Fri 26 Oct 2018 View all news articles
The Centre for Policy Studies has proposed a new scheme to increase home ownership at no cost to the Treasury, by giving tenants and landlords a rebate when a rented property is sold by the landlord to a sitting tenant.
Its report proposes that the Government turns the Capital Gains Tax payable by a landlord on sale of a rented home into a rebate shared between the landlord and tenant - to the former as an incentive to sell, and the latter to contribute towards a deposit.
This rebate would be split 33% to the landlord and 66% to the tenant, capped at 6.66% of the property, leaving the tenant to contribute just 3.33% to make up a 10% deposit.
The scheme, entitled Help to Own, would mean that for every £1 a tenant invested to buy the property they rent they would receive a total of £3 for their deposit. For an average property worth £228,000, they would be putting in just over £7,000 and getting £22,800 back.
The Centre's research shows that the levels of capital gain across the rented sector have been sufficient to pay for this scheme.
Robert Colvile, director of the Centre for Policy Studies, said: “The housing crisis is one of the great public policy challenges of our age – the Prime Minister has called it her ‘personal mission’ to reverse falling home ownership.
“A fully costed policy to increase homeownership which requires no increase in spending by Government is therefore something of a policy holy grail in the current political climate.
“By implementing this policy, the Government would be giving private renters up and down the country the help to own that they so desperately need. Like the original Right to Buy, this would promote mass ownership and be welcomed by those who need, want and deserve homes of their own.”
Alex Morton, head of policy at the Centre for Policy Studies, commented: “The great transformation in the property market recently has been the rise of private renting and the collapse of home ownership among younger people.
“This report shows how landlords can be incentivised to sell to tenants at a discount, promoting mass home ownership in a way that is fair to everyone – and at no cost to the Treasury.
“It is highly encouraging that the Government is reported to be taking this proposal seriously.”
Source: Financial Reporter
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