73% of landlords to raise rents following Budget tax changes

Nearly three quarters of landlords expect to increase rents when next permitted due to changes to taxation announced in last month's Budget, research from Pegasus Insight finds.

The snap poll of 168 members of the National Residential Landlords Association (NRLA) found that 73% expected the announced changes to rental income tax to lead to higher rents.

The largest group, 38% of all respondents, selected an increase of 5% to 10% or market rents. A further 11% selected an increase of more than 10% or market rents, while 24% selected an increase of less than 5% or market levels.

The poll asked landlords about their response to rental income tax rates of 24%, 44% and 49% from April 2027 for those holding property personally, reflecting the combined effect of increases announced in this Budget and last year.

Alongside the expected pressure on rents, 52% said they planned to sell property over the next 12 months in response to the tax changes. This included 38% planning to sell some properties and 14% planning to sell their entire portfolio. Only 2% planned to buy more rental property, while 26% expected no changes and 20% said it was too early to say.

Almost three in ten respondents (29%) anticipated cutting spending on maintenance or improvements, including 13% who expected to reduce it significantly. However, a majority (55%) expected no change to spending.

Mark Long, director of Pegasus Insight, said: “The industry has repeatedly warned that increasing taxes on landlords risks increasing costs for tenants. Announcing another two percentage point rise before the previous increase has even taken effect suggests those warnings have gone unheard.

“The comments behind these figures are particularly telling. Landlords describe the increases as a stealth tax on tenants and question how they can keep investing in their properties, including improving energy efficiency, while absorbing another hit to their income. For some, the cumulative pressure is prompting them to question whether they want to continue letting property at all.

“The government needs to consider what it is asking landlords to deliver and whether its tax policy supports that. Tenants need good quality homes at rents they can afford, and providing those homes requires continued investment. Squeezing the income available to fund that investment risks undermining those ambitions.

“These are immediate reactions, and intentions to raise rents or sell will not all become reality. But the strength of the response should give the Government serious pause for thought.”