The UK property market is undergoing one of its most significant shifts in a generation. With the first major phase of the Renters’ Rights Act 2025 having officially come into force on 1 May 2026, the private rented sector looks very different.
The abolition of Section 21 ‘no-fault’ evictions, the shift to rolling monthly tenancies, and a 12-month protected period for new tenants have left many landlords asking themselves the question: Is it time to sell?
If you are considering offloading a buy-to-let or a second home in response to these new tenancy rules – or you just think it is time to sell – you aren’t alone. However, before you put up the ‘For Sale’ sign, it is vital to understand the tax implications. Selling a secondary residential property triggers a distinct set of rules and liabilities that can significantly eat into your profits if you don’t plan ahead.
1. Capital Gains Tax (CGT)
When you sell your main home, you usually benefit from Private Residence Relief, meaning you pay zero tax on the sale. But when you sell a second home or a buy-to-let property, any profit you make is subject to Capital Gains Tax (CGT).
Crucially, you do not pay tax on the total sale price – only on the gain (the difference between what you bought it for and what you sold it for).
Current CGT Rates for Residential Property
Your CGT rate depends on your total taxable income for the year. After adding your property profit to all other sources of income, the tax breaks down as follows:
The Frozen Allowance: For the current 2026/27 tax year, the individual annual tax-free CGT allowance is frozen at £3,000. If you own the property jointly with a spouse or civil partner, you can combine your allowances to protect up to £6,000 of the profit from tax.
2. Reducing Your Tax Bill: Allowable Deductions
The headline tax bill can look daunting, but HMRC allows you to offset several ‘allowable expenses’ against your profit to reduce your overall taxable gain.
When calculating your net profit, make sure you deduct:
3. The 60-Day Countdown: Reporting and Paying
This is the rule that catches many sellers off guard. You cannot simply wait until your annual Self-Assessment tax return to declare the sale. For UK residential property disposals, you must report the sale and pay an estimated CGT bill to HMRC within 60 days of the completion date. Failing to submit your UK Property CGT return and make the payment on account within this strict 60-day window results in automatic penalties and backdated interest.
How the New Tenancy Rules Complicate Your Sale
The Renters’ Rights Act doesn’t just change how you manage tenants; it fundamentally changes your exit strategy.
If you choose to sell a property that is currently occupied, you must use the newly introduced Section 8, Ground 1A (sale of property). Under these 2026 rules:
This means timing your sale to align with tax years or market highs requires forward planning. Selling with tenants in residence may reduce your pool of buyers, potentially affecting your final sale price and your subsequent CGT calculation.
We Are Here to Help
Exiting the property market requires balancing complex legal tenancy timelines with strict tax deadlines. Getting it wrong can lead to costly compliance errors or an unnecessarily high tax bill.
When you do decide to go ahead with a sale, our legal team can handle the conveyancing process for you.
If you are a landlord reviewing your portfolio in light of the new regulations, get in touch with our team today.
