The government is facing calls from the National Residential Landlords Association (NRLA) to change how capital gains tax (CGT) is applied to house price increases. The NRLA argues that inflation is responsible for the majority of these rises.
According to the NRLA, only a fifth of house price growth observed between 2015 and 2024 constituted a real-terms gain. The organisation contends that the current tax system treats the inflationary portion of these increases as profit.
Ben Beadle, chief executive of the NRLA, stated that it is "absurd that investors face capital gains tax on increases in property prices that are simply the result of inflation." He added that taxing inflation "devalues the worth of an investment."
Ahead of the Budget, the NRLA is urging the Chancellor to adjust a property's acquisition price and any qualifying capital expenditure for inflation before calculating the taxable gain upon disposal. They also propose relief that reflects the duration a property has been held and used to provide accommodation, with no relief for speculative short-term purchases.
The NRLA suggests these changes would help preserve the purchasing power of money from sales and support long-term investment in rental homes. The organisation highlights Rightmove figures indicating an average of 10 enquiries per available rental home, double the pre-pandemic level, pointing to a shortage of rental properties.