The latest Royal Institute of Chartered Surveyors’ (RICS) Residential Lettings Survey revealed that only 4.6% of landlords want to sell their properties when their tenants’ leases expire.

This percentage is for the three months to the end of January and compares with 6.5% of landlords that wanted to sell in the previous three month period.

RICS suspected at the time that the sharp drop in the percentage of landlords looking to sell property was related to the changes in the capital gains tax regime that were planned for the start of the new financial year. The new arrangements have now been implemented with a single rate of capital gains tax of 18% replacing the previous structure which resulted in property sales by landlords incurring tax rates of somewhere between 24-40%.

In addition, RICS carried out a survey of its members to assess whether landlords are seeking to take advantage of the more favourable tax treatment. The results showed that at present they are not looking to do so, with just 2% of landlords currently planning to sell properties at the expiry of tenant leases. However, with property prices now slipping back and potential purchasers struggling to find mortgages, the incentive to cash in on the lower tax rate has diminished at least for the time being.

The fact that rents are also rising sharply is a further reason why landlords may be inclined to hold fire at the moment.
RICS acknowledged that the low estimate of landlord sales is an initial response to the tax changes and may have been conditioned by the raft of poor news flow on the housing market over the past month. However, it does suggest that fears of a wave of selling by buy-to-let landlords are misplaced and that the housing market will not, in the near term, have to cope with a sharp increase in the supply of new properties from this source.