Landlords warn Budget costs will push up rents

Nearly two-thirds of landlords say they will put rents up to recover losses from tax and regulatory changes, research reveals.

According to Pegasus Insight, tenants could face tighter scrutiny too, with landlords reporting that the changes will affect whom they are prepared to let to.

Ahead of the Budget on 28 October, the research firm has urged the government to resist imposing further costs on the sector.

Previous Pegasus research found that landlords had responded to taxation and regulation by selling properties, incorporating or delaying investment.

Court capacity concerns

The firm’s founder and director Mark Long said: “The growing concern about the courts should also give policymakers pause.

“The new possession regime will depend heavily on a court system landlords can have confidence in, so ensuring it has the capacity to cope must be a priority.”

He added: “The Private Rented Sector needs a period of stability.

“Further tax increases or additional costs could change landlord behaviour in ways that ultimately affect tenants through higher rents, reduced choice or fewer homes available to rent.”

Landlord tax pressures

The Landlord Trends research found that 88% of landlords were concerned about the 2% rise in income tax rates on income from properties held in personal names, up three percentage points on the previous quarter.

Asked about recovering losses, 64% said they would look to increase rents.

Meanwhile, 83% agreed that tax and regulatory changes would make them more selective about tenants.

Concern also extended to regaining possession under the Renters’ Rights Act, with 91% saying they were ‘very concerned’ about potential court backlogs.

Tenants face higher costs

Separate research from Pegasus found that the typical tenant pays £917 in rent a month, 11% more than a year earlier.

Among tenants who had lived in their property for at least a year, 46% had experienced a rent increase during the previous 12 months.

The research also asked tenants what they expected to happen to rents as landlords met the costs of complying with the Renters’ Rights Act.

More than a quarter expected increases as landlords passed those costs on, while just 9% expected rents to fall.