Budget Surplus, Capital Gains Tax and the ‘Landlord Exodus’ in South London
What the UK's record January surplus actually tells landlords… and what it doesn't
Last week brought a headline that will have caught the eye of anyone with a stake in the property market: the UK government recorded its largest ever monthly budget surplus in January 2026, at £30.4 billion. That is the highest since records began in 1993.
Chancellor Rachel Reeves has been quick out of the blocks to frame this as clear evidence of fiscal discipline, and a turning point when it comes to the nation’s economic fortunes.
And much of the coverage has zeroed in on one eye-catching number in particular: Capital Gains Tax receipts of around £17 billion in a single month – a 69% increase on the same month last year.
Spend any time in lettings circles, or read the property press, and you will know what narrative immediately attached itself to that figure: the landlord exodus.
The story writes itself: landlords, spooked by changing legislation, embattled by taxes and overcome by red tape, are at the end of their tether and selling up in droves, and this 69% increase in CGT is clear evidence to prove it.
It is a compelling story. It is also, in large part, not what the January CGT figure actually represents.
At Your Home Managed, we work with landlords across Streatham Hill, Balham, Tooting, Colliers Wood, Clapham and the wider South London area every day. We think it is worth taking the time to unpick what these numbers really mean – because whilst we accept that many landlords have concerns and do know that some have chosen to exit, the picture is in fact far more nuanced.
The January CGT Spike: What Is Actually Driving It?
When CGT receipts of £17 billion appear in a single month, it is natural to look for a cause. And with CGT rates on residential property having risen following announcements in the October 2024 Budget – from 18% to 24% at the higher rate – the assumption that landlords must be rushing for the exit is understandable. CGT is a tax that is very much associated with second-property sales, in the public’s mind.
But there is a crucial detail that might have got lost in the noise this week: the January spike is primarily a self-assessment phenomenon – and as it goes, it is not a property one.
CGT on property sales operates differently from CGT on other assets. When a landlord or second-home owner sells a residential property, they are generally required to report and pay the tax within 60 days of completion. That means property-related CGT receipts are collected on a rolling basis throughout the year – not concentrated in January as part of the surge in self-assessment tax due payments.
The January spike mostly reflects the 31 January self-assessment deadline. That is when CGT owed on shares, investment portfolios and business assets for the whole tax year is paid in one go.
The large proportion of that £17 billion this January is almost certainly a result of investors crystallising gains on financial assets, not property, before higher CGT rates came into effect; which means, it does not on its own point to landlords selling up their buy-to-let properties.
So the landlord exodus did not cause the January headline.
But that does not mean that there isn’t a story on those lines elsewhere in the data, and it is still worth reading carefully.
The Property CGT Story: Less Bolshy, But No Less Real
While the January number is not primarily a property story, that does not mean that property-related CGT is standing still. Far from it.
HMRC data for the 2024/25 tax year showed that 163,000 taxpayers filed a return for CGT on UK Property, reporting 183,000 disposals with a total CGT liability of £2.2 billion. Those were record figures, then: disposals up 28% on the previous year, and the CGT liability itself up 33%.
But let’s look at where we are already in this current tax year.
The cumulative CGT collected through the 60-day reporting mechanism between April 2025 and January 2026 already stands at around £1.8 billion – and there are still two months of the tax year to run.
On top of that, there will be additional property CGT still to arrive via self-assessment returns, as there always is.
We can definitely draw an early conclusion: the 2025/26 property CGT figure will almost certainly exceed last year's record of £2.2 billion when the final numbers are in.
That is evidence of a genuine landlord exodus. The January headline is a slight red herring, as far as it goes, but the steady, year-on-year trend of more landlords and second-home owners choosing to sell rather than hold is noteworthy.
It doesn’t mean the lettings market is tanking. There are new landlords stepping into the breach, as we have written about previously. But we are seeing evidence that a significant portion of a generation of landlords are seeing this as a moment to cash in their chips. Whilst many are simply at the end of their natural investment lifecycle, after paying off their buy-to-let mortgage after 20 to 30 years in the game, there is a sense that this current sell-off is driven by cumulative pressures: higher mortgage costs, the removal of mortgage interest relief, increased regulatory demands, and the uncertainty that has surrounded the private rented sector for several years.
For landlords in South London, where properties in areas like Clapham, Balham and Tooting have seen significant value appreciation over the past decade, CGT liabilities on disposal can be substantial. This is something that is concentrating minds.
The implications for the rental market are real – especially as there is a picture forming that whilst new, younger landlords are entering the market, they are typically looking to the North of England and the Midlands, where yields are greater. Properties leaving the private rented sector in London therefore does pose a risk that we will see a reduced supply locally.
In a market where demand continues to outpace availability across South London, that matters – for tenants, and for the landlords who remain.
SDLT and IHT: The Broader Picture
CGT is not the only property-related thread running through January's record surplus. Two others are worth a brief mention.
Stamp Duty Land Tax receipts in January alone came to £899 million – a 6% increase on the same month in 2025 – and across the full year to date, SDLT receipts have already reached £15.4 billion, and that is up 18% year-on-year.
Much of that increase does not reflect a busier market so much as thresholds that have failed to keep pace with house price growth. With the nil-rate band back at £125,000 and first-time buyer relief reduced to £300,000, more of every transaction is now caught in the SDLT net, particularly in higher-value areas of South London where even a modest flat can carry a meaningful stamp duty bill.
Inheritance Tax receipts between April 2025 and January 2026 totalled £7.1 billion, with the Office for Budget Responsibility forecasting a full-year figure of £9.1 billion. Again, in a similar way, frozen nil-rate bands, combined with rising property values, are drawing more ordinary families into IHT territory – often without them realising it until the estate planning conversation begins.
For landlords with property portfolios, the interaction between IHT and their assets is an increasingly important consideration.
What This Means If You Are a Landlord in South London
The record January surplus is real, and in some respects it reflects what we might cautiously call a healthier economy generating tax revenues.
But for landlords, the picture beneath the headline is one of a tax environment that has shifted on its axis, and may shift further.
CGT on property disposals is growing year on year. The rate rises that cam after announcements in the October 2024 Budget (2024, not 2025) have added to the financial case for reviewing whether to hold or sell.
And yet selling is not a neutral act either: it means crystallising a CGT liability, and exiting a market that continues to generate strong rental demand and rents increasing well ahead of general property values. There is also the need to balance triggering IHT down the line.
These are not decisions that benefit from being rushed, or from being made on the basis of a headline that turns out to be about something else entirely.
At Your Home Managed, we are not tax advisers, and for the specifics of CGT planning, SDLT, or IHT, we would always recommend speaking to a qualified professional.
Be that as it may, we do believe our landlords deserve to understand what is actually driving the numbers they are reading about, and what those numbers mean for the South London market they are invested in.
If you would like to talk through how the current landscape might affect your investment property or portfolio in South London, we are always happy to talk things through.
Q&A: The Record Tax Surplus and What It Means for Landlords in South London
Why did CGT receipts spike so sharply in January 2026?
The January figure – around £17 billion, up 69% year-on-year – is primarily driven by the self-assessment payment deadline of 31 January. This is when CGT owed on gains made across the full tax year on shares, investment portfolios and business assets is settled with HMRC. A significant part of the surge reflects investors selling financial assets before higher CGT rates came into effect, but it largely does not reflect landlords selling properties.
So the landlord exodus did not cause the January headline?
Not as people might at first assume. Property-related CGT is generally collected on a rolling basis within 60 days of a sale completing, so it flows through the year rather than concentrating in January. The January spike is almost entirely a financial-assets story. That said, property CGT is growing year on year, and the current tax year looks set to break last year's record — and that trend is the real landlord story we should pay attention to.
What do the property CGT numbers actually show?
HMRC data shows that in 2024/25, property CGT disposals were up 28% and total CGT liability up 33%, reaching a record £2.2 billion. In the current tax year, £1.8 billion has already been collected through the 60-day mechanism with two months still to go, meaning the full-year figure will almost certainly exceed last year's record. This reflects a genuine, sustained increase in the number of landlords and second-home owners choosing to sell.
What is driving landlords to sell?
A combination of factors has been accumulating for several years: the removal of mortgage interest relief, higher borrowing costs, increased regulatory requirements, and now higher CGT rates following the October 2024 Budget. For many landlords, particularly those holding properties that have appreciated significantly in value, as is common across South London, the tax calculation on disposal has changed materially.
What does this mean for rental supply in South London?
Every private rented sector rental that gets sold risks reducing supply, which adds to housing problems where demand remains strong. Across areas like Clapham, Balham, Tooting and Streatham Hill, rental demand continues to outpace available stock. A sustained trend of landlords exiting the market would put further upward pressure on rents and reduce choice for tenants.
Should I be considering selling my rental property because of CGT?
That is a decision that depends on your individual circumstances, your portfolio, your plans, and your wider tax position. Selling crystallises a CGT liability immediately; holding continues to generate rental income and defers the tax event, though rates may change again. There is no universal answer, and we would always recommend taking qualified tax advice before making a decision of this scale.
How do Stamp Duty and Inheritance Tax fit into this picture?
Both contributed to the January surplus and reflect a broader pattern of property tax revenues rising not because of increased transaction numbers in a more buoyant sales market, but because thresholds have not kept pace with house price growth. SDLT thresholds were cut back in April 2025, pulling more transactions into scope. IHT nil-rate bands have been frozen for years, drawing more estates above the threshold.
Are pension assets going to be brought into Inheritance Tax?
Some current proposals would bring pension wealth into the IHT net from April 2027, although this is not yet final and could change. For landlords who have both property portfolios and pension assets, the interaction between the two will be an increasingly important part of estate planning conversations.
What should landlords in South London be doing right now?
The most important thing is to make decisions based on accurate information rather than headlines. The January CGT figure is not primarily a landlord-exodus story, but the underlying trend in property CGT disposals is real and growing. Understanding your own position, taking appropriate tax advice, and keeping a clear view of your portfolio's performance in the context of the South London rental market are the foundations of good decision-making in the current environment.
How can a professional letting agent help?
We work with landlords across Streatham Hill, Balham, Tooting, Colliers Wood, Clapham and the wider South London area, and we keep a close eye on the market conditions and policy changes that affect our landlords' decisions. While tax advice is always best sought from a qualified adviser, we are always happy to talk through how current trends are playing out locally, and what they might mean for your portfolio. Get in touch – we would love to hear from you.
