Landlords will see their capital gains tax bills jump by more than £1,600 when they sell properties next month. 

The rises will kick in as the annual capital gains personal allowance is halved from £6,000 in 2023/24 to £3,000 in 2024/25. 

This move will offset the capital gains rate cut from 28% to 24% announced by Chancellor Jeremy Hunt in the Spring Budget earlier this month for most higher-rate taxpaying landlords who sell, says Hamptons. 

This will see the capital gains bill rise by £454, or 4%, in April for higher-rate taxpaying landlords. For average lower-rate taxpaying BTL owners, this bill will jump by £1,674 

The changes will affect 89% of higher-rate and 100% of lower-rate taxpaying landlords with homes in their own names, the property agent adds. 

A higher-rate taxpaying landlord reporting a capital gain of less than £68,000 “will find themselves worse off than two years ago,” according to Hamptons.  

The average landlord sold their buy-to-let in 2023 for £110,000 more than they bought it, the agent points out. 

Hamptons head of research Aneisha Beveridge says: “Although the Chancellor made it clear he was hoping to encourage landlords to sell up and add new housing supply into the market for first-time buyers, the reality is, that the capital gains tax changes taken as a whole will likely act as a disincentive.  

“Most landlords leaving the market this year will end up paying more tax than two years ago, not less. “ 

Recent changes to capital gains tax will hit landlords making the smallest gains hardest.  

“Typically, these will be newer millennial investors who have seen less price growth, or those selling cheaper homes in less expensive parts of the country.  

“Meanwhile, older investors who’ve been landlords for longer and have accumulated bigger gains are much more likely to benefit from the tax cut.” 

The property agent’s monthly lettings index, also pointed out that rental growth continued to cool in February.

Last month, the average rent on a newly let home in the UK rose 7.1% year-on-year, down from 8.3% in January and a peak of 12% last August.  

It says: “Even so, rental growth is still running faster than inflation and increases mean the average tenant moving into a new property would pay an extra £87 per calendar month or £1,044 a year more in rent than if they moved last year.” 

The report adds: “These affordability pressures combined with more homes on the rental market have slowed rental growth.  

“There were 30% more homes available to rent across Great Britain last month compared to the same time last year when stock levels reached rock bottom.  

“However, this predominantly reflects the fact that homes are taking a little longer to let, rather than a rise in landlord purchases.  

“Compared to February 2019, there are still 41% fewer homes to rent.”