For the British novelist Tilly Bagshawe, the timing is down to practicality tinged with a soupçon of consternation.

Anticipated tax hikes have sparked a race among second homeowners in holiday hotspots to sell up before the October budget, and while Bagshawe and her businessman husband Robin Nydes are not exactly falling over themselves to part company with their £2.85million home in the Cotswolds, which is steeped in happy memories, the decision to sell has become a no-brainer.

‘I wouldn’t say I felt rushed, exactly,’ says Bagshawe, 51, who has owned the six-bedroom, 2,854 sq ft property in Lower Slaughter since 2012. ‘But obviously these tax changes will have a material impact on what will ultimately be my kids’ inheritance and future.

‘That was one of a number of factors that influenced our timing. To be clear, I do not resent paying capital gains tax on our second home. I think it’s fair and reasonable to be taxed on that gain; and I also see the moral argument for a rise in CGT, closer to income tax.

‘But I also see my job as a parent to try to make the best choices I can for my own family. So that’s what I’m doing.’

She is not alone.

Bagshawe and her family, who let out the house to holidaymakers when absent, are among numerous second homeowners moving to dispose of assets following Sir Keir Starmer’s warning of a ‘painful’ autumn budget in which ‘those with the broadest shoulders’ will bear the heaviest burden.

It has been widely rumoured that capital gains tax, a charge imposed on the profit an investor makes from selling assets such as a second home or shares, will rise from 24% to up to 45% when Chancellor Rachel Reeves announces her first budget next month, essentially bringing the levy into line with income tax bands.

For Bagshawe and Nydes, who anticipate making a profit of roughly £500,000 from the sale of their home, that could mean a tax bill of approximately £225,000 – £100,000 more than they would pay currently.

Bagshawe acknowledges that it is ‘the very definition of a first world problem’, and is equally aware that locals may be glad to see the back of investors who, encouraged by Rishi Sunak’s stamp duty holiday, purchased homes in rural areas during the global pandemic.

Yet she also believes the issue is about more than just wealthy outsiders denying affordable housing to people in rural areas, stressing the benefits to the local economy and holidaymakers.

‘I know lots of people worrying about Labour’s proposed tax changes generally, whether it’s VAT on school fees, or property related tax hikes, or punitive restrictions on holiday lets,’ says Bagshawe.

‘In terms of local mood, in areas like ours which rely heavily on tourism, I think there has always been a certain section of the community who see people who rent out their second homes as “the enemy” and the reason that there isn’t enough affordable housing.

‘But there is also another group, including many local business owners, who recognise the contribution to rural economies that holiday lets provide, and the joy that they bring to many. So I think it’s mixed, and it certainly isn’t the over simplified ‘rich versus poor’ divide that it is sometimes made out to be.’

Gina Farrow of The Property Consultancy, an independent buying agent for the Cotswolds, says the spectre of a CGT rise has triggered a rush to the market that is forcing prices down.

‘There has been a significant increase in the number of properties being offered for sale in anticipation of a rise in capital gains tax,’ says Farrow. 

‘Those who have holiday cottages that once produced a good income stream have been hit by higher mortgage rates, and less bookings from those now holidaying abroad. 

‘This coupled with the expectation that CGT will rise has caused a surge of property to the market – not only holiday cottages, but also second home owners – that has caused a softening of prices, and buyers sit on their hands waiting to see what happens.’

Ms Reeves, who has admitted that she accepted free holiday accommodation worth a total of £1,400 for her family at the Cornwall property of a fellow Labour politician last year, had previously said that she would not raise CGT.  

‘I don’t have any plans to increase capital gains tax,’ she told the BBC’s Today programme last March. ‘There are people who have built up their own businesses who maybe at retirement want to sell that business.

‘They may not have had huge income through their life if they’ve reinvested in their business, but this is their retirement pot of money.’

But for owners already reeling under the abolition of tax breaks for furnished holiday lets, announced in March by the Conservative party and due to come into effect next April, Ms Reeves’ seemingly altered stance promises another significant blow.

Analysis published by Rightmove earlier this month showed a surge in larger properties being put up for sale in the east and south west of England, popular coastal and countryside areas where holiday homes are plentiful.

Along with falling mortgage rates, the anticipated rise in CGT was identified by the company as a key factor in the trend.

‘I have thousands of members who are trying to sell before the deadline,’ says Alistair Handyside, who runs the Professional Association of Self-Caterers and also owns Higher Wiscombe, a group of luxury holiday cottages in east Devon.

‘If there are no further mitigations and the doomsday scenario applies, a lot of people will have some horrible decisions to make.

‘The homes are never going to be bought as affordable houses, they’re going to get bought as second homes and will therefore be unproductive.

‘It’s aimed at the wrong cottage holiday owners: the most likely buyer is a retiree. No good can come of it.’ 

 Handyside’s thoughts are echoed by David Ruddock, head of residential sales at Carter Jonas, who points out that locals whose income is reliant on tourism are facing a financial hit that will leave them ill-placed to buy vacated properties themselves.

‘This has been building since before the election and it benefits no one,’ says Ruddock. 

‘Prices in the holiday villages are still significantly higher than surrounding areas. 

‘So there would have to be a complete collapse in the market before locals could buy – and the locals have invested in supporting businesses and services that rely on holidaymakers’ money being imported. 

‘Government ‘good’ intentions will have the opposite effect.’

The big question is therefore whether such homes will be purchased at all in the short-term.

‘Essentially, there are too many properties in the market for estate agents to sell,’  says Handyside. 

Of 48 properties with an asking price of £1million or more advertised on the homepage of John Bray Estates, which brands itself as ‘the premier estate agent in north Cornwall’, just eight were shown as under offer at the time of writing.

A similar search of available £1million-plus properties for sale by Savills in Rock, north-east Cornwall, shows two out of 12 under offer.

St Ives, meanwhile, another magnet for tourism, has 101 homes for sale between £500,000 and £1million, of which only eight are under offer.

With holiday let bookings down by 37% in Cornwall over the past year, and council tax on second homes set to double next spring under new rules broadening the definition of an empty property, much has changed since the Covid boom, when investment in the county soared. 

‘The holiday home market in Cornwall has been hit hard by a number of factors in the past 12 months, which together have created a difficult market for investors,’ said Anna Sharp of Black Brick Property Solutions. 

‘Investors are being squeezed from all angles and the yields are no longer viable. If Labour increase CGT, this will be another contributing factor to the perfect storm. 

‘I predict we will see more properties coming to the market should they raise the rate.’

However, according to Sykes Holiday Cottages, an agent for more than 22,000 holiday lets across the UK, the outlook for second homeowners is not unrelentingly grim. 

Figures compiled by the company show that in the peak summer months of July and August, average income from holiday lets increased year-on-year by more than 8%, from £6,579 in 2023 to £7,119 this summer.

‘Despite potential upcoming changes for holiday let owners, it is clear that holiday letting remains a profitable and rewarding long-term business model, with the nation’s love of holidaying at home and exploring our incredible country going nowhere,’ said Graham Donoghue, the CEO of Sykes Holiday Cottages. 

‘While there may well be further costs to contend with as an owner, the ongoing and ever-growing popularity of staycations will provide a boost.’

That may be of scant consolation to the likes of Bagshawe, who are braced to make a choice between losing 20% of any potential profit now, or more than double that further down the line.

‘The truth is, it is a wrench to sell,’ says Bagshawe, three of whose four children are over 17 years old. 

‘We have had many magical and cherished moments in that house. It’s been a huge part of my life and my children’s lives, so of course it’s emotional and I will miss it very much.

‘But a holiday home is self evidently a luxury and a privilege, so I am certainly not expecting anyone to feel sorry for me. 

‘In the end this is a practical, head over heart decision, and I think it’s the right one for our family, especially now the kids are older. I’m very grateful for the years we’ve had there. It’s a beautiful house.’