Rachel Reeves’s landlord tax will shrink rental supply and fuel rising rents
5 months ago | 5 comments
Government dismisses claims property tax rise will push up rents despite OBR warning
12:01 AM, 18th December 2025, 4 months ago
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The government claim the Office for Budget Responsibility (OBR) does not believe the decision in the Autumn Budget to raise property tax income will affect rents.
In answer to a written question from Lord Truscott about the impact of tax rises on landlords in the Autumn Budget on the supply of property in the private rented sector and rent levels, Lord Livermore claimed the OBR does not expect reform to property tax income to “significantly affect rents.”
This is despite the OBR’s Economic and Fiscal Outlook report warning that the “successive erosion of private landlord returns will likely reduce the supply of rental property.”
Risks a steady long-term rise in rents
In the Autumn Budget, Chancellor Rachel Reeves announced tax rates on property income would increase by 2 percentage points.
Financial Secretary to the Treasury Lord Livermore claimed the OBR “does not expect that the reform to property income tax will have a significant impact on rental prices.”
However, the OBR’s Economic and Fiscal Outlook report, says the plans in the Budget would reduce returns for landlords.
The document says: “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.”
Final nail in the coffin for landlords
The Treasury failed to carry out an impact assessment on how the new charge would influence rents or housing availability.
Many industry experts have warned the 2% rise could be the final nail in the coffin for landlords.
Jonathan Stinton, head of mortgage relations at Coventry Building Society, warns: “Hiking property income tax won’t just hit landlords, it will hit renters in the pocket too. When the cost of being a landlord rises, those pressures almost always find their way into monthly rents, meaning those who don’t own a home pay the price. A similar rise to tax on dividends means the cost will also go up for landlords who hold their property in a limited company.
“The more landlords are taxed the less appealing it is to let a property, which could lead to fewer landlords and reduced choice for landlords. The simple but powerful forces of supply and demand would then push rents higher, making it much more difficult to rent a home.”
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Defective lease - missing parking space?
Member Since October 2022 - Comments: 205
10:25 PM, 18th December 2025, About 4 months ago
Reply to the comment left by Keith Wellburn at 18/12/2025 – 12:46
You won’t have anywhere to live, but at least you can console yourself that you can afford a pint. There, now life is good again!
Member Since October 2022 - Comments: 205
10:34 PM, 18th December 2025, About 4 months ago
Lord Livermore is wrong! I am already charging more than I would have on at least one property when I took on a new tenant recently.
I agreed the rent on the assumption that taxes would go up but said if the govt didn’t increase landlords’ taxes then I would reduce it slightly. I’ve just had to tell him that I will stick with the higher rate as a result of the budget.
Member Since December 2025 - Comments: 1
12:12 AM, 19th December 2025, About 4 months ago
When will enough be enough. This isn’t a one off action but an ever increasing hostile environment towards landlords
Not the bad landlords either, who will continue to break rules regardless, but the good that follow the relentlessly increasing rule set.
There have been calls for landlords to collectively take action before on these forums (like a union). Can that not be collectively organised by an influential lobby such as Property118 perhaps?
I would happily be a paying and contributing founding member
Member Since October 2024 - Comments: 197
9:19 AM, 19th December 2025, About 4 months ago
Reply to the comment left by Dennis Forrest at 18/12/2025 – 13:51
This is if all landlords sell to the owner/occupiers.
There are still investors looking for properties and willing to offload from desperate landlords.
I have sold some properties, 2 out 3 went to the owner occupiers, one of these to the tenants. I wish to sell 3 more, all currently rented. I may have to give notice to sell them as empty will attract owner occupier, but nothing is certain. Or put them for sale. If owner occupier wish to buy them give 2 to 3 months notice.
Then later sell the ones as the fixed rate comes to end.
As I sell, more opportunities to keep some properties empty as tenants leave. So the double council tax can be paid. The government has made sure either there is income tax or council tax to pay for landlords.
Nothing is done to help the UK citizens. This government only helps themselves.
Member Since September 2018 - Comments: 3538 - Articles: 5
10:45 AM, 19th December 2025, About 4 months ago
what’s new?
They don’t listen to anyone in any industry, anyone who runs a business, any independent consultants or indeed even their own procured research findings.
Fingers in the ears policy making at its finest.
Member Since September 2018 - Comments: 3538 - Articles: 5
10:51 AM, 19th December 2025, About 4 months ago
Reply to the comment left by Tiger at 19/12/2025 – 09:19
Double council tax for an empty property can be avoided if you let the property for free (or rent it for less than £250 per year as it falls outside the Housing Act 1988 entirely.)
A family member or mate can use the property as storage so it looks like they have moved in (as an example). Nothing stopping them claiming the single person CT charge and you simply paying it on their behalf….
just saying….
Member Since August 2014 - Comments: 336
11:44 AM, 20th December 2025, About 4 months ago
It’s not just a 2% rise though is it.
It’s taking the tax rate up from 20% to 22% for a basic rate tax payer, which is 10% more tax each year, and from 40% to 42% for a higher rate tax payer, which is 5% more tax each year.
And as the majority of landlords have only 1 rental property, and likely using the income to supplement their pension, I would hazard a guess that the majority of landlords are gonna see a 10% increase in their tax bill.
The government can’t seriously think that this tax hike won’t seriously impact rents. It is another lie by this dreadful lying government.
Member Since July 2013 - Comments: 90
12:04 PM, 20th December 2025, About 4 months ago
I may have overlooked this in replies, but on 1st May 2026 the Renters Rights Act comes into effect. Whilst it will be possible to increase the rents once a year, there will have to be comparables.
So merely – as before – increasing the rent to take account of extra overheads – such as tax – will no longer be possible, will it?
Instead it will be necessary to be able to quote rentals achieved.
Member Since March 2023 - Comments: 1506
4:24 PM, 20th December 2025, About 4 months ago
You can also avoid double council tax by installing a ghost tenant, probably not legal but you will never be caught.
Invent a tenant and tell the council he has moved in. The council will sent out a council tax bill, and as long as you pay it the council will never investigate.
Member Since March 2024 - Comments: 281
4:30 PM, 20th December 2025, About 4 months ago
Reply to the comment left by GlanACC at 20/12/2025 – 16:24
I wonder how far you could push that. I recall reports back in the 1980s when news print unions had publishers over a barrel there was actually a ‘M. Mouse’ that received a pay cheque every month on one newspaper..