Recent data reveals that the share of former rental properties listed for sale is at an all-time high, potentially fueled by landlords’ anxieties over an impending increase in capital gains tax in the upcoming budget, according to a report from Rightmove.

Currently, 18 percent of properties available on the market were previously rental units, a marked rise from 8 percent recorded in 2010. Analysts suggest that fears surrounding the budget announcement on October 30, which may address capital gains tax—a levy on profits realized from asset sales—are contributing to this notable increase.

Particularly in London, 29 percent of homes for sale were once rental properties, while Scotland and the northeast follow with 19 percent of listings originating from the rental market.

The trend of former rental properties entering the sales market has gradually escalated over the months. Rightmove’s data shows that the average for properties making this transition over the last five years has been at 14 percent. Tim Bannister, Rightmove’s property specialist, emphasized that while the increase is significant, it does not suggest a widespread departure of landlords from the market.

Moreover, the influx of new properties onto the sales market has surged by 14 percent in comparison to last year, which was affected by high inflation rates and historically elevated mortgage costs. When juxtaposed with figures from 2019, the market has seen a 3 percent rise in available homes this year.

Bannister commented, “In recent years, many landlords have found it more beneficial to exit the rental market rather than continue investing, primarily due to escalating expenses and regulatory changes. This ongoing imbalance between supply and demand has potential implications for rising rental prices, raising concerns that, without incentives for landlords to remain active in the rental sector, tenants may end up bearing the consequences.”

Prime Minister Sir Keir Starmer has cautioned that the forthcoming budget may present “painful” adjustments, advising that those most capable of shouldering burdens ought to contribute more. Chancellor Rachel Reeves has not dismissed the possibility of increasing capital gains tax.

Currently, capital gains tax is imposed at rates ranging from 10 to 28 percent, applicable to assets like second homes and various business properties. An increase could significantly heighten the tax obligations for landlords, according to Marc von Grundherr, director at estate agency Benham & Reeves.

“Such a hike would represent another challenge for landlords who play a crucial role in providing essential housing within the rental sector, especially following a series of legislative changes that have impacted their profitability over recent years. Nevertheless, the anticipated exodus of landlords is not materializing as frequently reported; the buy-to-let market continues to be viewed as a viable long-term investment, with returns generally remaining robust despite market fluctuations,” he added.