Many landlords may be leaving the “buy to let” property sector, according to the latest Capital Gains Tax (CGT) figures from the government. Wealth Management firm Quilter has interpreted this data as a sign that more landlords are choosing to sell their properties, and thus exit the market, due to a combination of factors.

One of these factors is the rise in mortgage rates. This means it’s becoming more expensive for landlords to borrow money to purchase properties for rent, making the business less profitable.

Another factor is changes or “reforms” in the private rented sector (PRS), which could encompass anything from new regulations to shifts in market demand. This could make it more challenging for landlords to make a profit.

There’s also the deadline for Energy Performance Certificate (EPC) requirements. This is basically a measure of how energy-efficient a building is. New regulations may mean that landlords need to spend money to upgrade their properties to meet these standards, which again adds to the cost of doing business.

Looking at the figures, in the 2022/23 tax year, 139,000 taxpayers reported selling a total of 151,000 residential properties. They had to pay £1.8 billion in taxes on the profit they made from these sales. This amount was significantly more than the tax collected from similar sales two years ago, indicating that more landlords are selling up.

The data also shows that most of the CGT collected comes from a small group of taxpayers who make the biggest profits. In the 2021/22 tax year, 45% of the tax came from those who made profits of £5 million or more – a group that makes up less than 1% of all taxpayers. Also, 45% of the total profit subject to CGT came from the 12% of taxpayers who earned over £150,000.

Most of these big profits were made in London and the South East of England, which together accounted for roughly half of the total gains and tax liabilities.

So, in simple terms, the rising costs and regulatory changes in the rental property sector seem to be encouraging more landlords to sell their properties, which is resulting in a larger amount of tax being collected from the profits of these sales.