Tax hike to hit renters in the pocket

Almost half of landlords will increase rents next year to cover increased income tax bills, with a third planning to sell homes.

From April 2027, income tax rates on property income will increase by two percentage points, with new research commissioned by the NRLA showing 46% of you plan to raise rents as a result.

The hike was announced in last autumn’s Budget, with the poll by research consultancy Pegasus Insight, also finding a 35% of you plan to increase rents by more than previously planned.

The Office for Budget Responsibility (OBR) has agreed with the NRLA in warning the policy would lead to higher rents.

The news also comes hot on the heels of Housing Minister, Matthew Pennycook, admitting tax increases imposed by the last Government have been the main driver of landlords selling homes – taxes that have only grown further under the current Government.

Whilst Government policy risks pushing tenants’ rents higher, those reliant on housing benefit to access the sector continue to face the impact of a freeze on the support they can access, making it harder for them to sustain tenancies.

The Institute for Fiscal Studies has warned that the tight fiscal position in which the Government finds itself is “no excuse for a system that creates uncertainty for renters and unfairness between local areas.”

Government must ‘look in the mirror’

Ben Beadle, NRLA chief executive said the Government needs to abandon plans that will make it harder for renters to find a home – particularly those on lower incomes.

He said: “If the Government is serious about easing cost of living pressures, it needs to look in the mirror.

“To be increasing the cost of providing rental housing, whilst keeping housing benefit support frozen, simply makes no sense.

“Renters will be left picking up the bill for the Chancellor’s tax hikes. The Government needs to scrap plans that risk pushing rents higher and making it harder for people to find a home.

“And for those proposing rent controls as the answer, they do nothing to address the root cause of higher rents – rising costs and a chronic shortage of homes to meet demand.”

Photo credit: Rachel Reeves ©House of Commons