Landlords Rush to Sell Amid Possible CGT Hike In 2024 Budget

Property tax experts are predicting an increase in Capital Gains Tax (CGT) rates in the upcoming Autumn budget. The new government’s first budget is all set to be delivered on 30 October 2024. Due to the possibility of CGT rate hikes, landlords are opting to sell their properties before the budget is delivered and comes into effect. The anticipation of the possible changes in the upcoming budget is why many property investors are rushing to make various investment decisions.

What is Driving Landlords to Sell Their Properties?

The timing of the budget is just in time for Halloween, making it seem like a treat, but Chancellor Rachel Reeves has warned about the budget and its decisions being painful. The government must raise funding either through tax rate increases or reductions in exemptions and reliefs. Due to the government’s previous commitments not to raise National Insurance, Income Tax, and VAT, many believe a CGT rate hike will be most likely.

Currently, the CGT rate for the sale of residential property is at 18% for basic rate taxpayers and 24% for higher rate taxpayers. It is anticipated that CGT rates will increase to align with the Income Tax rates, making the maximum CGT rate up to 45%. Due to these possibilities, landlords are selling their former rental homes.

In addition, the Bank of England (BOE) has reduced the base interest rate by 0.25%, taking it to 5%, which could be another driving factor for the increase in rental properties going up for sale.

What is the Current Market Situation?

According to recent research, 18% of properties were previously available for rent, in comparison to 14% in the previous year and 8% in 2010. Now, properties previously available for rent are up for sale. This has been more popular in London, with 29% of homes up for sale which were previously available in the rental property market. Scotland has followed up with this trend, with 19% of former rental homes going up for sale.

What Do Experts Say?

Property tax experts believe that this trend of rental properties going up for sale has been on a gradual growth for many months. Experts are expressing that even though many landlords are choosing to sell their rental properties, this trend does not appear to be a mass decision. However, this trend and the upcoming budget decisions could have a long-term impact on the UK property and rental market.

Conclusion

One of the major predictions of the upcoming October budget is the increase in CGT rates. Due to a possible increase in CGT rate of up to 45%, landlords are rushing to sell their rental properties, which has created a surge in the property market. Although this could be a positive thing for first-time buyers due to the options available, rushing to sell properties may not be a wise decision. So, please seek expert advice before making an investment decision that you may regret.