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Could capital gains tax changes reduce the number of landlords?

As the UK government looks to introduce income generating changes to the UK taxation system many believe they may have overstepped the mark regarding capital gains tax. There is growing concern that the number of landlords in the UK could reduce after the UK government announced a significant increase in taxation for those investing in this particular arena. So could this actually reduce the number of landlords in the UK?

For many years, prior to the sudden economic downturn, many have seen the landlord market as something of a "gravy train" which many investors climbed aboard. However, while many investors were able to bank significant profits on their second, third, fourth, etc homes the sudden downturn did catch many by surprise and indeed many lost everything. The increase in capital gains tax, announced at the last budget, has effectively increased the risk/reward ratio in this particular investment arena and many landlords have announced their intention to pull out.

This comes at a time when UK house prices are well out of the reach of many first-time buyers and demand for rented property continues to grow. If rented property numbers do fall in the short to medium term this will push prices higher for those properties available and could stretch the finances of many people to the limit.

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