The National Residential Landlords Association has submitted a 17-page proposal to government calling for Capital Gains Tax relief, energy efficiency incentives and Local Housing Allowance restoration. The plan amounts to a defensive trade: accept higher CGT rates if necessary, but defer the revenue hit and incentivise retention over disposal.
The proposal arrives amid speculation that CGT rates on residential property may rise from the current 18 per cent and 24 per cent bands to align with Income Tax at 20 per cent, 40 per cent and 45 per cent. For a higher-rate taxpayer disposing of a property with £200,000 in gains, that would mean a jump from £48,000 to £80,000 in tax due.
The NRLA's response is two mechanisms borrowed from commercial property tax planning. A deferred annual investment allowance would accumulate over time and be realised only on sale, rewarding longer hold periods. Business Asset Rollover Relief would be extended to residential property, allowing landlords to defer CGT when sale proceeds are reinvested in new rental homes. The tax would remain payable when the replacement property is eventually sold.
The plan has been sent to ministers, think tanks and stakeholders. The source document states it was also sent to "the Prime Minister, Andy Burnham". Andy Burnham is the Mayor of Greater Manchester, not Prime Minister.
The tax planning dilemma
Portfolio landlords now face a timing problem with incomplete information. If CGT rates rise without mitigation, disposing before implementation becomes financially rational. If rates rise but reliefs are introduced, early disposal forfeits tax planning value. If neither happens, unnecessary restructuring creates costs for no benefit.
The deferred investment allowance would create a new layer of record-keeping and annual claims administration. Landlords would need to track qualifying investments, calculate annual allowance accrual, and maintain records until disposal, potentially decades later. Compliance professionals should note this would require new client advisory frameworks and software capability.
Business Asset Rollover Relief already exists for commercial property, plant and machinery. Extending it to residential rental property would allow disposal proceeds to be reinvested in replacement rental homes within a three-year window, deferring CGT until the replacement property is sold. The mechanism is well established but would require HMRC guidance on what qualifies as a replacement residential rental asset, whether like-for-like reinvestment is required, and how mixed-use or short-term let properties are treated.
The proposal assumes landlords want to remain in the sector and reinvest. Section 24 mortgage interest restriction, rising Energy Performance Certificate standards, and the Renters' Rights Bill have already pushed many portfolio holders toward disposal rather than reinvestment. The lobbying pitch is that tax relief can reverse this. No modelling is provided.
Energy efficiency and LHA restoration
The plan calls for specified energy efficiency improvements to be treated as revenue costs, deductible against income tax rather than capital expenditure. This would require HMRC to publish an annually updated list of qualifying measures and create a modernised Landlord Energy Saving Allowance covering double glazing and low-carbon heating.
Currently, capital improvements add to the property's base cost for CGT purposes but offer no income tax relief. Revenue treatment would provide immediate tax benefit, particularly for higher-rate taxpayers. It would also drive demand for energy assessors, retrofit contractors and compliance advice. The commercial read: this proposal benefits the energy efficiency supply chain as much as landlords.
The LHA element urges restoration to the 30th percentile of local rents from the next financial year, with maintenance at that level for the rest of the Parliament. LHA rates were frozen in cash terms from 2020 to 2024, creating a growing gap between benefit entitlement and market rents. Restoration benefits landlords in lower-value markets where benefit-dependent tenants concentrate. It is less material to mid-market portfolio holders.
The NRLA cites the English Housing Survey, stating that more than 80 per cent of private renters are satisfied with their homes and two thirds find it easy to afford their rents. The source does not specify which year of the survey or provide the exact question wording. These figures conflict with affordability pressure narratives elsewhere and should be treated as advocacy claims rather than settled evidence.
NRLA chief executive Ben Beadle said: "If the government decides to bring CGT rates in line with interest rates it is essential they offer alternative support to landlords to remain in the sector and continue to invest." The reference to "interest rates" appears to be an error; the policy discussion concerns alignment with Income Tax rates, not interest rates.