London Landlords Selling Properties at Record Rates Ahead of Anticipated Tax Hikes

London landlords are selling their buy-to-let properties at unprecedented rates in response to anticipated tax hikes from the U.K.’s Labour government, with almost one-third (29%) of homes currently for sale in the capital having previously been rented out, according to new data. This mirrors a nationwide trend, with 18% of U.K. listings being former rental properties, up from a previous five-year average of 14%. While there’s no definitive indication of a “mass exodus” of landlords, the appeal of buy-to-let investments has notably declined. The expected October 30th Autumn Statement by Finance Minister Rachel Reeves, which may include an increase in Capital Gains Tax (CGT), is seen as a key factor driving this uptick in sales. Currently, landlords pay a flat CGT rate of 18% or 28%, depending on their income tax bracket, but speculated changes could bring these rates in line with income tax levels, raising concerns among property investors. These changes follow years of declining profitability in the buy-to-let sector, exacerbated by the removal of tax incentives, higher interest rates, and cost-of-living pressures. The stock of investment properties and second homes has fallen by 8.7% over the past three years, reflecting a broader downturn in the property market, though recent easing of borrowing costs has sparked a rise in homebuyer activity. Experts warn that further pressure on landlords could worsen the existing supply and demand imbalance in the rental market, pushing up rents and reducing affordability for tenants. While London-based estate agents fear the impact of higher taxes on landlords, some analysts remain cautious, noting that the real estate market may not recover evenly across all sectors, and tenants could ultimately bear the brunt of the changes.