Buy To Let sell-off underway as Capital Gains Tax threat rises

Landlords are exiting the office on greater numbers since the government called for a review of Capital Gains Tax last year, claims Zoopla.

The portal’s head of research, Grainne Gilmore, says the proportion of previously rented properties listed for sale on the site has risen. The percentage of homes on the market that were previously let us up in all English regions, with 7.2 per cent of all new sales inventory across the UK now previously rented.

This trend is most prominent in London and the South East, with the proportion of previously rented properties now for sale  standing at 13.0 and 8.0 per cent respectively. 

She says some investors may be selling to beat changes to CGT or looking to take advantage of higher capital values; others may be rationalising their portfolios due to changing rental market dynamics.

And Gilmore adds this goes some way to explain why the supply of property is rising in London, with a higher proportion of new supply made up of formerly rented property, now coming to the market.

“One area of the market where there is more supply coming to the market is among landlords who are bringing their investment properties forward for sale” she comments. 

“The share of homes listed for sale which were previously rented has risen in nearly every region during 2020, as landlords reassess their portfolios in light of current rental trends, or ahead of possible tax changes for investment property. While the homes for sale account for a very small proportion - less than one per cent - of rented stock, it is a noticeable trend emerging in the market.”

Fears are growing about a possible CGT hike announcement in next week’s Budget following a report from the Office for Tax Simplification proposing measures to equalise Capital Gains Tax with income tax rates.

The National Residential Landlords Association is highlighting research which found that 72 per cent of private landlords regard the tax as a major disincentive to sell property on the open market.  

The association says almost half of landlords have entered the market chiefly to contribute to their pension - for them, increasing CGT would negatively impact their retirement planning. 

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