Budget will hit renters in their pocket

Responding to the Budget announcement of a further increase in income tax rates on rental income, Ben Beadle, Chief Executive of the National Residential Landlords Association, said:

“The Chancellor has today made life harder for renters right across the country.

“As the Office for Budget Responsibility has confirmed, hiking taxes will drive up rents and drive down supply in the rental market when demand is already way ahead of the number of homes available.

“How that fits with a commitment to providing households with more breathing space is anyone’s guess.”

-ENDS-

Notes

• The Budget Red Book notes:

“Budget 2025 increased the rates of tax on savings and property income by two percentage points across all tax bands from April 2027. The government will increase these rates by a further two percentage points from that date.”

• The Office for Budget Responsibility’s Economic and Fiscal Outlook document to accompany the Budget notes:

“The 2 percentage point increase in property income tax rates in this Budget will be implemented on top of the 2 percentage point increase announced at Budget 2025. Both of these measures will come into force from April 2027 and represent a material reduction in returns to private landlords. This follows various measures over the past 10 years that have also reduced private landlord returns.

“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. Such rises in rents would offset at least some of the reduction in the commercial viability to landlords from the measures introduced in recent years.”

• According to Rightmove, the average rental home received 10 enquiries, compared to the pre-pandemic level of 5. See details here.
• Further information about the NRLA can be found at www.nrla.org.uk.  It posts on X @NRLAssociation.
• For further information contact Ed Jacobs by emailing [email protected] or calling 07900 052659.
• The NRLA’s press office can be contacted by emailing [email protected] or by calling 0300 131 6363.