Autumn Budget tax hikes set to raise rents for renters
5 months ago | 1 comments
Rachel Reeves’s landlord tax will shrink rental supply and fuel rising rents
12:01 AM, 2nd December 2025, 5 months ago
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The Chancellor Rachel Reeves’s Budget move to increase tax on landlords’ rental income is set to push up rents and force landlords to sell, one mortgage expert is warning.
Simon Gammon, the founder and managing director of Knight Frank Finance, told The Independent that the 2% uplift will be the ‘last straw’ for many landlords.
He warned that the PRS is already stretched and said more exits will accelerate the shortage of available homes.
He said: “The nonsense is that the more properties that come to the market, the less they will be available for rental, and therefore the rents will continue to go up. Which doesn’t help anybody.”
No impact assessment
His intervention comes amid growing concern that the Treasury did not carry out an impact assessment on how the new charge would influence rents or housing availability.
The omission has raised eyebrows across the sector, particularly as rents have surged over the past two years.
Average rents increased 8% in 2023 and a further 9% in 2024, with London seeing an 11.5% jump last year.
Mr Gammon said landlords are being pushed towards the exit ‘like death by a thousand cuts’.
He also points to the abolition of mortgage interest relief in 2015 as the start of the squeeze.
Since then, a series of regulatory and tax reforms have reshaped the market, and the Renters’ Rights Act will bring more pressure on evictions and rent rises.
Landlords 2p rental income surcharge
Labour’s plan for the proposed extra 2p in the pound on rental income could be the tipping point, Mr Gammon warns.
He says that many landlords who have been operating on slim margins may decide the numbers no longer work.
Mr Gammon told the newspaper: “People are just not going to go into the market, or going to sell their buy to let, and that means there’s less rental properties.
“It’s a nonsense.”
He is predicting that the consequences will start to show within two years.
That’s when landlords will begin to understand the scale of the change when they receive their tax bills for 2026 or 2027 and landlords will sell.
Losses will rise
Mr Gammon argues that while some landlords have been willing to absorb modest annual losses, the sums involved will soon be far larger.
He warns: “People think, ‘As long as I’m breaking even, or it’s only costing me a few hundred pounds a year in costs, then I can kind of stomach it’.
But now it’s going to be thousands of pounds for most landlords, and they will sell.”
The government’s impact assessment accompanying the new measure did not analyse how higher taxes might influence supply or rents.
It did, however, flag concerns about equality and acknowledged that members of the Asian community would be disproportionately affected, as they account for 4.8% of landlords despite representing 2.8% of the wider population.
Tags:
Budget landlord tax rise, Knight Frank Finance, Rachel Reeves landlord tax, Rental market crisis, Rising Rents UK, Simon Gammon interview, UK rental supply
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Member Since June 2024 - Comments: 5
11:33 AM, 2nd December 2025, About 5 months ago
It’s becoming more and more blatantly obvious that Starmer meeting with Blackrock that he does not want private landlords, they want corporate landlords only to give them more control of the rented sector. Obviously there has been a deal done with these people and as we know Blackrock and Vanguard are main share holders in Serca who rent properties out which are owned by private landlords. It a disgrace with everything else that they have already done. 😡
Member Since October 2020 - Comments: 1171
5:05 PM, 2nd December 2025, About 5 months ago
The problem is that the Renters Rights Act changes the whole process by which rent can increase.. If a landlord is already charging the full market rent for the property and then tried to increase it by 2% in April 2027, I think that the Tribunal would refuse the increase if the tenant challenged it. There would be no basis for them to agree a figure above market rent.
Over time, market rents will gradually increase to accommodate the tax rise, but landlords should not count on recovering additional costs straight away. This would also apply to other universal costs, such as the fee for joining the database and ombudsman scheme when these come in.
Other costs, such as EPC upgrades, repairs costs etc will be even more difficult to recover as they won’t apply universally and will only affect market rents tangentially.
Member Since September 2018 - Comments: 3524 - Articles: 5
8:11 PM, 2nd December 2025, About 5 months ago
Reply to the comment left by DPT at 02/12/2025 – 17:05
…for the RRA costs like the dbase and ombudsman to be recouped asap, EVERY single LL needs to add these in to the next rent increase they make for every single property they let.
If everyone did this, within the first year the ‘market rate’ would reflect these additional costs and so increase as a result.
Don’t forget, marketing after the RRA comes in it will (artificially) raise the market rate on paper – because you can only rent at what you advertise so a rental price listed will be inflated on the basis you will be able to take a ‘lower’ offer (even though the lower offer may actually still be market rate)
Anyone else advertising a similar property in similar location will also do the same to match the ‘new’ market rate.
How will anyone ultimately know exactly what the rental price was agreed between the LL and T for that property? Could it be £20 a month less than what was advertised or £100 a month less?
If anything this distorts the market further – certainly not helping tenants, which apparently IS/WAS the intention of the RRA….
Member Since September 2018 - Comments: 3524 - Articles: 5
8:25 PM, 2nd December 2025, About 5 months ago
Reply to the comment left by DPT at 02/12/2025 – 17:05
I think a counter claim to the Tribunal should be made by the LL citing the EICHR, Article 1 of Protocol No. 1 which protects the “peaceful enjoyment of his possessions”, which can include earned future income or existing claims to property.
This is an interesting read…
https://rm.coe.int/168007ff55#:~:text=on%20Human%20Rights-,Article%201%20of%20Protocol%20No.,or%20other%20contributions%20or%20penalties.
Member Since October 2020 - Comments: 1171
11:09 AM, 3rd December 2025, About 5 months ago
Reply to the comment left by Reluctant Landlord at 02/12/2025 – 20:25
I dont think that it really matters how many landlords add these costs to their rents. The critical factor is how few tenants challenge the increase. That’s the way that the overall market rent rises.