52% of Landlords in New Poll Plan Property Sales After Tax Changes

More than half of landlords responding to a new post-Budget poll plan to sell rental property within the next 12 months, with selective disposals considerably more common than plans to leave the market altogether.

The Pegasus Insight survey of 168 National Residential Landlords Association members found that 38% intended to sell some properties and 14% their entire portfolios. Together, they account for the 52% planning sales in response to the announced rental-income tax changes.

The findings, reported on 10 November, bring the discussion beyond the headline tax rates. For landlords considering a disposal, the next question is how much cash a sale would release and what it would do to the income, debt and costs of the properties left behind.

Selective sales are the bigger story

The distinction between selling one or two properties and exiting entirely matters. A landlord reducing a seven-property portfolio to five may still intend to remain invested for years, while changing which assets carry the debt and where future expenditure is concentrated.

That could mean selling a property with a large maintenance bill, releasing equity from an asset with a weak income return, or using the proceeds to reduce borrowing elsewhere. Each choice produces a different portfolio after completion.

The poll also found that 26% expected no changes and 20% considered it too early to decide. Only 2% planned further purchases. The responses therefore describe a cautious group weighing different options, rather than a uniform rush to sell.

Nor does 52% of respondents planning sales mean 52% of rental homes will come onto the market. The research does not establish the number or value of properties that will ultimately be sold.

The tax timetable brings the review forward

HMRC’s policy note sets out planned property-income rates of 24%, 44% and 49% for the corresponding basic, higher and additional bands from the 2027–28 tax year. For individuals, the stated scope covers England, Wales and Northern Ireland, with devolved powers also relevant.

The poll asked about the combined effect of changes announced in the last two Budgets. The new information is how respondents expect to react, rather than a further tax announcement.

Ownership makes a difference. The personal property-income rates should not be applied to company-held rental profits as though the treatment were identical. Companies fall within Corporation Tax, and taking money out of a company raises separate questions for the owner.

For a landlord with properties held both personally and through companies, a single percentage applied across the portfolio would give a misleading picture. The accountant’s tax assessment and the mortgage review need to start from the actual ownership of each asset.

A sale price is not the cash available to reinvest

A property can show substantial equity on paper while releasing less spendable cash than its owner expects. The mortgage must be redeemed, selling costs paid and any applicable early repayment charge included. Tax can reduce the amount available further.

Consider a hypothetical property sold for £350,000 with a £220,000 mortgage. The apparent £130,000 equity falls to £120,000 after an assumed £5,000 early repayment charge and £5,000 of selling and legal costs, before any tax.

HMRC’s guidance on property disposals explains that a buy-to-let sale can give rise to Capital Gains Tax. The taxable gain is a separate calculation from the cash left after repaying the mortgage.

That distinction matters if sale proceeds are intended to repay another loan, fund improvements or provide a deposit for a replacement investment. Those plans should use the expected cash after costs and tax, rather than the property’s headline equity.

The remaining mortgages deserve as much attention as the sale

Selling a heavily mortgaged property may remove a substantial interest bill. Selling a lightly mortgaged property might release more cash but also remove a stronger source of monthly income. Neither outcome can be judged from the sale price alone.

The useful comparison is the expected position before and after the disposal: rental income, mortgage payments, running costs, tax and cash reserves. A smaller portfolio could generate less rent but leave the owner with a more manageable borrowing commitment.

The mortgage structure also affects the sequence. Where a facility is secured across several properties, the amount a lender requires to release one asset must be established before the owner relies on the remaining proceeds.

For individually mortgaged properties, product-end dates and early repayment charges still matter. Committing to a new fixed rate on an asset intended for sale soon afterwards could create an avoidable exit cost, depending on the product’s terms.

Refinancing may improve the position of retained properties, but a lower headline rate is only part of the comparison. Fees, the loan balance, repayment structure and intended holding period determine whether changing the borrowing produces a useful saving.

Properties being sold may attract a different type of buyer

If the stated sales intentions turn into transactions, some homes may be bought by other landlords. An investor with lower borrowing, available cash or a different ownership structure may assess the same property differently from the seller.

That creates a possible acquisition opportunity, although the poll’s low purchase intention shows little immediate expansion appetite among its own respondents. It provides no evidence of a ready pool of buyers or of discounts already being agreed.

For a prospective purchaser, the investment still needs to work at the agreed price. Existing rent, tenancy terms, property condition, necessary works and mortgage availability all influence the amount of capital required and the likely return.

A seller’s decision to exit is a reason to investigate the figures carefully. It does not by itself make the property a bargain, particularly where the buyer would inherit the same expenditure pressures.

Rent increases and reduced spending have practical limits

The wider poll findings show that 73% expected to increase rents when next permitted, while 29% anticipated reducing maintenance or improvement spending. A majority, 55%, expected spending to remain unchanged.

For portfolio planning, an intended rent increase is not yet additional income. The achievable rent and the applicable tenancy rules determine what can actually be collected. A refinancing appraisal should avoid relying on an untested increase to close a funding gap.

Spending also needs to be separated into essential work and improvements that can reasonably wait. Deferring expenditure may preserve cash temporarily while leaving the underlying cost unresolved, or making the property harder to let, sell or refinance.

April’s changes make this a portfolio decision

The strongest message from the research is the range of decisions landlords are considering. Some intend to sell everything; a larger group wants to reduce its holdings; others plan to stay with the assets they already own.

A useful review starts with a property-by-property schedule of rents, costs, mortgage balances, rates and renewal dates, then tests the intended changes across the whole portfolio. Sale proceeds, lost income and any replacement borrowing need to be considered together.

Willow can compare the borrowing arrangements for properties being retained, establish the financing consequences of disposals and assess suitable mortgages for acquisitions, alongside the accountant’s tax assessment. That brings the proposed transactions back to a practical question: what will the landlord own, owe and receive once the changes are complete?