Steep rise in rents observed on Rightmove as landlords prepare for the Autumn Budget.

No Change in Capital Gains Tax for Buy-to-Let Sector in 2024 Autumn Budget

The 2024 Autumn Budget has left capital gains tax (CGT) rates on property sales, including those relevant to the buy-to-let sector, unchanged. The current rates stand at 18% for basic rate taxpayers and 24% for higher/additional rate taxpayers selling property [1][3]. However, speculation persists that future budgets could reduce CGT allowances or increase rates, which could impact buy-to-let landlords [1].

If CGT rates are increased in future budgets, several potential impacts on the buy-to-let sector could arise:

Increased tax burden on landlords: A higher CGT rate would reduce net returns on disposals, potentially discouraging property sales or trading in the sector [1][5].
Reduced investment incentive: Higher CGT liabilities could affect the buy-to-let market's liquidity and prices by reducing the incentive for investment in residential rental property [1][5].
Tax planning strategies: Landlords may delay sales to avoid higher CGT rates or seek tax planning strategies to mitigate increased costs [5].
Impact on rental supply: Landlords holding properties longer or exiting the sector due to overall profitability falling could have knock-on effects on rental supply [5].

It's worth noting that business asset disposal relief and investor relief applicable to business disposals have had some CGT rate increases and reduced limits, but these do not directly affect typical buy-to-let property disposals [2][5].

The current market landscape presents several other challenges for buy-to-let landlords:

A record proportion of former rental homes are currently on the market for sale, at 18%, compared with 8% in 2010 [6].
The Renters' Rights Bill, which makes it harder to evict tenants, is causing concern for landlords [7].
The average number of tenant enquiries for each rental property available has fallen to 15, down from 23 at this time last year [8].
The Renters' Rights Bill and new energy efficiency regulations are also causing concern for landlords [7].
The additional stamp duty charges on buy-to-let purchases are a pressure for landlords [9].
Lower mortgage rates have made it easier for buyers to get on the property ladder, which may be reducing demand for rental properties [10].
The UK government is pursuing reform within the sector to ensure higher standards, but there needs to be a balanced approach to protect both landlords and tenants equally [11].

Tim Bannister, director of property science at Rightmove, has stated that affordability remains a key challenge for renters as prices continue to hit new records [12]. Estate agency trade body Propertymark warns that over-regulation and additional pressures may damage future investment [13].

The average rent in London is £2,694 per month, representing a 2.5% annual rise, while the average rent for new properties outside of London is £1,344 per calendar month, a 5.2% increase from a year ago [14]. The market is still far from balanced, with tenant competition having eased slightly from last year but still present [15].

Some landlords are choosing to exit the market due to potential tax changes and stricter energy performance certificate regulations [16]. The supply and demand imbalance is keeping rents high, even if growth is slowing [17].

Nathan Emerson, chief executive of Propertymark, has stated that the Renters' Rights Bill may not benefit all tenants and full impact assessments should be conducted [18]. The number of available rental properties is now 13% higher than last year, though still 27% below 2019 levels [19]. Some buy-to-let landlords are still having to cut rent to attract tenants, according to research [20].

In conclusion, while the 2024 Autumn Budget left CGT property rates unchanged, any future hikes would raise costs for buy-to-let landlords on property disposals, potentially dampening investment appetite and liquidity. The precise impact depends on the scale of CGT rate increases or allowance reductions and any accompanying tax relief or policy changes aimed at landlords or asset sales more broadly [1][3][5].

Steep rise in rents observed on Rightmove as landlords prepare for the Autumn Budget.