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adrian alderton

Abolition of Lettings Relief dilemma

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Hi I have been a landlord for a number of years and my longest let property was a former residence and is in my sole name.

I would be interested in your views and advice on a dilemma caused by the forthcoming abolition of lettings relief by former chancellor Hammond.  This applies in April 2020.

The property is let to a retired lady who has been an excellent tenant for 10 years and has all her support network in this locality.  Its a family sized house in good order and as i now live at the other end of the country my plan was to sell it when she moves on sometime in the future.  The rent is now below market value as I have not regularly increased it as i self manage from a distance and I'm happy to keep a good tenant. 

With the abolition of Lettings relief I have estimated that at current values my CGT bill will increase from about £2k to £13k from 2020. The property is highly leveraged so would take a significant chunk of my equity.  I have looked at various options such as

- selling with a sitting tenant  - not promising with a low yield and not an investor area

- transferring part ownership to my partner - negligible impact

- selling to my company  - high transaction costs.

The only real option to avoid/minimise CGT would be to sell before April 2020.

I haven't had this discussion with my tenant as she was ill earlier this year and I'm am not in the habit of evicting my tenants, i tend to like to keep them!

Bearing in mind I am planning to sell this property in the future do you have any views or advice on ways to proceed.





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If your tenant is likely to stay another 10 yrs why not bring the rent up a bit and plan to continue renting to her? It will not remove your CGT bill but the extra profit would mitigate it somewhat. If she has been there for 10 yrs I imagine you have made quite from income a bit & can probably continue to do so.

Once again we are seeing an unintended consequence of poor legislation negatively impacting on an unrelated party!

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