The proportion of former rental properties moving into the sales market has hit a record high, as more landlords appear to be selling off their portfolios. This shift may be linked to the anticipated rise in Capital Gains Tax, which could be announced in the upcoming Autumn Statement on October 30.

According to data from property website Rightmove, 18% of homes currently listed for sale were previously rental properties, a sharp increase from 8% in 2010. London is at the forefront of this trend, with nearly 29% of its for-sale homes having come from the rental market. Scotland and the North East follow, both with 19%.

While this increase reflects an ongoing pattern rather than a sudden surge, it still marks a significant rise. Over the last five years, an average of 14% of homes for sale were former rentals, indicating that the trend has been gradually building over time.

This surge in property listings coincides with a 14% increase in new homes coming to market compared to last year, driven by a surge in seller activity following a recent cut in the Bank of England’s base rate. However, the market still hasn’t reached pre-pandemic levels, with new listings up just 3% compared to 2019.

Rightmove’s property expert, Tim Bannister, emphasized the importance of maintaining a healthy rental sector. “Landlords are facing rising costs, taxes, and more regulations, making it less attractive to stay in the sector. Without support for landlords, tenants may bear the brunt, with rent increases as supply shrinks.”

Despite the fears of a landlord exodus, Bannister notes that the trend may not necessarily result in a major reduction in rental properties. “Many homes being sold may be snapped up by other landlords or first-time buyers, so the long-term impact on the rental market remains to be seen.”

Marc von Grundherr, Director of Benham and Reeves in London, also weighed in, expressing concerns over the potential equalizing of Capital Gains Tax. “If CGT increases, it would be a significant blow to landlords already grappling with regulatory changes. But despite these challenges, buy-to-let remains a solid long-term investment with consistent returns.”

As the housing market braces for potential changes from the Autumn Statement, both landlords and tenants will be watching closely to see if the government takes steps to incentivize investment in the rental sector and prevent further reductions in supply.