A senior tenant campaigner has poured cold water on claims that landlords are exiting the buy-to-let market, following higher UK rental tax rates announced in the autumn Budget. But many landlords say the lived reality looks very different, with margins under pressure from tax, regulation and finance costs.
Ben Twomey, chief executive of Generation Rent, told readers of The Guardian that warnings of landlords selling up should be treated “with a large pinch of salt”. His comments follow Chancellor Rachel Reeves’ decision to raise tax on rental income.
Rental tax changes and landlord costs
From April, basic-rate taxpayers will pay 22% on rental income, with higher-rate and additional-rate landlords facing 42% and 47% respectively. For many, this comes on top of higher mortgage rates, licensing fees and compliance costs.
The Guardian highlighted one landlord facing an extra £2,500 a year due to the changes. That figure will ring alarm bells for smaller landlords with one or two properties, where profit buffers are already thin.
Twomey argues that “most landlords are able to absorb an increase in tax”. Yet industry bodies point out that absorption often means reduced reinvestment, delayed repairs, or reassessing whether a property still stacks up financially.
According to UK Finance data, buy-to-let mortgage approvals remain well below pre-2022 levels, suggesting many investors are already sitting on their hands rather than expanding portfolios.
Buy-to-let market pressures beyond tax
Tax is only part of the picture. Section 24 mortgage interest restrictions, higher stamp duty on additional homes, and tightening energy efficiency rules have steadily raised the bar for landlords.
Twomey claimed landlords can “raise rents anyway when wages are rising and building new homes slows down”. In practice, rent increases are constrained by local demand and affordability. Outside London and the South East, landlords report far less headroom than national averages imply.
Letting agents have repeatedly warned that fewer landlords mean fewer homes to rent. The National Residential Landlords Association has linked recent rent rises to supply exiting faster than new stock is built, particularly in smaller regional markets where institutional investors rarely operate.
Renters Rights Act and future supply
The upcoming Renters’ Rights Act will remove Section 21 “no-fault” evictions, a change Twomey says will stop landlords evicting tenants simply to re-let at higher rents.
Landlords counter that longer possession processes increase risk, especially when combined with rising taxes. Many are already factoring in longer voids and legal costs, which again feeds into decisions about whether to stay in the sector.
The result is a quiet reshaping of the private rented sector. Fewer amateur landlords, more selective investment, and a bias towards higher-yielding areas. That may suit campaign groups, but it does little to boost overall supply.
