Property experts slam Budget tax raid on landlords

A property expert has slammed the government’s latest two-percentage-point tax rise on property income, as the move comes under fire over fears of higher rents.

Chancellor John Healey announced in the Budget that tax rates on property and savings income will increase by a further two percentage points from April 2027, adding to the rise announced by Rachel Reeves last year.

Other industry experts have criticised the move, warning that further tax increases could make it increasingly difficult for landlords to remain in the sector.

How much more can landlords take?

Paul Shamplina, founder of Landlord Action, said: “I really do wonder how much more the government thinks private landlords can take. Last year we had a two percentage point increase in tax on rental income announced, and now we are being told there is another two per cent on top of that. At what point does someone stop and ask what this is actually going to do to the rental market?

“I am speaking to landlords every single day, and far too many are already questioning whether it is worth staying in the sector. They have got rising costs, more regulation, the changes brought in by the Renters’ Rights Act, and now another tax increase to contend with.”

He added: “Of course, landlords should pay their fair share of tax, but there has to be a balance. We rely on private landlords to provide homes for millions of tenants, and if you keep making it more expensive and less attractive to let property, many more will inevitably decide to sell.

“The problem is that the tenants do not just disappear when a landlord sells up. They still need somewhere to live, and in many areas there simply are not enough rental properties available. Less choice and more competition are hardly going to help people who are already struggling with the cost of renting.”

Tenants will bear the brunt

The Office for Budget Responsibility (OBR) issued a damning assessment of the two-percentage-point tax rise, warning it could push rents higher for tenants.

Property industry experts have also criticised the measure as “punitive”, warning tenants could ultimately bear the brunt of the increase.

Timothy Douglas, head of policy and campaigns at Propertymark, said:  “The proposed steep and punitive rise in income tax on property income from April 2027 is a further disincentive to potential landlords from entering the market, and it will hit existing landlords badly.

“As the Office for Budget Responsibility has pointed out, this decision to raise the tax will result in a steady, long-term rise in rents, impacting tenants as well as landlords. Propertymark is concerned about the cumulative impact of successive changes on landlords’ confidence and willingness to invest in the private rented sector. This will be bad news for tenants if the supply of rental homes dwindles.

More BTL landlords selling up

Elliot Vure, sales director at Together: “The government’s decision to levy an extra 2% tax on rental income on second homes adds an extra notch of pressure to small-portfolio landlords.

“The government needs to be careful not to overstretch this key cohort of landlords, who provide a large percentage of the housing stock in the rental market.

“Each year they are losing incentives to maintain or expand their portfolios. This is through extra tax requirements, as well as the additional layers of legal complexity following the Renter’s Rights Act’s introduction.

“More buy-to-let landlords selling up will be a headache for renters, and another downward pressure on property prices. Time will tell whether the benefits of the potential £575mn yearly tax receipts generated by this move will outweigh the lost rental stock as a result.”

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