The Residential Landlords Association has called for landlords to be given tax relief if they sell to first-time buyers.

The proposal, said RLA chairman Alan Ward, follows David Cameron’s speech at the Tory party conference calling for an increase in ownership, but has also been made to give landlords “a way out of the market”.

Ward said: “With tax changes coming up that will severely impact on their incomes, a number of landlords will be looking to quit.

“A second group of landlords looking for a way out could be older ones, who may have held on to their properties for a very long time, and who now want to retire or who need the money for other things.”

He said that despite lobbying by the RLA, there is no sign of Chancellor George Osborne backing down on the changes announced in the summer Budget.

These will progressively remove the ability of landlords to offset mortgage costs from their rental income, with tax relief to be restricted to the basic rate.

According to the RLA, that will mean that some landlords will be paying tax on a loss.

However, the organisation says that landlords will also be caught by tax if they try to sell up now.

Capital Gains Tax payable by landlords when they sell is typically at the higher rate of 28%.

It means that a landlord who bought a £250,000 property in 2005 and who sold now could have a CGT bill of £63,000.

The RLA points out that by contrast, owner occupiers incur no CGT liability at all.

Citing the results of a survey of landlords, Ward said: “Selling to first-time buyers or sitting tenants would be attractive to more than three-quarters of landlords given the right tax environment.

“David Cameron’s speech lacked detail as to how landlords could be encouraged to sell and tenants to buy.”

The proposal to let landlords off CGT if they sell to first-time buyers was first made in the RLA’s ‘election manifesto’ published at the start of the year.

In its ‘manifesto’, aimed at all political parties in the run-up to the May election, the RLA also called for CGT relief when a landlord sells one rental property but reinvests the proceeds in another.

Ward said at the weekend: “No other business that wants to reinvest would be penalised in this way.

“We also have to accept that markets change.

“For example, an area in south Manchester was popular with landlords investing in student property.

“Now that the [Manchester Metropolitan] university has moved its campus, those landlords could be usefully encouraged to sell up and reinvest, for example in city centre apartments.”