I want to sell a house I've been renting out – will I have to pay capital gains tax?

I’m also wondering whether my ex-wife would have had to pay CGT when she sold her share of the property to me after our divorce

Q Could you please assist me with the following complicated but not uncommon situation. In 2001, I bought house for £167,000 with my then wife. In 2005, we let the house out. In 2013, we divorced and I mortgaged the house to be able to buy out my ex-wife.

In 2015, I remarried and gave my new wife half the property for mortgage and tax purposes. We are now considering selling the house for around £400,000. The house is still let and has been for around 136 months.

Am I right in thinking that my ex-wife was liable for capital gains tax when she disposed of her share by selling it to me? And would I be liable for capital gains tax (CGT) if I sold the house today? Would I be advised to move back into the house for a period of time to limit my exposure to CGT? AH

A Whether you are right in thinking that your ex-wife was liable for CGT when she sold you her share – not that it’s any of your business – depends on when the disposal took place.

If she transferred her share to you before the end of the tax year in which you separated, then – like transfers of assets between spouses who are not separated – the transfer would be treated as giving rise neither to a gain nor a loss, so no CGT would be payable.

If the transfer took place after the end of the tax year that you separated, your ex-wife may be liable for CGT but that’s between her and her tax office. More information is available in Helpsheet 281 – “Spouses, civil partners, divorce, dissolution and separation” – from HM Revenue & Customs (HMRC).

You too would be liable for CGT if you sold the property, but only on your share of the gain and probably not on the whole of that. The fact that you say “move back into the house” suggests that when you first bought the property with your now ex-wife, it was your home until you let it out in 2005 so the answer to your last question is: you don’t need to move back in to minimise your tax bill.


The fact that you lived in the home before letting it out means that you qualify for partial “private residence relief”, which makes part of the gain tax-free. You can work this out by taking the number of months you lived in the house plus 18, and then dividing that figure by the number of months you owned the property. Multiplying this fraction by whatever the gain is (what you sold it for less what you paid for it, legal fees and stamp duty) gives you the amount of private residence relief you can subtract from the gain to reduce the tax you pay.

If you moved back in, the fraction would be calculated differently. Rather than adding 18 to the number of months you lived in your property, you would add the number of months out of the final 18 of ownership not covered by actual occupation. So, for example, if you moved back in for six months before selling, you would add 12 to the number of months you lived there.

Since you let the property, you may also qualify for “lettings relief”, which also reduces your tax bill. The amount of the gain qualifying for lettings relief is the smallest of: the gain attributable to the period of letting (calculated by multiplying the gain by the number of months the property was let then dividing by the number of months of ownership); the amount of private residence relief you’re entitled to; and the maximum lettings relief of £40,000. More information on calculating lettings relief is available in HMRC’s Helpsheet 283 on private residence relief.

https://www.theguardian.com/money/2016/aug/25/sell-house-renting-out-capital-gains-tax

London housing: TfL land set for affordable homes as Sadiq Khan picks expert team

The capital’s mayor has begun moves to put his low cost housing pledges into effect

London mayor Sadiq Khan has announced two forward steps on his long and testing quest to improve the supply of new homes for low and middle income households. One is the release for development of a piece of Transport for London (TfL) land in Kidbrooke. The other is the start of assembling his expert Homes for Londoners unit at City Hall.

The Kidbrooke site is the first brought forward by TfL under Khan’s manifesto pledge to supply “part-buy, part-rent” shared ownership homes on publicly-owned land for first-time buyers, giving “first dibs” to Londoners who’ve been renting for five years, especially in Outer London. It demonstrates both continuity of policy from what TfL did under Boris Johnson and significant adjustments of it.

The transport body’s approach to making money from its developable land assets has been be to enter into joint ventures with developers to build housing and other things - schools, shops, medical facilities - on it, enabling TfL to take a share of the profits. The first example of this new departure for the transport body was the vast and controversial Earls Court Project - find seven years’ worth of mildly obsessive coverage here - which has so far seen the TfL land on which the Earls Court exhibition centre stood levelled and precisely no affordable homes, however defined, planned for it.

Here is where Khan differs from his predecessor. TfL’s first priority under Johnson was to make as much money as fast as possible from its property deals: hence the zero “affordable” portion in the Earls Court redevelopment so far and a concentration on sites in expensive areas. Khan, by contrast, is to insist that an overall 50% of all homes built on TfL land must meet his definition of “affordable” - to be a more stringent one than the government uses - and has asked TfL to move more sites in Outer London up its priority list. Kidbrooke fits the bill.

The land, which lies next to Kidbrooke railway station, is big enough for around 400 homes plus retail, commercial and open space. During the mayoral election campaign, Khan spoke of TfL retaining ownership of its land, which is usually advisable in any case since it tends to contain useful public transport stuff like stations. In this case, however, the land isn’t needed for TfL transport purposes which means it could be sold rather than retained.

Such a sale could be to the highest bidder on the open market but, that high price would make it unlikely that 50% of any homes built on it were affordable, especially by Khan’s definition. However, the land can also be sold to a company that TfL is part of, logically at a price low enough to make 50% affordable financially feasible. According to paragraph 2.4 here it is “contemplated that TfL will dispose of the land to such a company.”


An issue raised by a 50% affordable requirement, the minimum set out by Khan for the Kidbrooke site, is that TfL will get less from the development of the land in this way than they would have were the “affordable” proportion lower. City Hall officers’ advice to Khan is that were TfL itself or a subsidiary of it developing the land for less than the maximum possible return, it would be breaking the law in the form of the GLA Act, but that those provisions don’t apply to a non-subsidiary, such as a joint venture company. Khan has therefore formally directed TfL to sell or develop the Kidbrooke land by means of such a company, which will likely be formed with one of the 13 developers named in TfL’s property partnership framework in February.

All this has brought criticism from Conservative London Assembly member Keith Prince, who speaks for the Tory group on transport. He has accused Khan of financial irresponsibility, saying his approach threatens TfL’s finances at a time when Khan is also freezing its fares income and the government is phasing out its grant. Planning applications for the development of TfL land and made by TfL itself under Mayor Johnson have contained proposals for affordable housing - at Nine Elms, Northwood and Parsons Green. The proportions in each case have been for substantially less than 50%, but still implied a smaller return for the transport body.

Khan has said that Johnson hadn’t pushed TfL to move on the Kidbrooke site (although it has long been a contender for attention), the implication being that the transport body is already in line to be better off than it would have been under the previous mayor and that 200 more affordable homes will soon enter the supply pipeline too. Ensuring speedier housing delivery on is one way in which Khan can address the tension between TfL’s need for additional income and his commitment to building affordable homes on its land portfolio,

And so to the second of Khan’s housing announcements. The Homes for Londoners line-up includes a “governance board” comprising Khan’s housing deputy James Murray, four borough leaders to be nominated by London Councils, TfL commissioner Mike Brown, the Greater London Authority’s executive director housing and land David Lunts, chair of the G15 group of leading housing associations David Montague and two “members of the residential property sector” who have yet to be named. Khan himself will chair the board, which will meet quarterly. The clear objective, in keeping with Khan’s manifesto, is to form an alliance of all those with an interest in building London homes.

Khan has also announced that he’s assembling an in-house “viability expert team” to look closely at the often contested financial costings compiled by developers to justify the amount of “affordable” housing and other social infrastructure they supply as part of development schemes. The thinking is that cash-strapped boroughs are often bamboozled by property giants and end up getting less affordable housing out of deals than there could have been.

Having a stronger viability scrutiny operation at the service of the mayor, who can block, shape or even take over the determination of planning applications, should help the boroughs and also promote greater consistency in viability negotiations - something it is hoped developers themselves might welcome, as the process can be costly and time-consuming for them too. The same experts will also help Khan develop his new London Plan and shape major parts of mayoral planning policy, such as opportunity areas and housing zones.

The initiative has been welcomed by London Councils, business body London First and the London Chamber of Commerce and Industry, reflecting broad agreement that London’s housing problems need to be tackled with greater interventionist vigour. Khan is hoping that Theresa May will join the chorus of agreement. Her chancellor’s autumn statement is awaited with interest.

https://www.theguardian.com/uk-news/davehillblog/2016/aug/23/london-housing-tfl-land-set-for-affordable-homes-as-sadiq-khan-picks-expert-team

Offer made on West Heslerton village put up for sale for £20m

Entire North Yorkshire village, home to 375 people, was listed on property website as somewhere ‘time has stood still’

An offer has been made on a 2,000-acre North Yorkshire village that went on the market for £20m earlier this year.

West Heslerton, which has been owned by the Dawnay family for more than 150 years, was put up for sale in April, giving wealthy individuals the chance to purchase a perfectly preserved, quintessential Yorkshire village where “time has stood still”.

From childhood, the late Eve Dawnay, the former owner of West Heslerton, near Malton, loved to build miniature models. When her father bequeathed her the village, she set about creating an archetypal family hub.

From its pub, garage, playing fields and sports pavilion, to a 21-bedroom hall and 43 houses, Eve Dawnay left a remarkable legacy when she died aged 84 in 2010: a functioning English village, with a population of about 375 people, preserved in time.

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With no single heir, the village was left to Eve’s wider family and they decided to sell, hoping to find a wealthy yet benevolent buyer, who would help to preserve the bucolic way of life.

On Monday, estate agent Cundalls, which is handling the sale, confirmed that an offer was on the table.

“It is correct that it is under offer and it has been for some time now. There was a lot of interest from many different buyers, but we cannot say any more at this stage,” said Tom Watson, the director of Cundalls.

“Historically, we have dealt with many estates, but for the past 20 to 30 years, this is our biggest sale.”

The village’s Rightmove listing said: “A once-in-a-generation opportunity to purchase a 2,116-acre mixed agricultural, residential and commercial estate with vast development and sporting potential, situated within a beautiful area of North Yorkshire.”

The advert, which includes 86 photographs showing characterful cottages and sweeping scenic shots, is marked as being under offer.

Eve Dawnay graduated from Oxford University with a degree in French in 1948, and worked in Paris and London before returning to the village. When her father died in 1964, she inherited the estate.

The unmarried eccentric kept rents low and, with some clever social engineering, ensured that it retained a vibrant community supporting a host of amenities, including a primary school and football, cricket and bowling teams.

The centrepiece of the estate is the 21-bedroom West Heslerton Hall, which has been empty for 30 years since Eve Dawnay downsized to a four-bedroom house in the village.

The estate has more than 1,500 acres of agricultural land, including 112 acres of woodland.

The annual rental and agricultural subsidy income is listed as about £390,000.

https://www.theguardian.com/uk-news/2016/aug/22/west-heslerton-village-north-yorkshire-offer-made-sale-eve-dawnay

Labour attacks 'misleading' help-to-buy Isas

Scheme launched by George Osborne in 2015 budget criticised for not paying a 25% bonus until a property deal is completed

A government-promoted savings account taken out by more than 500,000 aspiring first-time buyers has been dubbed a “sham” that has betrayed young people hoping for their first step on the property ladder.

The help-to-buy Isa pays a 25% government bonus of up to £3,000 towards a deposit. But it has emerged that this is not paid until a property sale is completed, and so cannot be used to the initial deposit demanded by mortgage lenders. 

Labour MP David Lammy said: “Young people and all those saving in the hope of one day owning their own home have got every right to feel betrayed and conned by the government.

“Payment of a 25% bonus upon completion of the purchase of a home will only help those lucky enough to be able to already afford a deposit and will do nothing whatsoever to help those who are priced out of ever getting on the housing ladder.”

Help-to-buy Isa clause under attack for hampering first-time buyers

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Labour said that more than £2m has been wasted by the government advertising a “misleading” Isa deal.

The scheme was launched in the 2015 budget, with the then chancellor, George Osborne, saying it would help first-time buyers tackle the “high deposits required by the banks”.

Rebecca Long-Bailey MP, Labour’s shadow chief secretary to the Treasury, said: “Over the weekend we learned that over £9bn goes into the pockets of private landlords when instead we should be building council houses and it was also revealed that the Tory Isa for first-time buyers was a sham.

“Adding insult to injury we learn the Tories have blown millions of taxpayers’ money on advertising the first-time buyer sham. Young people struggling to get on the housing ladder deserve better than this.”

Financial advisers said the help-to-buy Isas have, until now, been hugely popular among potential young buyers, with over 500,000 accounts. But they said many will now be sorely disappointed they can’t access the cash bonus until it is too late.

Hargreaves Lansdown’s Danny Cox said: “Clearly saving for property with the added bonus from the government is an incentive which works, though now it looks like many of these savers are going to feel disappointed by a rule which prohibits them from getting their government bonus until after they have completed their house purchase.”

However, a Treasury spokesperson defended the scheme, saying the £3,000 bonus is included as part of the overall deposit and taken into account by lenders when deciding on the loan-to-value ratio.

“This government is committed to helping those who aspire to buy their own homes, and that’s why we have made sure they are aware that they can receive a government bonus of up to £3,000 if they save into a help to buy Isa. Since its launch more than half a million people have made use of the scheme, with over 22,000 already receiving their bonus.”

Britain’s housing crisis has become one of the key policy areas in the Labour party leadership battle, and formed a central plank in Theresa May’s bid to become prime minister.

Jeremy Corbyn has argued for a cap on private rent levels, more council housing and an end to “social cleansing” he argues has resulted from benefit caps and housing sell-offs.

He has also put forward his own plan to extend the right-to-buy scheme to the private rented sector. He has suggested funding subsidised mortgages for private tenants by withdrawing £14bn of tax allowances that were at the time given to buy-to-let landlords.

Owen Smith has pledged that a government under his control would build 300,000 homes in every year of the next parliament, equal to 1.5m over five years.

When May launched her campaign for leadership of the Conservative party she promised: “We need to do far more to get more houses built. Because unless we deal with the housing deficit, we will see house prices keep on rising.”

https://www.theguardian.com/money/2016/aug/22/labour-attacks-misleading-help-to-buy-isas

17 ways to tell you are Obsessed with Property

1. You throw away the news and sports section of the Sunday papers and concentrate on the property section. Armed with a thick red marker pen you outline your best buys.
   
2. Your computer desktop is a picture of Kirstie Allsopp.
   
3. You calculate you spend more time talking to estate agents than talking to your own children.
   
4. You are able to sniff out boxes in a supermarket, you can't see them but you know that perfect box to help you with your move is close by.
   
5. If asked directions you find yourself navigating by estate agents rather than pubs and churches.
   
6. When walking into a friends house for the first time you enquire about the number of bedrooms and if planning permission has been given for an extension, before asking them how they are. You then quiz them about local amenities and possible flooding.
   
7. If you're a bloke, instead of enjoying a copy of the latest lads mag you are more than likely to be reading a stack of property particulars at lunch time, muttering to yourself in the corner about period features. If you're a women, a pile of Heat magazines lie unread in a corner, whilst the local property section is scoured, front to back, as soon as you get your hands on it.
   
8. You are on first name terms with your local estate agents and even some not so local, in fact you are now the godfather to one estate agent's child.
   
9. You know which day the interest rates are announced and can give a reason why the inflation rate has effected the Bank of England's choice to raise or lower rates.
   
10. You own all of Sarah Beeny's property books and have watched every episode of Location Location Location.
    
11. A walk down your local high street takes three times as long as most peoples as you have to stop at every estate agent's window to look for that bargain.
    
12. You can now visualise square footage when listed in property details and know exactly how much you need.
    
13. Your moving day plan is akin to the D-Day landings in complexity, the folder containing the plan is heavy enough to squash a small dog if it were to land on top of one.
    
14. Your Internet bookmarks groan under the weight of property websites and you have become such a frequent visitor to some property websites that they have invited you to be a shareholder.
    
15. When traveling to a new area you find yourself calculating the demographics and statistics, wondering if this could be your dream neighbourhood.
    
16. The bulk of your email inbox is made up of property email alerts as you have set up so many requests with property search websites.
    
17. Your house sale playbook contains more psychological tricks than Derren Brown, going beyond the simple "baked cookie smell", wafting through the house. You hang prints on the walls containing auto suggestions regarding how great the house is.
    
    http://www.mypropertyguide.co.uk/articles/display/10069/17-ways-to-tell-you-are-obsessed-with-property.htm

Victory for landlords as council scraps proposed licensing scheme

A landlord group has successfully halted the planned introduction of a selective licensing scheme proposed by its local council.

More than 80 buy-to-let landlords in Weston-super-Mare teamed up over the summer to raise more than £12,000 with a view to taking North Somerset Council to court in a bid to overturn a decision to introduce a licensing scheme across parts of the town.

The landlord group, called the Somerset Property Network, strongly opposed the planned new license which would have covered Central ward and part of Hillside, and cost £320 for a five-year license, and felt that a legal challenge was necessary to stop the initiative being introduced.

Now, North Somerset Council has said it will not be proceeding with the planned scheme, which would have meant that anyone failing to meet a minimum standard criteria potentially face prosecution. The council will now deliberate additional feedback provided by landlords ahead of a further review.

https://www.landlordtoday.co.uk/breaking-news/2016/8/victory-for-landlords-as-council-scraps-proposed-licensing-scheme

Private landlords get £9.3bn in housing benefit from taxpayer

Private landlords get £9.3bn in housing benefit from taxpayer, says report

Amount is nearly double what was paid 10 years ago according to National Housing Federation study

Taxpayers handed over £9.3bn in housing benefit to Britain’s private landlords last year, nearly double the amount paid 10 years ago, according to a new report.

The number of households receiving housing benefit to pay rent to private landlords has risen 42% since 2008, the National Housing Federation, which represents the non-profit housing sector, has found.

The NHF calculated that if all those housed in the private rented sector lived in affordable housing, taxpayers would save £1.5bn a year. David Orr, the federation’s chief executive, said: “It is madness to spend £9bn of taxpayers’ money lining the pockets of private landlords, rather than investing in affordable homes.

“Housing associations want to build the homes the nation needs. By loosening restrictions on existing funding, the government can free up housing associations to build more affordable housing at better value to the taxpayer and directly address the housing crisis.”

The number of housing benefit recipients in the private rented sector has risen from just over a million in 2008 to almost 1.5 million in February this year.

Housing benefit is paid to households that cannot afford to meet their rental costs and have enough left over for essentials such as food, clothes, heating and lighting. Almost half the households in the private rented sector that receive housing benefit are in work, but not earning enough to cover the rent and living expenses.

In a sign of how pay has failed to keep pace with the cost of living, in 2008 only a quarter of the private renters in receipt of housing benefit were in work.

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According to the NHF’s research, housing benefit claims in the private rented sector are much higher than in the non-profit housing sector, with on average about £1,000 extra being spent to keep roofs over the heads of private renters – rising to £3,300 a year in London.

Since the beginning of the financial crisis in 2008, the proportion of housing benefit recipients paying private rents has risen from one in four, to almost one in three.

The NHF also noted a rise in the proportion of middle-income households forced to turn to the benefits system. “Specifically, the strongest increase in housing benefit claimants has been among households with net incomes between £20,000 and £28,000 per year, rising from 11% in 2008/09 to 19% in 2014/15,” the report stated.

A government spokesman said it had taken action to reduce the private rental sector housing benefit bill. “The reality is we have taken action to bring the housing benefit bill under control, and since 2012 the amount going to private sector landlords has actually been falling – something which the National Housing Federation fails to recognise,” he said.

“We are also committed to building the homes this country needs and investing £8bn to build 400,000 more affordable homes.”
https://www.theguardian.com/society/2016/aug/20/private-landlords-9bn-housing-benefit-taxpayers-national-housing-federation-report