Octane Capital’s CEO, Jonathan Samuels, has issued a stark warning to the newly installed Labour Government, cautioning that an ongoing clampdown on buy-to-let (BTL) landlords may drive the current rental market crisis to an irreversible tipping point.

As Labour gears up to introduce changes to Capital Gains Tax (CGT) in the upcoming Autumn Statement—specifically targeting landlords—Octane Capital took the initiative to survey UK landlords, aiming to measure the pulse of the sector.

The findings were telling. A striking 66% of landlords admitted they had already downsized their investment portfolios over the past year. The main culprit? Reduced profitability, largely attributed to prior legislative changes. This evolving regulatory environment has left many landlords questioning the long-term viability of their investments.

Furthermore, the looming rental market reforms—particularly the potential abolition of Section 21 evictions—ranked high among landlord concerns, coupled with the inevitable aging of landlords, many of whom are nearing retirement age.

A notable 52% of respondents expressed waning confidence in their rental market investments under Labour’s governance. On top of this, a staggering 75% voiced fears over the prospect of the government aligning CGT rates with income tax thresholds, a move they believe would deal a further blow to the sector.

If these changes are enacted, 58% of landlords said they would be inclined to shrink their BTL portfolios even further. Alarmingly, an additional 30% indicated they were already planning to reduce their holdings due to diminishing profitability, regardless of any impending tax changes.

Jonathan Samuels weighed in on the situation, stating: “It seems that our new Labour Government is picking up where its predecessors left off within the rental market landscape, driving legislative changes designed to deter landlords from the sector."

He further expressed concern over the data, adding: “It’s quite worrying to see that such a large proportion have reduced their portfolio size over the last year, with more planning to do so should the proposed changes to capital gains tax come to fruition."

Samuels did not mince words about the potential fallout, remarking: “A tenant-first approach is all well and good, but the key factor driving the current rental crisis is the lack of available stock, and by further penalising landlords, Labour are set to push the current crisis to breaking point.”

In closing, he added: “Raising rental market standards is an admirable endeavour, but without the homes themselves, rental prices will continue to spiral, and it’s tenants that will pay the price, either financially or otherwise.”

The picture Samuels paints is clear: unless there’s a shift in how landlords are treated, the consequences for the rental market—and tenants—could be severe. The already strained supply of rental properties may dwindle even further, driving up rents and deepening the crisis for those who can least afford it.