Budget 2026: What happens next

It is now just over a week since John Healey announced savage tax hikes for landlords. Here our chief executive Ben Beadle explains what this will mean for the sector and what we are doing to challenge it.

All the predictions had been for a ‘quiet’ budget, with expectations of ‘breathing space’ amidst a cost of living crisis – so quite how a 4% surcharge on income earned from property from next April fit with this is anyone’s guess.

His two-percentage point hike came on top of the 2% announced by his predecessor Rachel Reeves, which was announced last year and deferred to 2027.

This double whammy is both unjust and extremely shortsighted.

We know it will only serve to hurt those the Government has pledged to help, the renters who will have to come up with the cash to cover rents forced up by this unfair tax hike.

It also goes against John Healey’s promise that his budget would be focussed on growth.

Not only that, but, with 10 households currently competing for each home to let, it risks further exacerbating the housing supply crisis, meaning fewer, more expensive homes for an increasing number of people.

It is lose/lose.

So, what is the Government’s thinking?

The treasury has reiterated that government does not want to raise taxes for 'working households’ and the Chancellor identified landlords as a group that could be taxed more or – arguably – whom are considered more acceptable to tax more.

This, it would seem, brings us back to the preposterous argument from two years ago that landlords are somehow not ‘working people’.

We challenged then-Prime Minister Sir Kier Starmer on that suggestion then, as we continue to challenge the Government now.

Being a landlord is hard work – something the Government should know better than anyone, given the plethora of new responsibilities and obligations they have placed on our shoulders.

What will the tax hike cost renters?

Our preliminary calculations (with image) show the tax hike could see a basic rate taxpayer letting a flat in London needing to add £123 to the existing rent to cover the new tax rate.

The equivalent rent rise in Manchester would be £73 and in Cardiff £62.

While we would stress these are very much early estimates, based on average rent and cost assumptions, these figures are not plucked from nowhere

The Office for Budget Responsibility, which I should stress is an independent body with a statutory duty to examine the sustainability of public finances, has confirmed ‘steady rent rises’ are an inevitable consequence of the announcement.

It’s report, released in the wake of the Budget said: “These measures collectively risk leading to a steady rise in rents through two effects.  

“First, potential landlords are less likely to enter the market, reducing long-run rental supply, which risks a steady long-term rise in rents if demand outstrips supply – which we think is more likely than not.  

“Second, landlords are likely to pass on more of these costs to renters in the long-run through a combination of some current landlords leaving, thereby giving more price setting power to remaining landlords, and greater long-run flexibility to raise rents.” 

I couldn’t have said it better myself.

What happens next?

As to what we can do next – it is a challenge.

When meeting with the Treasury shortly after the Budget, they seemed keen to reassure that ‘at least’ the tax credit for finance costs is also being uprated to 24% - a, quite frankly, insulting attempt at mitigation.

However, the reality of finance legislation is that there is very little means to challenge a government with a majority.

We have spoken with our legal advisers, and our initial assessment is that, unfortunately, there is practically no prospect of successful legal challenge.

However, the dialogue is ongoing.

In the meantime, we are asking you for your support to bolster our case.

The Government is making a grave error, and we need them to understand that.

With this in mind we are asking you to add your voice by writing to your MP explaining the impact the tax hike will have on you, your business and your tenants. You can contact them via the parliament website. Or you can write to them at the House of Commons, London, SW1A 0AA. 

I have already spoken to many of you for whom this latest tax hike – coming, as it does, after major changes to mortgage interest relief and stamp duty – is the final nail in the coffin and plan to sell up as a result. This is bad news for everyone.

These are dark times and it is vital we work together to challenge this unjust targeting of our sector – at a time when people need it most.

More information - writing to your MP

Writing directly to your MP as a constituent is a powerful and effective lobbying tool. Your MP has an obligation to read what you send them and reply to all reasonable requests, so letting them know what you think is worthwhile.

Please consider raising the following issues:

• The impact of the recent tax rises in the Budget on you as a landlord
• Whether or not you will have to pass on costs in rent rises to tenants
• How the Renters’ Rights Act has affected you
• Your concerns about the national landlords’ database

We would encourage you to set out your particular circumstances and explain the decisions you now face, including whether or not you might leave the sector.

You may also want to ask your MP to do the following:

• Raise your concerns directly with the Chancellor of the Exchequer (John Healey MP) and Housing Minister (Matthew Pennycook MP).
• To ask questions in the House of Commons about the issues you have raised.
• To seek a debate in parliament on the private rented sector

We are also looking for landlords to share their stories in the media and our communications channel. If you would like to get involved please email [email protected]