A perfect storm: Piecemeal policy and tax change is devastating our sector – here’s what needs to happen

A week after the Chancellor delivered her Autumn Budget NRLA chief executive Ben Beadle calls for a clear and comprehensive strategy for the private rented sector – before it’s too late.  

No consistency, no strategy, no idea.  

Years of piecemeal policy and tax changes are wreaking havoc on our sector, with our most vulnerable tenants the ones hit hardest. 

Last week I explained the devastating impact of Rachel Reeves’ latest tax changes, which will add two percentage points to landlords’ income tax bills and introduce a ‘mansion-tax’ council tax surcharge to high value rental homes. 

These came alongside the news that Local Housing Allowance (LHA) rates will remain frozen next year and funding for green homes will reduce by a quarter. 

As a result, it is low-income tenants that will be hit the hardest, left struggling to find a home they can afford in the middle of a wider cost-of-living crisis. 

Long line of tax raids

The changes are just the latest in a long line of tax raids on the sector, something that is not a party-political issue, with many of the biggest changes coming courtesy of former Conservative Chancellor, George Osborne. 

To recap, over the last decade we have seen:   

April 2015 - Landlord Energy Savings Allowance abolished.  

April 2016 - 10% Wear and Tear Allowance was removed. 3% Stamp Duty Land Tax (SDLT) surcharge applied to the purchase of homes to rent out. Residential property differentiated from other assets for Capital Gains Tax (CGT) purposes, resulting in higher rates 

2017-2020 - Mortgage Interest Relief restricted to the basic rate of income tax.  

April 2023 - CGT Annual Exempt Amount cut from £12,300 to £6,000. 

April 2024 - CGT Annual Exempt Amount cut to £3,000. Higher rate of CGT on property disposals cut from 28% to 24%. 

October 2024 - SDLT surcharge on the purchase of homes to rent out increased to 5%.  

April 2027 - 2 percentage points increase to the basic, higher and additional rates of property income tax. 

Moving the goalposts, with such depressing regularity, only makes it harder and harder for landlords to plan for the future, forces rents up, and hits the supply of homes as landlords struggle to make ends meet. 

As I explained last week, it is not just us saying that, with the Office for Budget Responsibility (OBR) reflecting: “The measures announced in this Budget reduce returns to private landlords, following various measures over the past 10 years that have also reduced returns.  

“This successive eroding of private landlord returns will likely reduce the supply of rental property over the longer run. This risks a steady long-term rise in rents if demand outstrips supply.” 

The Institute for Fiscal Studies puts it even more succinctly, explaining: “Taxing property income will increase rents.”  

It is important not to forget that most landlords aren’t simply choosing to increase rents to cover rising costs. The majority of buy to let landlords have mortgages, and the majority of mortgage providers typically require rental income to cover between 125% and 140% of a mortgage payment. 

Here are some key things ministers need to bear in mind

• We are not all fat cats. Yes, of course there are wealthy landlords out there, but the vast majority of us are basic-rate taxpayers with an average income of £25,000 from our properties. 

• Landlords are providing a valuable service, providing millions of homes across the country at a time when 1.3 million households are sitting on social housing waiting lists. 

• A million new homes to rent will be needed by 2031 to meet growing demand 

• Landlords play a key role when it comes to getting housing developments off the ground, by buying properties early, off plan. 

• Build to rent, long considered the panacea when it comes to tackling the housing supply crisis is still only providing 2% of PRS homes. 

These facts make it clear that what the sector needs now is support, not more landlord-bashing.  

So, what needs to happen next?  

We are, at present, facing a perfect storm, buffeted at all sides by tax increases, legislation change – in the shape of the Renters’ Rights Act and upcoming new energy efficiency rules – as well as the introduction of a completely new financial reporting system, in the shape of Making Tax Digital. 

As we have heard from a range of trusted sources, this is likely to further impact rents and the long-term supply of much-needed homes. 

What the Government needs to do is end this piecemeal approach to policy and taxation and come up with a comprehensive strategy for the PRS. 

This includes developing a tax system that actively supports and encourages long term investment by individual residential landlords in high quality new homes for private rent.   

As we move into 2026 it also needs to think long and hard about its strategy with regards to the new minimum energy efficiency standard (MEES). It is clear to everyone that the 2028 deadline for the minimum C rating for new tenancies (and 2030 for existing ones) will be unachievable for many. 

Don’t get me wrong, we support plans for more energy efficient homes and lower bills for tenants. 

However, ministers have no hope of achieving their ambitions in this area without going back to the drawing board to come up with a realistic timetable for change and a package of financial support to help the sector make these changes. 

As we move into 2026, we will continue to make this case to the Government, while supporting you through the changes up ahead.