New research reveals that 77% of buy-to-let (BTL) landlords are holding back on property purchases due to concerns over potential tax increases. With today’s Budget announcement pending, over 90% of surveyed landlords expressed worry about a possible rise in capital gains tax and the impact it could have on their investments.
Tax fears hold back property investment
A recent survey by Butterfield Mortgages found that tax concerns have created a wait-and-see attitude among BTL investors. Over 70% of landlords surveyed said they have postponed new property purchases until after the Budget, with only 11% going ahead with purchases in the lead-up to the announcement. The uncertainty is particularly affecting landlords with multiple properties, while single-property landlords expressed less concern about potential tax changes.
Alpa Bhakta, CEO of Butterfield Mortgages, noted, “It is clear that landlords are keenly waiting to see what the chancellor announces. There has been a significant amount of tax and regulatory change in the BTL market over the past decade, and there’s plenty of speculation that more is coming—landlords are understandably wary of the implications.”
BTL remains popular, but caution prevails
Despite the potential tax rises, BTL remains a preferred investment choice for the majority of landlords. According to the survey, 58% still view BTL as their investment of choice, while only 20% disagreed. Among larger portfolio owners, nearly half of those with five or more properties expressed intentions to expand their portfolios, demonstrating continued confidence in the sector.
Government data from 2021 shows that 43% of landlords own a single property, while 39% hold two to four properties. The largest group of landlords—those with five or more properties—represents 18% of the market and rents out 48% of all tenancies in the UK. Surprisingly, only 5% of landlords hold their properties in a company structure, with the vast majority (94%) owning properties individually.
The need for clarity and expert guidance
In light of ongoing tax and regulatory changes, landlords are placing increasing value on professional guidance to navigate potential policy shifts. Bhakta emphasised, “The Budget will provide much-needed clarity, but our research underlines that lenders, brokers, and third-party experts have a vital role to play in the weeks and months to come. Great financial products are not enough—the support, access to relevant experts, and customer services must be exceptional, too.”
With half of BTL landlords planning to keep their portfolios the same over the next year and only 10% intending to sell, many are waiting to see how today’s Budget will impact the sector. For landlords and property investors, the outcome could determine whether now is the time to expand, hold steady, or exit the market. The anticipated clarity from the Budget could shape the trajectory of property investment in the coming months, as landlords weigh their options in an uncertain economic landscape.
