Editor's note: This brief was summarised by The Property AI Newsroom from a report by Property118. Read the original article for full details.

Landlords Now Selling Due to Capital Gains Tax Uncertainty, Survey Finds

A recent Property118 Landlord Sentiment Survey has found that financial factors, particularly speculation around Capital Gains Tax (CGT) changes and higher interest rates, have overtaken regulation as the main reasons landlords are selling their properties. The survey results for Q2 show that these two financial triggers are now effectively tied as the strongest motivations for disposals among landlords.

The survey expanded its questioning this quarter, asking landlords to rank six potential reasons for selling rather than three. The findings revealed that higher interest rates scored 4.14, while the desire to realise gains before any change to CGT scored 4.13. Regulatory pressures, such as the Renters’ Reform agenda and new EPC rules, formed a middle tier of motivations, with circumstantial triggers like tenants moving out ranking lowest.

The report highlights that speculation around possible changes to CGT in upcoming Budgets is already influencing landlord behaviour. For landlords with significant accrued gains, the possibility of a future tax increase is prompting some to sell now to secure current rates. The survey suggests that this anticipation of tax changes is now as powerful a motivator as the current cost of borrowing.

The survey also notes a rise in landlords expecting to remortgage within the next twelve months, increasing from 31.6% in Q1 to 34.2% in Q2. This shift is attributed to fixed-rate deals reaching maturity and moving onto higher rates, rather than borrowing to expand portfolios. The ongoing pressure from elevated interest rates is squeezing returns and may prompt more landlords to consider selling when refinancing becomes necessary.

For letting agents and inventory clerks, these findings indicate a shift in landlord priorities, with financial considerations now driving sales decisions as much as regulatory changes. The report advises landlords to carefully assess their exposure to remortgaging and their current CGT position, and to seek professional advice where significant sums are involved.