With the Renters’ Rights Act removing Section 21 from 1st May this year, plenty made a deliberate choice beforehand: serve notice, regain possession, and sell while that route still existed. Add in rising regulation, tax and finance costs, and it wasn’t a surprise to see a wave of stock hit the sales market at once — just as a wary set of buyers, a difficult economy and international uncertainty made mortgages harder and more expensive to secure. The result, in a lot of cases, is a property that used to generate rent now sitting empty while the sales market catches up.
Hamptons’ research puts a number on the scale of it: analysis published in July 2026 estimated that as many as 100,000 previously-rented homes could be sitting unsold and out of the rental market. That matters for tax as much as for supply, because the more deliberate the exit, the clearer HMRC’s intention test becomes — and the less scope there is to treat a vacant property as simply “between tenants.”
Waiting for a tenant, or a buyer?
HMRC’s starting position is straightforward: a temporary void doesn’t interrupt a letting business. If a tenant leaves and you’re actively looking for the next one, the usual running costs — insurance, finance costs, council tax, utilities — remain deductible in the normal way, and HMRC will generally accept that the business hasn’t ceased provided the gap is under three years and you can show you were genuinely trying to keep it going.
Where it gets more complicated is when a landlord decides, part way through that gap, that they’re not going to re-let after all. HMRC’s own guidance is explicit that a single-property letting business ceases at the point the owner decides the property won’t be re-let. For landlords who served notice specifically in order to sell, that point isn’t ambiguous or something to establish after the fact. From then, the ongoing costs of holding the empty property are no longer running costs of a live letting business. They aren’t deductible against rental income, and council tax and similar holding costs during a marketing period don’t reduce a future capital gain either. It’s a genuine gap: cessation switches the expenses off, without a replacement mechanism for obtaining relief.
There’s an added twist for anyone whose sale doesn’t move quickly. Landlords who use Ground 1A to regain possession specifically to sell face a mandatory 12-month ban on re-letting if the sale falls through — and Hamptons’ analysis of 2025 sales data (published July 2026) found 51% of landlord-sold homes that year failed to sell within a year, rising to 60% among flats. A property in that position isn’t just tax-inactive; by law, it can’t earn rental income again for a year even if the owner changes their mind. Worth knowing before advising anyone to sit tight “just in case” a buyer doesn’t materialise.
What about a portfolio that’s shrinking rather than stopping?
None of the above applies in the same way to a landlord who owns several properties and is selling one or two while continuing to let the rest. A property business built on multiple properties doesn’t cease just because part of it winds down — again HMRC’s guidance is clear that the business continues until the last let property is disposed of or repurposed, so there’s no cessation, no three-year clock, and losses carry forward as normal.
That said, it isn’t a free pass on the specific property being sold. Once a landlord decides a particular property won’t be re-let, the running costs on that property stop being incurred wholly and exclusively for the letting business, even though the wider business is still trading. In practice this can leave a portfolio landlord in a slightly worse position than someone winding up entirely as they don’t get access to post-cessation relief, because their business hasn’t ceased, yet the costs on the property earmarked for sale are still disallowable. Worth flagging for any landlord assuming that “the business is still going” automatically protects every property within it.
Post-cessation relief — narrower than it looks
Once a business has ceased, a different and more limited set of rules applies. Certain costs — such as the cost of keeping a property heated to prevent damp or condensation while it’s marketed — can still be relieved as post-cessation expenses, but only against post-cessation receipts, and only within seven years of cessation. If there’s no post-cessation income to set them against, the relief has nowhere to go.
Other categories worth a reminder
A property let on an uncommercial basis — below market rent, or without normal lease terms — can only have expenses deducted up to the value of rent received; it can’t be used to create a loss. And where a property has genuinely mixed use, personal and rented, only the business proportion of an expense is deductible, calculated on a fair time or space basis.
The practical point
None of this is new law and HMRC’s guidance here has been stable for years, but the current market means far more landlords are living in the grey area between “temporarily vacant” and “ceased” than usual, and more of them arrived there by deliberate choice rather than bad luck. The distinction is a question of fact and intention, not a fixed timetable, so should be confirmed before a return is filed rather than after. If a landlord or investor’s property has been empty for a while, the conversation worth having isn’t just how long, but what they’ve actually decided to do with it — and, increasingly, whether that decision was made in a solicitor’s letter before it was made anywhere near a tax return.
Full HMRC guidance sits in the Property Income Manual, particularly PIM2510 on cessation and PIM3000 on post-cessation receipts and expenses.
The Ground 1A and unsold-stock figures are from Hamptons’ Monthly Lettings Index, reported via The Negotiator, 13 July 2026 — as with any market data, worth checking for a more recent update if you are reading this sometime after publication.