Realising gains before CGT changes: the new reason landlords are selling

Ask landlords why they are selling, and the answer used to be regulation. This quarter, the survey tells a different story. The strongest pull towards the exit is now financial, and Capital Gains Tax is right at the top of it.

For Q2, the Property118 Landlord Sentiment Survey expanded its question on why landlords sell, asking them to rank six potential triggers rather than three. The results reorder the usual assumptions about what is driving disposals.

Two financial factors sit clearly at the top, and they are effectively tied. Higher interest rates scored 4.14. The desire to realise gains before any change to Capital Gains Tax scored 4.13. The regulatory pressures of the Renters’ Reform agenda and new EPC rules formed a middle tier. Circumstantial triggers, such as tenants moving out, ranked lowest.

The Budget speculation is already doing its work

The significance of that near-tie should not be missed. It means the anticipation of a tax change is now as powerful a motivation to sell as the very real, here-and-now cost of borrowing.

Capital Gains Tax has been the subject of persistent speculation ahead of successive fiscal events. For a landlord sitting on years of accrued gains, the calculation is uncomfortable but simple: if the rate might rise, there is an incentive to sell now and bank the gain at today’s rate rather than risk paying more later.

Whether or not any change materialises, the speculation itself is pulling sales forward. That is a lesson in how tax uncertainty, quite apart from tax policy, shapes behaviour in the real economy.

Refinancing pressure is building underneath

The interest-rate half of the equation is intensifying too. The share of landlords expecting to remortgage within the next twelve months rose to 34.2% in Q2, up from 31.6% in Q1. This question is directly comparable between the two quarters, so the increase is a genuine shift.

For many, this is not borrowing to expand. It is fixed-rate deals reaching maturity and rolling onto materially higher costs. With rates still well above pre-2022 levels, that rising cohort faces a squeeze on returns, and for those least able to absorb it, refinancing can be the moment the decision to sell is finally made.

What it means for landlords weighing their options

None of this is advice to sell, and every landlord’s position is different. But the survey makes the backdrop clear. The financial case, the cost of borrowing and the tax position on disposal, is now doing as much to drive landlords towards the exit as regulation ever did.

For those considering their next move, the practical questions are worth thinking through carefully and, where the sums are significant, with professional advice: how exposed is the portfolio to remortgaging over the next year, what the CGT position looks like today, and how much of any decision is being driven by speculation rather than certainty. The one thing the data suggests is that these conversations are already happening, in large numbers, around kitchen tables across the country.

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