Between 2015 and 2024, UK house prices rose 46.2%. General inflation over the same period was 34%. Real house price growth was 9.1%. Four-fifths of the CGT a landlord currently pays on a sale from that period is a tax on inflation, not on a genuine gain in purchasing power.
What Has Happened?
The National Residential Landlords Association published its formal pre-Budget submission on capital gains tax this week, timed for the Treasury's policy preparation window ahead of the 28 October 2026 Budget. The submission makes one central argument: the way CGT on residential property is calculated forces landlords to pay tax on inflationary gains, not on real increases in wealth.
The NRLA's evidence is specific. Between 2015 and 2024, average UK house prices rose by 46.2%. Over the same period, general consumer price inflation increased by 34%. That means real house price growth, in terms of purchasing power, was just 9.1% over nine years. Under the current CGT framework, a landlord who bought in 2015 and sold in 2024 was taxed on the full 46.2% nominal gain. The portion attributable to inflation, roughly 37 percentage points out of 46, was not stripped out before CGT was calculated. The NRLA calculates that around four-fifths of CGT paid by residential landlords over that period represented inflation, not genuine economic gain.
The proposal the NRLA is asking Treasury to adopt is inflation indexation of the cost base. In practical terms, this means adjusting the original purchase price, stamp duty, acquisition costs, and any capital improvements by the Consumer Price Index before working out the taxable gain. A landlord who bought a property in Manchester for £150,000 in 2015, spent £10,000 on improvements, and sold in 2026 for £220,000 would not be taxed on the £60,000 difference. They would first apply a CPI adjustment to the £160,000 cost base, and only pay CGT on what remained after that inflation allowance.
The current CGT rates on residential property are 18% for basic-rate taxpayers and 24% for higher and additional-rate taxpayers. The annual exempt amount stands at £3,000. The concern among landlord bodies and tax advisers is that the October Budget may contain a rate increase, with some speculation that the Treasury is modelling aligning residential CGT rates with income tax bands, which would mean 40% for higher-rate taxpayers and 45% for additional-rate taxpayers.
No Budget changes are confirmed until the Chancellor stands up on 28 October. What is confirmed is that the NRLA's submission is formally in front of Treasury, that the Budget is six weeks away, and that landlords with substantial unrealised gains on properties held since before 2020 are facing a decision they cannot defer indefinitely.
Why This Matters to UK Property Investors
CGT is not a theoretical concern for the majority of active landlords. It is the single largest tax liability they will ever crystallise from the portfolio, and the structure of how it is calculated determines whether an exit strategy is financially viable or not.
Run the numbers on a straightforward Northern example. A landlord in Leeds who bought a two-bed terrace in LS11 for £85,000 in 2012, spent £15,000 on improvements, and is now sitting on a property worth £190,000 has a nominal gain of £90,000. At 24%, the CGT bill is £20,880 after the £3,000 annual exemption. Under the NRLA's inflation indexation proposal, the £100,000 cost base would be adjusted upward by CPI since 2012. CPI over that period was roughly 32%, pushing the adjusted cost base to approximately £132,000. Taxable gain falls to £58,000, CGT to £13,200. That is a £7,680 difference on a single mid-range Northern property. Across five or six properties, it runs into six figures.
The more immediate concern for many landlords is what happens to those rates on Budget day. A move from 24% to 40% on a £90,000 gain changes the liability from roughly £21,000 to £34,800. Across a portfolio, that compounds sharply. Landlords who were already considering a managed exit over the next two to three years are now being forced to ask whether it makes sense to bring those sales forward, completing before 28 October.
The sell-or-hold calculation for most landlords right now is not straightforward. Rental yields in many Northern and Midlands markets are running at 7% to 9% on current valuations. Selling a property yielding £600 per month to avoid a CGT rate increase means giving up income alongside the gain. That is not always the wrong trade, but it depends entirely on the size of the unrealised gain, the expected holding period, and what the landlord would do with the proceeds.
The Risks Investors Need to Understand
There is no certainty that CGT rates will change on 28 October. The Treasury is modelling various options. That is not the same as announcing a rate rise. Landlords who sell properties in the next six weeks to beat a Budget that then leaves CGT unchanged will have crystallised a tax liability they did not need to, sold assets that were generating income, and created conveyancing completion pressure that may be impossible to achieve in time anyway. Average conveyancing timescales in England are currently running at 16 to 20 weeks from offer to completion. A decision made this week to sell does not guarantee completion before 28 October under those conditions.
The NRLA's inflation indexation proposal has almost no chance of making it into the October Budget. It is a credible policy argument that will likely take several years to gain traction, if it ever does. Treasury calculates that any form of indexation reduces its tax take, which is the opposite of what a Chancellor presenting a tight fiscal statement typically wants to do. I would treat the NRLA submission as important advocacy work for the medium term rather than anything that changes the calculus for October.
There is also a broader risk in the sell-before-Budget approach that is not often discussed. The properties most landlords are considering selling are often the ones that are performing best. A property generating a 9% gross yield in Bradford BD3 is generating that yield because it has appreciated in value and rents have risen. If a landlord sells it specifically to avoid a CGT rate change, they are selling a performer. The question is whether the after-tax proceeds can be redeployed at a similar yield in a similarly improving market. In September 2026, with rental supply down and yields holding firm in the North, the opportunity cost of exiting is real.
One risk I would not dismiss: the possibility that Budget day brings a CGT change that is retrospective to some announcement date before 28 October. This is uncommon but not unprecedented. If the Chancellor signals a rate change in a pre-Budget statement, the effective date of that change could be the announcement rather than the Budget day itself. That makes the six-week window shorter than it appears on the calendar.
Where the Opportunity Could Be
For landlords who have genuinely been planning a managed exit over the next 12 to 24 months, the pre-Budget window is worth serious attention. If you are sitting on a property you intended to sell anyway, a four-to-eight percentage point CGT rate increase is meaningful enough to accelerate the timeline. Getting a property to market this week, accepting a realistic offer by early October, and pressing hard for an expedited exchange and completion is achievable on the right property in the right location.
The properties with the fastest conveyancing timelines in the current market are: vacant possession freehold houses (no management company, no leasehold complexity), properties with no onward chain, and properties that buyers do not need a mortgage for. Cash buyers currently represent a significant proportion of BTL transactions. A landlord-to-landlord sale, particularly in a Northern market where the buyer is also a professional investor, has the highest probability of completing in a compressed timeline. Birmingham, Sheffield, Leeds and Manchester all have active professional BTL buyer pools who move quickly when the numbers work.
For investors who are holding and not planning to sell, the NRLA submission is still relevant because it shapes the five-to-ten-year policy direction. If inflation indexation does eventually become law, it changes the after-tax return on long-hold BTL significantly. A landlord buying in Leeds LS9 today at £140,000 and holding for twelve years in an environment where CPI runs at 3% per year would see roughly a 43% CPI adjustment on their cost base by the time they sold. That substantially reduces the effective CGT rate on any nominal gain. The NRLA is arguing for a tax structure that makes the long-hold case demonstrably stronger. If that argument wins over any future parliament, holding longer becomes materially more attractive than trading in and out of properties.
One tactical opportunity in the CGT discussion: landlords who are thinking about transferring properties into a limited company structure. A transfer between a sole trader landlord and their own company is a disposal for CGT purposes. If CGT rates rise in October, the cost of incorporation increases. For landlords who were already considering the company structure move, and who have the right professional advice, completing that transfer before 28 October removes one uncertainty from the decision.
Arsh's Investor View
I have been a landlord for 25 years. In that time, CGT has been restructured several times. Each time, the dominant response from investors is either to rush to sell or to do nothing and hope for the best. Neither of those responses is usually the right one, and the October 2026 Budget is not different.
The NRLA's inflation indexation argument is correct. It is also politically inconvenient, which is why I do not expect it to land on October 28. But the argument matters because it reframes how we should think about property taxation over the long run. Taxing inflation is not taxing wealth. A landlord who bought in 2012, watched their property rise with general price levels, and is now told they owe 24% of the nominal rise is in a genuinely different position to one who generated alpha above inflation. Conflating the two is poor tax policy, and the NRLA is right to make that case publicly.
The practical question for most landlords I speak to is simpler: should I sell before October 28? My answer is usually no, unless you were already planning to sell. Properties are not shares. You cannot exit in minutes and re-enter six months later. Selling costs money in agent fees, conveyancing, and lost rental income during the void. A CGT rate change of 8 to 16 percentage points is real money, but so is selling a 8% yielding asset you would otherwise hold for another decade.
What I am doing is making sure any sale I already had in my pipeline completes before 28 October. One property in my portfolio was already under offer when this Budget speculation started. I pushed hard on the conveyancing and that sale will complete in time. That is opportunistic rather than panicked. For properties not already in the sale process, I am watching the Budget without selling anything.
On the broader question of rate alignment with income tax: if CGT on residential property does move to 40% or 45% for higher-rate taxpayers, it will accelerate the ongoing landlord exodus I have been writing about for two years. Selling at a higher CGT rate still beats the alternative of holding a portfolio that is no longer commercially viable. That reinforces the case for building up within a limited company structure now, while the cost of doing so is at current CGT levels.
How Property Investor App Can Help
Property Investor App helps landlords who are actively managing their exit decisions by surfacing landlord-to-landlord sales opportunities where the buyer pool is deepest. In Northern markets like Leeds, Sheffield, Bradford and Manchester, where professional BTL investors are most active, PIA connects sellers with buyers who can move quickly and do not need a mortgage. That matters when completion timelines are compressed by a pre-Budget deadline. PIA also works with specialist BTL tax advisers and accountants who can run the CGT calculation for your specific portfolio before you make any decision. Browse current UK property investment opportunities on Property Investor App.
Key Takeaways
- The NRLA submitted its pre-Budget CGT proposal to Treasury in September 2026, calling for inflation indexation of the property cost base. The argument: between 2015 and 2024, UK house prices rose 46.2% while CPI rose 34%, so real house price growth was just 9.1%. Around four-fifths of CGT currently paid by landlords reflects inflation, not real economic gain.
- Current CGT rates on residential property are 18% for basic-rate taxpayers and 24% for higher and additional-rate taxpayers, with a £3,000 annual exempt amount. Treasury is reportedly modelling rate increases for the 28 October Budget, with speculation pointing toward alignment with income tax rates of 40% and 45%.
- Average conveyancing timescales in England are 16 to 20 weeks from offer to completion. A decision to sell this week does not guarantee completion before 28 October. Landlords with properties already under offer and in the conveyancing pipeline are best placed to crystallise gains at current rates.
- The sell-before-Budget calculation depends on the size of the unrealised gain, the rental yield being forgone, the expected future holding period, and whether proceeds can be redeployed at a comparable yield. Selling a 9% yielding Northern terrace to avoid a CGT rate change that may not materialise is not always the right trade.
- Landlords considering incorporation into a limited company structure should note that transferring a property from personal ownership to a company is a disposal for CGT. If rates rise in October, the cost of incorporation rises with them. The pre-Budget window is relevant for that decision as much as for outright sales.
Frequently Asked Questions
What are the current CGT rates on UK residential property in 2026?
CGT on residential property disposals in the 2026/27 tax year is 18% for gains falling within the basic-rate income tax band and 24% for gains above that threshold. The annual exempt amount is £3,000. These rates have been in place since the October 2024 Budget, which aligned the main CGT rates on other assets with the existing residential property rates. There have been no further confirmed changes to these rates as of September 2026.
What is the NRLA proposing on CGT ahead of the October 2026 Budget?
The NRLA is asking Treasury to introduce inflation indexation of the cost base for CGT on residential property. This would allow landlords to uplift their original purchase price, stamp duty paid, legal fees, and capital improvements by the Consumer Price Index from the date of acquisition to the date of sale, before calculating the taxable gain. The rationale is that average UK house prices rose 46.2% between 2015 and 2024 while general inflation rose 34%, meaning real house price growth was just 9.1% over that period and around four-fifths of current CGT liability on sales from that period reflects inflation rather than genuine real gain.
Will CGT rates on property increase in the October 28 2026 Budget?
No Budget changes are confirmed until the Chancellor delivers the statement on 28 October 2026. The current speculation, reported in tax advisory circles, is that the Treasury is modelling a rate increase, with some analysis pointing toward alignment with income tax rates, which would push the higher-rate band from 24% to 40% and the additional-rate band to 45%. This is speculation, not policy. Landlords making major decisions based on pre-Budget speculation should do so with clear-eyed analysis of the downside if rates are not changed.
Can landlords realistically complete a property sale before 28 October 2026?
Average conveyancing in England currently takes 16 to 20 weeks from offer to completion, making it extremely unlikely that a property going to market today completes before October 28. The exception is properties that are already under offer and well advanced in conveyancing, or off-market transactions between professional investors where both parties are motivated to complete quickly and neither requires a mortgage. Landlord-to-landlord sales in active professional BTL markets such as Leeds, Sheffield and Manchester have the highest probability of achieving a compressed timeline.
Does transferring a property into a limited company trigger CGT?
Yes. Transferring a property from personal ownership to a limited company, including your own company, is treated as a disposal for CGT purposes at market value. This means any unrealised gain in the property becomes a CGT liability at the point of transfer. If CGT rates increase in the October Budget, the cost of incorporating your BTL portfolio rises accordingly. Landlords who have been planning to move into a company structure and who have meaningful unrealised gains should take specialist tax advice before 28 October about whether completing that transfer now, at current rates, is financially advantageous.
