Two in three landlords say they will sell properties as buy-to-let is hammered by tax and regulations

Two in three landlords are planning to sell one or all of their properties soon, as the buy-to-let sector continues to be heaped with rules and regulations. 

Some 65 per cent of buy-to-let investors are planning to sell at least one of their properties in the next three years, according to a survey by landlord consultancy Property118.

Investors have faced years of heightened mortgage rates, higher taxes and legislation changes.

Most recently the Renters' Rights Act, introduced in May, has made it harder for landlords to evict tenants from their properties and raise rents.

But falling house prices in some areas mean that even those that decide to escape the market up could face a loss on their investment, according to tax data.

Buy-to-let investors lost £1.15billion in the 2024-25 tax year on residential property sales, according to the latest capital gains tax data from HMRC.

It is an increase of a third from the £870million losses seen in 2023-24, says Bowmore Wealth Group, which analysed the data.

Harry Goodliffe, of broker HTG Mortgages, says: ‘Successive Governments have turned buy-to-let into a part-time compliance job with a full-time tax bill. 

'Expect a slow trickle of rental homes rather than a flood, arriving in waves as tenancies end.’

House prices are still suffering as high mortgage rates bite and buyers sit on the sidelines amid national and geopolitical uncertainty.

It means landlords who bought when prices were high, for example during the pandemic, but decide to sell up now could face a small or non-existent capital growth on their homes.

In September, price growth was stagnant, according to the Lloyds House Price Index.

The £298,441 average remains unchanged when compared to a year earlier.

Property values in the capital  fell by 2.2 per cent to £531,548. 

It was a similar story in the South East as prices plunged by 2.1 per cent to £380,829.

David Floyd, of Bowmore, says: ‘Buy to let investors are looking at the growth in global stock markets and the high yields on UK Government bonds and asking themselves if they should still be in an investment that has a relatively low net yields.

‘The Renters' Rights Act may have also prompted property investors to sell up - even if it means taking a loss. It has added an extra level of jeopardy and risk into being a landlord.’

‘A lot of BTL investors found that the administrative burden of being a landlord was surprisingly high.’

The smattering of homes expected to arrive on the market could be welcome news for portfolio landlords however, as it could give them an opportunity to pick up bargain properties. 

 Mark Alexander, founder of Property 118, explains that selling doesn’t have to be a negative decision and, in some cases, could work in a landlord’s favour.

He says: ‘Selling one poorly performing property may strengthen the remaining portfolio. It should form part of a plan that accounts for costs, tax and what happens next.’