Should I sell my house or keep it and rent it out?
Published 8 October 2026 · 6 min read · By Evren Ergin
Sell if you want the money, a clean break and no landlord duties. Keep and let only if you want long-term income and can live with open-ended tenancies and a possible Capital Gains Tax bill when you sell later.
TL;DR
- •Since 1 May 2026, private tenancies in England are periodic, Section 21 is gone, and tenants can leave on two months' notice.
- •Taking a let home back to sell it needs the sale ground: 4 months' notice, not in the tenant's first 12 months.
- •Your main home is usually free of Capital Gains Tax when sold, but the years you let the whole home are not covered, apart from the final 9 months.
- •Start with what the home would sell for, then compare it with the rent after costs.
Advertisement
What is the first number to work out?
The first number is what your home would sell for today. Equity is the part of that value you own after the mortgage is paid off, and it is what you would walk away with from a sale.
You cannot compare selling with letting until you have that figure. Free, side-by-side valuations from competing local agents give you an honest range before you commit to either route.
What changed for landlords on 1 May 2026?
A periodic tenancy is a tenancy that rolls on week to week or month to month with no end date. Since 1 May 2026, private tenancies in England are periodic, and the rules for ending them are different.
- Section 21 "no-fault" evictions are abolished, and assured shorthold tenancies no longer exist (Shelter England, February 2026).
- Tenants can leave by giving two months' notice. A landlord cannot end the tenancy without a legal ground (GOV.UK, 6 November 2025).
- To take a home back to sell it, a landlord must use the sale ground. That ground cannot be used in the tenant's first 12 months, it needs 4 months' notice, and the landlord cannot market or re-let the home for 12 months afterwards (GOV.UK, 6 November 2025).
- If the tenant does not leave, the landlord has to prove the ground in court (GOV.UK, 6 November 2025).
These rules apply in England only. Scotland, Wales and Northern Ireland have their own systems.
What happens to my tax if I let my home and sell later?
You do not pay Capital Gains Tax when you sell your only home if you have lived in it as your main home for all the time you have owned it and you meet the other conditions. That relief is called Private Residence Relief.
Once you move out and let the whole home, the years it was let are not covered by that relief. The final 9 months of ownership always qualify, as long as the home was your main residence at some point. Letting Relief only applies where you let part of the home while living in the rest, and not where the whole home was let.
For gains made from 6 April 2026, Capital Gains Tax is 18% on the part of a gain that falls within the basic Income Tax band and 24% above it. The tax-free allowance for 2026 to 2027 is £3,000.
Worked example using HMRC's method (illustrative, not a forecast)
| Step | Example |
|---|---|
| You owned the home for | 10 years (120 months) |
| You lived in it | First 6 years (72 months) |
| You then let the whole home for | 4 years (48 months) |
| Months that qualify for relief | 72 + the final 9 months = 81 of 120 (67.5%) |
| If the gain on sale is | £100,000 |
| Part of the gain that is taxable | 32.5%, which is £32,500 |
| After the £3,000 allowance | £29,500 taxable |
| Tax at 24% (higher-rate taxpayer) | £7,080 |
The inputs are invented to show how the method works. Your own figure depends on your dates, your gain and your income, so ask a tax adviser before you decide.
How do sell and keep-and-let compare?
Selling or keeping and letting your home
| Factor | Sell | Keep and let |
|---|---|---|
| Money | A lump sum at completion | Monthly rent, less costs |
| Your time | None after completion | You become the landlord, or pay someone to be |
| Tenancy | Not applicable | Open-ended, with tenants able to leave on two months' notice |
| Tax | Usually none on your main home | Tax on rental income, and possibly Capital Gains Tax on the let years when you sell later |
| Getting out later | Already done | Selling later means using the sale ground, with 4 months' notice, or selling with the tenant in place |
| Market risk | Gone once you complete | You still carry it |
How do I decide between selling and letting?
1. Find out what the home would sell for
Get free, side-by-side valuations from competing local agents so you have an honest range, not a single opinion.
2. Work out what you would keep after selling
Take off agent fees, legal costs and your mortgage balance. The sale proceeds calculator does this in a few minutes.
3. Check your mortgage terms
Letting a home usually needs your lender's permission, and some lenders require a different type of mortgage. Ask before you plan around the rent.
4. Estimate the rent after costs
Subtract mortgage interest, insurance, repairs, any agent fees and periods when the home is empty. Compare the result with what the sale money could earn elsewhere.
5. Ask a tax adviser about the let years
The Capital Gains Tax on a later sale depends on your dates and your income, so get the figure before you commit.
6. Choose the timeline that suits you
The decision, and the timing, are yours. A sale can be started at any point, and so can a decision to let.
This article is general information, not tax or legal advice.
Can I sell my house with a tenant in it?
Yes. You can sell with the tenant staying, to a buyer who wants to keep the tenancy, or you can end the tenancy using the sale ground. The sale ground needs 4 months' notice and cannot be used in the tenant's first 12 months.
Can I evict a tenant so that I can sell?
Only through the sale ground. If the tenant does not leave after the notice, you have to prove the ground in court. You also cannot market or re-let the home for 12 months after using it.
Will I pay Capital Gains Tax if I rent out my home and sell it later?
You may. The years the whole home was let are not covered by Private Residence Relief, apart from the final 9 months. The tax on the taxable part is 18% or 24%, depending on your income, after a £3,000 allowance.
What if I want to rent it out only because it is not selling?
That is a different decision, and it is worth checking the asking price and the agent first. Our guide to renting out a house that will not sell covers it.
Sources
- [1]GOV.UK: Guide to the Renters' Rights Act · 2025-11-06 · https://www.gov.uk/government/publications/guide-to-the-renters-rights-act/guide-to-the-renters-rights-act
- [2]Shelter England: How section 21 notices will be abolished · 2026-02-01 · https://england.shelter.org.uk/professional_resources/news_and_updates/how_section_21_notices_will_be_abolished
- [3]GOV.UK: Capital Gains Tax rates · 2026-04-06 · https://www.gov.uk/capital-gains-tax/rates
- [4]GOV.UK: Tax when you sell your home, Private Residence Relief (page checked 8 October 2026) · 2026-10-08 · https://www.gov.uk/tax-sell-home
- [5]HMRC: HS283 Private Residence Relief helpsheet · 2026-04-06 · https://www.gov.uk/government/publications/private-residence-relief-hs283-self-assessment-helpsheet/hs283-private-residence-relief-2025
Terms in this article
Plain-English definitions from the ValuQ property glossary.
Read next
Related insights
Market appraisal or Red Book valuation: which do I need to sell?
House prices flat in September: what it means if you want to sell
Thinking of downsizing? Where to start and what it costs
Which estate agents should I invite to value my house?
What is your home worth today?
ValuQ gives UK homeowners free, side-by-side property valuations from competing local estate agents. Anonymous until you choose. No cold calls.
Get your free anonymous valuationSellers and buyers never pay.