Tax cuts on buy to lets could ease property sales backlog

Tax cuts on buy to lets could ease property sales backlog

A property lawyer suggests reducing Stamp Duty on additional properties, mainly buy to lets, could help clear the current backlog of unsold investment homes following recent rental law changes.

Lisa Wilson, partner at Spencer West LLP, highlighted the impact of the Renters Rights Act and the abolition of ‘No Fault’ evictions from May 2026 on the property market. These reforms led to a surge in landlords putting properties up for sale before the deadline, but rising mortgage rates and buyer caution have slowed sales, leaving many homes unsold.

Wilson advocates for Stamp Duty reform in the upcoming 2026 Budget, proposing lower rates for additional properties to attract new investors and restore market liquidity. She emphasises that property investment should be viewed as a long-term commitment, capable of withstanding political and economic shifts.

Market effects of recent rental law changes and tax policy

The introduction of the Renters Rights Act, which removed the ability for landlords to evict tenants without cause, has significantly affected landlord behaviour. In the lead-up to the May 2026 deadline, many landlords expedited evictions under Section 21 to regain possession before the new rules took effect. This caused a spike in properties entering the sales market.

However, this influx coincided with a period of higher mortgage interest rates and general economic uncertainty, which has dampened buyer enthusiasm. Consequently, many buy to let properties remain unsold, particularly flats in southern England. Data from Zoopla indicates that a high percentage of flats have remained on the market for over six months, with London showing an 87% unsold rate after this period.

The glut of properties is attributed partly to landlords exiting the private rented sector, possibly due to the new tenancy regulations, and a declining appetite for leasehold flats. This situation has created a bottleneck in the market, affecting both sellers and prospective buyers.

Implications for landlords and letting agents

For landlords, the current market conditions mean that selling properties may take longer than expected, with some facing extended vacancy periods and associated costs. Letting agents may find it more challenging to secure buyers for investment properties, especially in areas with high unsold rates.

Wilson’s suggestion to reduce Stamp Duty on additional properties aims to incentivise new investors to enter the market, potentially increasing demand and helping to clear the backlog. Such tax relief could make buy to lets more financially attractive, offsetting some of the increased costs landlords face under recent regulatory changes.

Landlords should consider the long-term nature of property investment and prepare for continued regulatory evolution. Strategic planning around portfolio management, including timing of sales and acquisitions, will be crucial in navigating this period.

Uncertainties and what to watch for

The upcoming 2026 Budget will be closely scrutinised for any announcements regarding Stamp Duty reforms or other tax incentives aimed at the buy to let sector. Any changes could significantly influence market dynamics and investor behaviour.

It remains unclear how quickly any proposed tax cuts would translate into increased market activity. The broader economic context, including interest rates and housing demand, will also play a critical role.

Landlords and agents should monitor official government guidance and budget statements to understand the implications for their portfolios and business strategies. The ongoing effects of the Renters Rights Act and other rental reforms will continue to shape the sector.

Practical steps for landlords amid market challenges

• Review portfolio strategies considering potential longer sales periods and increased holding costs.
• Stay informed on legislative and tax developments to anticipate and adapt to changes.
• Consider the benefits of maintaining tenancies under the new law versus selling in a slow market.
• Engage with letting agents experienced in navigating the current regulatory environment.
• Prepare financial plans that account for potential tax changes and market fluctuations.

Supporting landlords with compliance and portfolio management

TLA membership offers landlords and letting agents access to up-to-date compliance resources and practical information essential for managing properties under evolving regulations. Our new property management and compliance platform, ORBIT, currently in BETA testing, is designed to help organise portfolios, manage rental documentation, and keep track of key compliance actions.

ORBIT’s features relevant to this situation include tools for recording tenancy agreements, tracking rent payments, and monitoring regulatory changes, which are vital as landlords adjust to the Renters Rights Act and prepare for possible tax reforms. Members can explore TLA membership and access these resources to support effective property management during this period of change.

Looking ahead, landlords should keep a close eye on the 2026 Budget announcements and continue to adapt their strategies in response to regulatory and market shifts.

Sources: Landlord Today