Tax breaks for landlords who sell second homes and pensioners who downsize are considered by ministers

TAX breaks could be given to landlords who sell their second homes and pensioners who downsize under proposals being looked at by ministers. 

The Government wants to crack down on the buy-to-let market and get more Brits owning their own homes. 

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Early ideas being kicked around Government include cutting capital gains tax for landlords who sell their second home. 

While higher rates of stamp duty could be put on buy-to-let properties. 

And pensioners who move into smaller properties could be offered tax breaks.

The ideas are only in their early stages and not yet gone to the Treasury. 

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But the PM is understood to be keen to do something radical on housing before the next election.

A source close to the discussions said: “The Prime Minister wants to shrink the buy to let market.”

Another Whitehall insider said: “The Prime Minister’s latest obsession is housing. 

“He wants to do a lot more on it.”

Ministers reckon the housing supply is partly being strangled by lots of accidental landlords.

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These are people who perhaps held on to a property after they married, or inherited, and now rent it out.

But they are not members of any professional bodies for landlords and do not see it as their profession.

The Government is looking at tax breaks to nudge these people into selling up and freeing flats and houses for first time buyers and families.

Currently, Brits pay capital gains tax on the profit you make from selling a home.

If you are a basic rate taxpayer and sell a second home you pay 18 per cent on the gain you make.

If you are a higher rate taxpayer you pay 28 per cent.

Stamp duty is already higher for buy to let mortgages, but this could be pushed up higher still.

Home ownership among under 40s has plummeted in recent years.

People in their mid 30s to mid 40s are three times more likely to be renting than they were 20 years ago.

There is alarm in Government ranks that these people will not vote Tory unless the they go from being ‘generation rent’ to ‘generation buy’.

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The new ideas come after Michael Gove ditched planning reforms which would have forced areas to build more housing after a massive Tory backlash.

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Late last year, a minister said he wanted to encourage old people “rattling around” in houses that are too big for them to downsize to a smaller home.

Chris Pincher, the housing minister until February, told the House of Lords that almost four in ten properties are “under-occupied” and could be better used by younger families with children.