Property lawyer Jason Richardson believes that the increase in residential landlords selling their homes even though rental income is increasing is due in part to the threat of losing Capital Gains Tax (CGT) allowance on their 'principal private residence'.
"Essentially we're three years on from the beginning of the recession and the point at which many homeowners may have moved out of their house and rented it. When three years has passed, the property can no longer be deemed the owners 'principal property' and therefore they are liable for CGT on selling the property," explains Jason Richardson.
"Many homeowners who perhaps moved in with a partner and decided to rent three years ago rather than sell as the property market was declining must now decide if they want to be a landlord for the long haul or cut their losses and avoid paying CGT.
"Some will also be coming to the end of a fixed mortgage and must seek a new mortgage deal during a time when the banks, although improving slowly, are still not lending to homeowners the way they were three years ago.
"I think that the increase in residential landlords putting properties on the market is probably due in no small part to the CGT three year rule and the wish to avoid such a tax.
"My overwhelming advice to landlords wishing to sell quickly would be to make sure that the property is renovated once tenants have left so that it sells quickly and CGT is avoided."
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