Under radical plans to get more renters on the property ladder, the Centre for Policy Studies (CPS) said landlords selling their rental properties should be given a rebate on Capital Gains Tax (CGT) which would be shared with the tenant.

The CPS suggests a rebate of 33% for the landlord and 66% to the tenant, capped at 6.66% of the property value.

This means tenants would receive 6.66% of the value of the property towards a deposit so they would need to contribute 3.33% in order to make up a minimum 10% deposit.

Essentially, for every £1 a tenant invested to buy the property they rent, they would receive a total of £3 for their deposit. For an average property worth £228,000, they would be putting in just over £7,000 and getting £22,800 back.

This would “ensure fairness” and would “be a hand up on to the housing ladder, not a handout for nothing,” wrote the report author and head of policy at the CPS, Alex Morton.

It suggested that if just one in 10 landlords took advantage of this policy in one year, over one million people would be given a chance to move in to homeownership.

The ‘Rent to Own’ idea comes just a week after conservative think tank Onward published its ‘Chance to Buy’ paper suggesting greater incentives for landlords while stimulating homeownership for private renters.

Report authors, Will Tanner and Guy Miscampbell, proposed that existing buy-to-let properties would be eligible for 100% CGT relief if the property was sold to a sitting tenant who has lived at the property for three years or more.

The gain would be split 50/50, unlike the 33/66 ratio suggested by the CPS, helping the landlord keep more profit from the sale of the property, and providing a healthy average deposit of £7,500 for the tenant.

It estimated 88,000 households would take up the relief each year, with a million people moving from the private rented sector into homeownership by 2023.

Statistics reveal that since 1997, the number of households renting in the private sector has risen from 2.1 million to 4.7 million, consisting of nine million working age adults and 870,000 retirees.

Britain now has the fourth lowest rate of homeownership in the EU with the proportion of young people on average wages owning their own home shrinking from two thirds in the mid-1990s to only a quarter now. During this time, house prices have risen by 160% in real terms while young people’s incomes have grown by just 23%.