Buy-to-let investors crystallised £1.15 billion of losses on residential property sales in the latest tax year, up 32 percent from £870 million a year earlier, after stagnating prices and higher borrowing costs pushed more landlords to sell for less than they paid, analysis of HMRC figures by Bowmore Wealth Group shows.
The data records losses declared through capital gains tax returns on disposals of residential property investments. Bowmore said the true scale of the red ink is likely to be far higher, because the headline figure only captures losses locked in on completed sales rather than paper losses on homes landlords still hold.
Sellers of city-centre flats look hardest hit, with values in parts of London still falling while mortgage costs sit well above the lows that once made thin rental yields easy to live with. For owners weighing up whether to hold or quit, the tax-return evidence now puts a national price tag on getting that call wrong.
London price falls deepen the pain
Lender house-price data cited by Bowmore shows national prices flat across the last 12 months, while London values fell 2.2 percent over the same period. David Floyd, head of private clients at Bowmore Financial Planning, said falling prices in real terms had arrived just as landlords faced rising mortgage costs and the impact of the Renters Rights Act. Price falls have since spread further, with falls reported across 35 percent of postcode areas in the latest Zoopla figures.
Floyd said many buy-to-let investors were now comparing their returns with global stock markets and high yields on UK government bonds and asking whether they should stay in an asset with relatively low net yields. “A lot of buy-to-let investors found that the administrative burden of being a landlord, as opposed to being a stock market investor, was surprisingly high,” he said.
Renters Rights Act adds to selling pressure
The Renters Rights Act makes it harder to remove tenants who fall into arrears and harder for landlords to raise rents, Floyd said, adding that the legislation may have prompted investors to sell even where that meant taking a loss. “That administrative burden and the costs of maintaining the stock left buy-to-let investors with net yields that were fairly low and were flattered by house price inflation,” he said. “However, house prices have now stalled and the prices of many flats have fallen sharply.”
The disclosure lands weeks after capital gains tax rates were left unchanged at the last fiscal event, sparing higher-rate landlords a feared £15,000-plus hike on a typical gain. That freeze fixes the rate on gains, but it does nothing for owners selling at a loss, who can only carry those losses against future gains.
This follows Landlord Knowledge’s report on e.surv figures showing 39.5 percent of London flats resold at a loss, the highest share in the country. The Bowmore analysis suggests that pattern is now showing up in tax returns at national scale, with more than £1 billion of losses crystallised in a single year. The figures build on HMRC’s published Capital Gains Tax statistics.
What this means for landlords
- If you are thinking of selling a flat at a loss: check how the loss can be set against other gains this year or carried forward, and take advice before exchange since the timing of completion fixes the tax year.
- If you are holding city-centre stock: get an honest current valuation rather than relying on peak-price memory, and test whether the yield still works after finance and maintenance costs.
- Review your finance: with borrowing costs far above recent lows, a remortgage review may cut the monthly drag that turns a flat yield negative.
- Watch for: further regional price splits, with southern flats under most pressure while some northern markets hold up better.
- Bottom line: more than £1 billion of losses in one year shows selling is no longer a guaranteed profitable exit, so run the numbers before listing.
Editor’s view
The £1.15 billion figure punctures the old assumption that landlords can always sell their way out of trouble. With price growth stalled and the Renters Rights Act raising the cost of problem tenancies, weak stock should be repriced or restructured now, not nursed on hope.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 28 October 2026
Sources: Bowmore Wealth Group, HMRC
Related reading: e.surv: 39.5% of London flats resold at a loss
