London landlords sell up properties at record rates ahead of anticipated tax hikes

LONDON — London landlords are selling up their buy-to-let properties at record rates as anticipated tax hikes from the U.K. Labour government add further pressure to the once lucrative investment sector.

Almost one-third (29%) of homes currently for sale in the capital were previously rented out, data published on Thursday by property portal Rightmove showed.

The spike mirrors a wider uptick in rental property sales across the U.K., where 18% of all nationwide listings were previously tenanted, according to Rightmove.

Rightmove said it was not yet clear that the figures pointed to a "mass exodus" by landlords, but rather to a gradual decline in the appeal of the buy-to-let sector. The previous five-year average of former rental listings for sale was 14%, while the proportion of ex-rental properties on the market in 2010 was 8%, Rightmove said.

It highlighted that it expected tax hikes in Finance Minister Rachel Reeve's forthcoming Oct. 30 Autumn Statement — including a possible increase in Capital Gains Tax (CGT) — to become a "potential driver" of the increased sales.

Prime Minister Keir Starmer has already warned that the October budget would be "painful" after the government said it discovered a £22 billion ($29 billion) hole in the public finances, when it took office in July.

Reeves has refused to be pressed on the contents of her spending plan, telling CNBC in July that such matters are "rightly for the budget."

Speculation has mounted around tax hikes, including an equalizing of CGT, which would bring it in line with the tiered rates at which income tax is levied. Currently, buy-to-let landlords have to pay a flat rate — 18% for basic-rate taxpayers and 28% for higher-rate taxpayers — on the sale of their property.

Marc