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BPF calls for CGT rollover relief for residential investors

Capital gains tax will go up from 18pc to 40pc hitting everyone from individual investors in buy-to-let properties to those realising the value of share options.

The British Property Federation has called for target rollover relief from this doubling of the tax and also for the formation of residential real estate investment trusts (Reits), which were introduced for commercial property in 2007.

Liz Peace, chief executive of the British Property Federation, said:

“Buy-to-let landlords and individual investors will bear the brunt of this 22pc tax rise and while the public at large may have little sympathy with those profiting from property sales, ministers must recognise the massive contribution that these people have made to housing supply over the last decade. Over a million more people rent now than in 2001 and this has been made possible through buy-to-let investment.

“The government must to look to nurture new investment streams into housing – through residential Reits and from the institutions. This will mean reforming tax rules, incentivising large-scale investment from institutions and changing the Reit structure to allow housing vehicles to form. Ministers should also look to introduce a targeted rollover relief from these changes for investors who keep their money in housing.

“If the right residential Reit or other collective investment vehicle could be formulated, offering deferral of tax to anyone selling a property into the vehicle in return for an interest in it, this could be a way of encouraging greater liquidity in rented housing.”

For more information contact Andrew Teacher at ateacher@bpf.org.uk