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Landlords and second-home owners rush to sell up over tax and energy changes
Landlords and second-home owners are increasingly looking to sell up amid uncertainty around potential tax and energy-efficiency changes.
New data shows there's been a spike in listings of chain-free homes and properties in holiday home hotspots.
Read on to find out the reasons behind the sell-off, and for advice on what's happening to buy-to-let mortgage rates.
The holiday home sell-off
New research by Zoopla shows the number of properties coming on to the market has increased by 12% year-on-year.
The portal says this has been led by a big rise in listings in coastal areas – where holiday homes are commonly found.
In Truro, Torquay, Exeter, Bournemouth, Lincoln and Norwich, there has been an increase of more than 40% in the number of properties being listed for sale.
Zoopla's data shows a third of homes coming on to the market are listed as 'chain-free', while 13% have previously been let by their owners.
'Huge tax bills'
The sell-off comes as rumours swirl around potential tax and regulatory changes in the upcoming Autumn Budget, which will take place on 30 October.
A change to capital gains tax (CGT) has been rumoured, which could see it rising to match income tax levels.
The current highest rate of CGT is 28%, compared to 45% for the top rate of income tax.
Sarah Coles of Hargreaves Lansdown says: 'Owners are falling over themselves in a rush to shift holiday homes and buy-to-let properties.
'They’re panicking that changes that might come through in the Budget could saddle them with a huge tax bill on their gains.'
- Find out more: Autumn Budget rumours
Landlords fear regulatory changes
The landlord sell-off has been underway for a number of years, and there are signs that it's picking up pace once again.
A joint study by the rental platforms Goodlord and Vouch shows that 30% of landlords have either sold a rented property or listed one for sale in the last year.
One in five landlords said they are considering reducing their portfolio, with more than half blaming proposed changes to regulations around rented properties.
Many expressed concern about the upcoming Renters' Rights Bill, which the government says will abolish 'no fault' evictions and allow tenants to challenge rent rises.
Landlords also cited possible changes to energy efficiency rules, which would require them to upgrade rented properties to an Energy Performance Certificate (EPC) rating of C.
- Find out more: how to get an EPC you can trust
Council tax bills could rise
Owners of holiday homes could also face higher taxes from next year.
In England, councils will be allowed to double the council tax charged on second homes from April 2025.
The change comes under the Levelling Up and Regeneration Act 2023, which allows councils to decide whether to increase council tax bills on furnished homes which are not used as a sole or main residence.
In Scotland and Wales, councils are already allowed to charge higher rates of council tax on second homes.
- Find out more: how council tax bands are calculated
What's happening to buy-to-let mortgage rates?
Buy-to-let mortgage rates are currently at their lowest levels since September 2022, but remain considerably higher than the long-term average.
The average buy-to-let fixed rate is currently 5.45%, compared to 4.38% two years ago, and 3.16% five years ago.
This means that, although rates are improving, most landlords who are due to remortgage will likely be faced with higher repayments.
If you're shopping around for a new mortgage, consider taking advice from a mortgage broker, who can trawl through the deals currently on the market to find you a suitable one.
- Find out more: what's happening to buy-to-let mortgages?
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