Two thirds of landlords planning rent increases cite forthcoming tax changes as a key factor, according to new polling that the National Residential Landlords Association says should serve as a warning to government.
A survey of NRLA members by Pegasus Insight found that 65 percent of landlords intending to raise rents in the next year identified the tax rise as a major reason. Only higher overall running costs – cited by 68 percent – ranked higher as a driver.
Budget tax hike prompts rent warning
The findings follow the Chancellors announcement of a two percentage point increase in income tax on rental income from 2027. The Office for Budget Responsibility warned at the time that the move could push rents higher, and the new polling appears to support that assessment.
The survey also revealed widespread concern about the end of Section 21 evictions, scheduled for 1 May. Some 91 percent of respondents said they were either very concerned or slightly concerned about court delays for possession cases. Government data shows possession cases currently take an average of over seven months to process and enforce – the longest average since early 2022.
Sales outpacing purchases by widening margin
On broader market conditions, 61 percent of landlords reported strong tenant demand. However, the gap between landlords selling and buying has widened significantly. Almost a quarter (24 percent) reported selling property in the past 12 months, while only 5 percent purchased – a 19-point gap that has more than doubled since early 2024.
Of those who sold, over a quarter (27 percent) did so with tenants still in place. The NRLA has previously warned that landlord exits are reducing rental supply and contributing to rent pressure.
Ben Beadle, chief executive of the NRLA, said the research should be a wake-up call. “Hiking taxes on rented housing will lead to higher rents. Its not exactly clear how this approach will address the cost-of-living crisis ministers now say is the governments number one priority,” Beadle said.
He added that landlords were seriously concerned about court backlogs ahead of the Section 21 abolition. “Warm words mean nothing without a clear plan to ensure legitimate possession cases are processed and, if needed, enforced far quicker than at present,” he said.
Opinion
The polling confirms what many landlords have been saying privately: tax increases get passed on to tenants. With Section 21 abolition weeks away and courts already struggling, the pressure on the PRS is only going to intensify. Something has to give.
Sources: NRLA, Pegasus Insight
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