Tax increase may force out landlords

Around 26 per cent of landlords said they were thinking about selling their properties before the tax is increased from its current rate of 18 per cent, according to the lettings agency network LSL Property Services.

A further 71 per cent of investment landlords said a rise in the tax would make them reconsider making future investments in property.

Nine out of 10 landlords also said they opposed plans to increase capital gains tax.

The Government signalled its intention to raise capital gains tax in its coalition agreement, when it said it would change the rate paid on non-business capital gains to a level similar to those applied to income.

This has been interpreted as meaning the tax will be increased from its current rate of 18 per cent to 40 per cent or even 50 per cent but the plans, which are expected to be included in this month's emergency Budget, have sparked opposition from Right-wing Conservative MPs.

The LSL research found that although landlords make returns from both renting out their property and house price rises, they tend to place greater importance on the capital gains, which will be hit by the tax.

It said that while 30 per cent of investors placed equal importance on rental income and house price rises, 36 per cent considered increases in the value of their property to be the most important aspect.