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Will there be a CGT rise for landlords in the autumn budget?

Journalist: Myra Butterworth, Freelance

ended 05. September 2024

Hi, I'm writing a story for Mortgage Solutions about the mooted rise in capital gains tax in this autmn’s budget.

In particular, how this will affect landlords and whether they will remain in the sector. 

Latest Rightmove move suggests they are already getting the jitters: https://x.com/MyraButterworth/status/1831629387537514540

 I’m looking for some predictions and comments about whether your landlord clients are getting the jitters ahead of the mooted CGT rise and what percentage of landlords do you think may consider leaving the sector if a rise is implemented?

  • Are your landlord clients are getting the jitters ahead of the mooted CGT rise?
  • Would a CGT rise be the last straw for many of your landlord clients who have had to deal with increased regulation and costs in recent years?
  • What percentage of landlords do you think may consider leaving the sector if a rise is implemented?
  • What type of landlords will leave the sector in the years ahead because of any such changes - ie will only those who are equity rich remain?

3 responses from the Newspage community

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Editor
Ben Perks
Managing Director at Orchard Financial Advisers
Many are familiar with the term Mortgage Prisoners; borrowers that are trapped in mortgages and have no option to sell or remortgage. An increase to CGT could see the creation of Landlord Prisoners. Landlords are being hammered from every angle as the Government try and make it as unattractive as possible to own multiple properties. Now they are going to make it unattractive to offload them.
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Editor
Gabriel McKeown
Head of Macroeconomics at Sad Rabbit - Substack Newsletter
As the autumn budget looms, a palpable sense of unease is spreading through the UK's buy-to-let sector, with the prospect of a significant rise in CGT leaving many landlords contemplating a swift exit from the property market. What was once a beacon of opportunity for investors has devolved into a labyrinth of fiscal challenges and bureaucratic hurdles. For many landlords, this potential CGT rise is seen as the culmination of a series of regulatory and financial challenges that have beset the sector in recent years. With the phasing out of mortgage interest tax relief, more stringent energy efficiency requirements, and tighter regulations on tenant evictions, a CGT rise could be the straw that breaks the camel's back. Furthermore, against a backdrop of already dwindling rental supply, the implications of a mass exodus, estimated at nearly a third of landlords, could be devastating for the rental market.
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Clive Read
Owner at Goldmanread
We have seen a marked decline in investors entering the buy to let market over the last few years. There is very little financial justification left to recommend buy to let as an investment. The mooted increase in CGT makes this one more nail in the coffin of the buy to let sector. Some Landlords I have spoken to are trying to exit before the expected tax changes come into effect. Ironically even equity rich investors who would otherwise be happy to sell and return a poperty to the market are actually being disinctevised given the likley tax hit. The reality of this move will be to reduce the supply of buy to let property thereby drving up rental costs. Small landords are likely to be driven out of the sector whilst Limited company purchases and larger corporates, such as Lloyds Bank are likely to dominate over the coming years.