Landlords are rushing to sell their properties because they expect a capital gains tax rise and stricter renting rules under the new government.
Labour has promised to strengthen tenant rights, including banning no-fault evictions and ending rental bidding wars, and has refused to rule out an increase in capital gains tax (CGT).
The threat of higher taxes and more regulation has triggered a scramble to sell. More than 28,000 rental properties were listed for sale in June, twice the number in the same month last year, and a 27 per cent increase on May, when Rishi Sunak fired the starting gun on a general election.
Colin Bradshaw from the property data company TwentyCi, which compiled the figures, said: “There’s a lot of uncertainty in the buy-to-let market around what a possible change in government means for landlords, which is no doubt spooking many of them into selling.”
A dwindling market
The exodus adds to a general decline in buy-to-let investment over the past decade, largely driven by landlords no longer being able to fully offset mortgage interest payments against their tax bills.
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Investors sold 1,192,790 properties and bought 935,850 between 2017 and the beginning of 2024 — a net loss of 256,000 rental homes, according to the estate agency Hamptons.
Natalie Burrows plans to sell her one-bedroom buy-to-let in Surbiton in south west London as soon as her tenant’s contract ends in November.
“The general election was the nail in the coffin for us,” said Burrows, 34, who runs Integral Wellness, a nutrition and health clinic.
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“The quickest I can sell it is in January, because no one puts their house on the market before Christmas. I have to hope that it takes a long time for Labour to enforce policy, and hopefully we will remain ahead of these changes.”
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Burrows bought her flat for £310,000 in 2018 and her profits have been hit by higher mortgage rates and increased maintenance costs. Her mortgage payments rose from £1,230 to £1,630 a month after her interest rate went from 2.7 per cent to 6.5 per cent in August 2023. This year her building management fees increased to £1,800, up from £1,200 when she bought the property.
She has kept the rent at £1,350 for her tenants and is at least £450 out of pocket every month. “Labour considers landlords to generally be raking it in, to have big portfolios and to treat tenants badly, but that’s not accurate,” she said.
Liam Gretton, an independent estate agent on the Wirral, said: “We are seeing a noticeable increase in inquiries from landlords who are considering selling ahead of any potential policy changes.
“The primary concerns we hear are the anticipated increases in CGT and the introduction of stricter regulatory measures, which could significantly affect their investment returns.”
CGT is paid on the profits made from the sale of of property that is not your main home, as well as shares and most possessions worth more than £6,000. It is levied on the gain made since the asset was bought, not the entire sale proceeds. Basic-rate taxpayers pay 18 per cent on gains made from property, and higher and additional-rate taxpayers pay 24 per cent.
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Everyone gets an annual £3,000 tax-free allowance. This was reduced under the Conservative government — two years ago the allowance was £12,300.
A ban on Section 21 no-fault evictions was tabled as part of the Renters (Reform) Bill, which was shelved before the election. Greg Tsuman, of the estate agency Martyn Gerrard, said there had been a spike in landlords asking for help to serve a Section 21 notice to tenants. Some 48 per cent of all Section 21 requests to Martyn Gerrard this year were made in the five weeks since the election was called in May.
“Landlords may request a Section 21 to be served for a variety of reasons, but one of the major, if not the most commonly used, reason is because landlords want to sell,” Tsuman said.
‘I’m getting out before it’s too late’
Megan Armitage had wanted to carry on being a full-time landlord for another 15 years before retiring — she turns over £80,000 a year and takes home £50,000 after tax, mortgage costs and other expenses.
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But she is so concerned about the changes that Labour could make now that it is in government that she plans to sell all three of her buy-to-let properties. “I am sure that things are about to take a turn for the worse, so I’m getting out before it’s too late,” Armitage, 59, said.
“My immediate worry is that CGT is going to go up very soon after they get in and without warning. “My other concern is section 21 disappearing as that will make it very difficult to get tenants out if they don’t pay or cause trouble.”
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Armitage, whose name has been changed for this article, will put one property up for sale in September when her tenant’s contract ends and aims to list a second after Christmas. She will sell her third when her mortgage deal ends in two years.
She said: “I stand to lose a big chunk of the retirement fund I had planned. I’m very concerned — this is my business and my livelihood which is being threatened.”
