Could Andy Burnham’s proposed land tax force landlords to sell?

Reply to the comment left by Beaver at 17:40
Beaver, you write: “I think that a variety of elements of the Labour Renters Rights Act will push market rents up”. Very true. One point has not had much comment but is one that is familiar to commercial property investors and lawyers, such as myself. Tenants will usually pay more for a more flexible lease.
If at rent review, you are valuing a five year lease with no break clause that will attract a lower rent than a five year lease with a break right every anniversary of the lease. Even more valuable to a tenant is what the RRA creates; an indefinite lease term with a rolling tenant-only break clause on two months’ notice.
Maximum flexibility comes at a price. Landlords have less security of income but will obtain higher rents than they would otherwise.

Reply to the comment left by Ian Narbeth at 30/06/2026 – 10:51
The fact that the Labour Renters Rights Act bans landlords from taking more than the advertised rent (even if offered), forces landlords to include a price in an advert (other than on a notice on the property itself), bans payment of rent upfront, and limits rent increases when they occur all mean that landlords don’t have any sensible pricing strategy left to them any more, other than to advertise at the maximum possible rent whenever they advertise a new-let, but then come down if they need to, and any competent agent also has to advise that.

Because market rents are assessed in part on advertised rents this in turn is going to feed in to increasing market rents. And the Labour Renters Rights Act creates additional costs, particularly screening costs, that need to be passed on to all tenants because the Labour Renters Rights Act bans discrimination against benefits tenants and removes all powers that were there to deal with antisocial behaviour (no fault evictions), all of which has happened before anybody fixed the courts system.

That’s what happens when a government interferes in market, breaks the things that don’t need fixing, and doesn’t fix the things that need to change. It doesn’t benefit tenants; tenants, like all consumers, benefit from competition and choice.

But although I’m familiar with letting commercial property I’m really not sure how the Labour Renters Rights Act affects the value of long-term leaseholds on residential property. I once asked an old friend of mine, now deceased, why he didn’t buy his council house. He compared his council house to mine…lots of space, decent sized garden, enough off-road parking. And he only had to pay council rent which wasn’t as much as servicing a mortgage at the time we had the conversation. His answer was, “…why would I buy it? I’m living in a property a lot like yours and I don’t actually have to buy it because I can live here anyway, for not much rent, without having to take on all that debt and pay for it”.

And so, once a tenant is in a property and effectively has a right to stay if they carry on paying the rent, I’m not sure what the value of long-term leaseholds after the introduction of the Labour Renters Rights Act is actually going to be. IF you have the right to continue living in the property ANYWAY, why would you pay a lot of money for the long term leasehold?

Or does your comment only really refer to the value of five year leaseholds?

Reply to the comment left by Beaver at 30/06/2026 – 12:35
Well, you can get a tenant out if you want to live in the property yourself or want to sell. My point is that instead of having to commit for 6, 12 or 24 months, tenants can get out on two months’ notice (to expire at end of a rental period). That has a value compared to a fixed term lease with no right to break.

You are right that not being able to accept a higher than advertised rent will lead to increases. We will have Dutch auctions!

Personally, I would rather have less risk, cost and hassle from Govt and a slightly lower rent. Instead we have the threat of massive fines for things which are standard in business.

Reply to the comment left by Ian Narbeth at 30/06/2026 – 16:32
I agree. And provided that the property you are talking about is a property that has little or no development potential and also that as a tenant you don’t indulge in antisocial behaviour then as a tenant the Labour Renters Rights act gives you security of tenure. There is no value to the tenant in paying rent in advance and if the tenant had the money to buy a longer-term let or long-term leasehold, but now has security of tenure anyway, why would any tenant buy even a 5-year leasehold? Surely the tenant would be better putting the money into premium bonds.

So doesn’t this mean that the Labour Renters Rights Act devalues leaseholds?

I’m of the opinion that taxing landlords is not inherently a bad thing – but this scheme is just downright idiotic. Firstly, services that are consumed by the tenant, should be paid by the tenant – they are the ones who use the local services, not landlords!

Secondly, taxing the property on the basis of how much it is worth will cause home improvements to become tax burdens; why install (e.g.) double glazing if the improvement in house value is going to lead to a higher tax bill?

That said, given that the “Fairer Share” scheme being bandied around is going to produce obvious losers, would take time to get through Parliament & will produce a string of nightmarish headlines for the new government. Given this, its far more likely that Council Tax reform will be to change to more modern values (rather than 1991 valuation levels) & add some additional bands for the more expensive areas. Beyond that, possibly reforms to Stamp Duty (possibly paid by the seller when the house is sold as they have had the benefit of any house value increase?), but this 0,46% of value is highly unlikely to happen – and definitely not before the next GE.

Reply to the comment left by Ian Narbeth at 30/06/2026 – 16:32
If a tenant signs a tenancy agreement on the first of a month and then gives immediate notice, when will the tenancy end?

Reply to the comment left by The_Maluka at 07:05
If the “rental period” is from the first to the last day of a month then it will end in two months’ time on the 1st of the month. See: https://www.gov.uk/guidance/renters-rights-act-overview-for-tenants
“If you want to end an assured periodic tenancy after 1 May 2026, you can end it by giving 2 months’ notice:
in writing for example, by letter, email or text
on the day when the rent is due or the day before the rent is due”.
If, however, the tenant served notice the day after moving in, the tenancy would end at the end of the third month.
Example:
Tenancy starts 1st July and rental period is first to last day of month.
1st July notice served. Tenancy will end 1st September.
2nd July notice served. Tenancy will end 30th September.

Reply to the comment left by Ian Narbeth at 01/07/2026 – 10:55
That is an interesting response with which I half agree – in other words I am unsure. I asked because I believe that the earliest a tenant can leave is effectively three months after the tenancy starts. Usually the day of notice does not count, this is especially so with landlords giving notice in situations where the case will be heard before a judge. So surely it should be that a tenant must give notice before the first of the month?

I am not here to disagree with your expert opinion, I just wish to clarify the situation in my own mind.

Reply to the comment left by SteveP at 30/06/2026 – 18:41
On your “….I’m of the opinion that taxing landlords is not inherently a bad thing…” do you mean that you think taxing landlords more than anybody else is justifiable?

What I mean is, at the moment if you are a small business you can offset all your costs against rents; if you are a non-incorporated landlord you cannot offset all your finance costs against rents. Do you think that’s a good thing? And if so, why?

I many parts of London in back gardens not much better than sheds accomodation is rented out every one knows this is going on including councils. Fake shops all over selling illegal tobacco amongst other things,turkish barbers etc. Huge increase in HMO properties in Ipswich only property that was giving a reasonable return on investment ,now so many most have vacancies and rents falling. Result more and more unregistered HMO properties. I was told by Ipswich housing staff they are not looking for these unlicensed houses only act when enough complaints that can relisticaly can be acted on. Universal law of unintended consequences? I lived in Peru many years ago where there are so many rules and taxes avoided by paying under the counter ,clearly something similar will increasingly happen here.