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Landlord Exodus Evident as CGT Statistics Surface

Published by Chirag
Published Date: August 7, 2023

Fresh government data regarding Capital Gains Tax (CGT) has spotlighted a notable trend of landlords departing from the buy-to-let sector, as indicated by a prominent wealth management firm.

According to experts, the figures underscore a wave of landlords who are making an exit due to escalating mortgage rates, shifts in the private rented sector (PRS), and the looming urgency to meet Energy Performance Certificate (EPC) requirements.

Market Shift: Landlords Bid Farewell Amid CGT Data Surge

It was stated that the information gleaned from HMRC points to an exodus of landlords from the property market, triggered by the tightening of tax regulations concerning buy-to-let investments, rendering them less appealing. The backdrop of persistently high property values, juxtaposed with the looming spectre of a property price collapse, appears to be nudging more landlords towards divestment.

Capital Gains Tax (CGT)

Experts explain that the data suggests that there is an exodus of landlords from the property market as the tightening of tax laws on buy-to-lets make them a more unattractive investment. Coupled with this, the continuing high property values but the simultaneous threat of a property price crash is seemingly making more landlords opt to sell up.

Additionally, they added stating how this ultimately impacts the market for all prospective buyers and renters is yet to be seen. Currently, property prices are slipping slowly, but rent remains sky-high as renters compete for a dwindling stock of rental properties.

Tax Dynamics: CGT Insights Reflect Landlord Transition

The government’s data showcases that the majority of CGT revenue emanates from a select group of taxpayers who reap substantial gains. In the tax year 2021 to 2022, 45% of CGT contributions originated from those who netted gains of £5 million or more. This group represents less than 1% of the total CGT taxpayer base annually.

Capital Gains Tax (CGT)

Throughout the same tax year, while both income and gain size grew, the number of individual taxpayers decreased. Notably, 45% of CGT gains within this cohort came from the 12% of individuals with taxable incomes surpassing £150,000, the threshold for the additional rate of income tax.

In terms of regional distribution, London and the South East of England accounted for nearly half of the overall gains (49%) and tax liabilities (51%) during the tax year 2021 to 2022.

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