The government may be about to give tax breaks to landlords agreeing to longer tenancies, according to claims put forward in The Sunday Times.

The paper said:“Under plans that have found favour in Downing Street, landlords would not pay capital gains tax (CGT) when selling to tenants who have lived in a property for three years or more.

“The plan is designed to spur landlords to offer longer tenancies and then to sell on to a new generation of homeowners.

“Senior Tories say the plan — due to be unveiled by Conservative think tank Onward — is under consideration for inclusion in the budget on October 29.”

Under existing rules, landlords who sell a rental property are liable to pay CGT at 28 per cent on any profits they make.

Under the Onward plan, the landlord would be eligible for tax relief with the profit split equally with the tenant, who could use it as part of their mortgage deposit.

Just last week the Residential Landlords’ Association (RLA), in its submission to the Treasury ahead of the Budget, called for tax relief on rental income which could increase each year a tenancy continues up to a maximum of five years if the tenancy is renewed.

Research by the RLA found that 73 per cent of landlords would offer longer tenancies in return for financial incentives and the ability to swiftly regain possession if tenants fail to pay their rent or commit anti-social behaviour.

Over the summer the government proposed a number of options to implement a three year tenancy model addressing the demand for longer tenancies from the growing numbers of families and older people in the private rented market.

One of these options proposes ‘financial incentives’, which the government argues “could be quicker to implement” than mandatory three year agreements.

Find out more about the pros and cons of long term tenancies in this new blog from Simple’s resident blogger, letting agent, landlord and developer Carl Agar.

Meanwhile, the prospect of longer-term tenancies makes the process of screening tenants ever-more important. Richard Truman, Head of Operations at Simple Landlords Insurance, added: “Getting the right tenants into your property is absolutely key, and that means you have to get reliable references.

“While letting agents can take on the task of finding and vetting tenants for you, offering longer term tenancies may well mean landlords want more say in who goes into their properties. Landlords can go direct to referencing agents – like Simple’s sister company Maras – for professional referencing. Just make sure you do your due diligence, follow government guidance, and create your own robust systems for ongoing management.”