LANDLORDS in Merseyside fear proposed changes to capital gains tax rules could harm the residential lettings sector.

The coalition Government is looking to introduce ways of taxing non- business capital gains at rates close to those applied to income.

Capital gains tax currently only applies to investments that are sold, and so investors that retain their assets will not have to pay any tax, for now.

If the new policy is actioned, investors selling property could find they are forced to hand over 40% of their capital gains to the taxman, instead of 18%.

There are fears there could be a rush of landlords looking to dispose of properties before the change becomes law and that this may lead to a shortage of rental property on the market.

Paul Sutton managing director at Liverpool estate agency Sutton Kersh, said: “We don’t know how or when the new policy might apply.

“It might be from the date of the Budget or it might be from the start of the next tax year. Potentially, this could trigger a fire sale situation. Professional investors may look to sell their current portfolios now before the new legislation is in place.”