Majority of Landlords Set to Increase Rents Following Chancellor's Tax Changes
A significant majority of private landlords across the United Kingdom are planning to raise rental prices in direct response to the government's new tax measures, according to industry research. The National Residential Landlords Association (NRLA) has published survey findings indicating that financial pressures from Westminster are set to be passed on to tenants.
Tax Policy Driving Rental Market Decisions
The survey of 837 NRLA members revealed that 65 per cent of landlords who intend to increase rents over the coming year cite Chancellor Rachel Reeves' planned tax on property income as their primary reason. The policy, announced in last year's Budget, will introduce a two percentage point tax rate on property income starting from April next year.
This fiscal measure forms part of a broader package of tax increases designed to expand the government's financial headroom to just under £22 billion. Treasury projections estimate the property income tax will generate approximately £500 million in additional revenue by 2030.
Rental Costs Outpacing Property Values
Official statistics from the Office for National Statistics (ONS) demonstrate that rental inflation is already exceeding house price growth, placing additional strain on household budgets. In the twelve months to December, average monthly private rents in the UK increased by four per cent to reach £1,368, while average house prices saw a more modest rise of just 2.5 per cent.
Ben Beadle, Chief Executive of the NRLA, described the survey results as a "wake-up call" for government ministers. "It's not exactly clear how this approach will address the cost-of-living crisis that ministers now identify as the government's number one priority," Beadle commented, questioning the policy's alignment with broader economic objectives.
Regulatory Changes Compound Landlord Concerns
The property sector faces additional challenges from forthcoming regulatory changes scheduled to take effect from 1 May. The government plans to abolish 'no explanation' repossessions, a move that has raised concerns about potential court backlogs affecting property owners.
Internal government figures indicate that possession cases currently take around seven months to progress through the court system. The NRLA survey found that 90 per cent of property owners expressed concern about these justice system delays.
"With no-fault repossession due to end in just a matter of months, responsible landlords are seriously concerned about court backlogs," Beadle explained. "Ministers have pledged to ensure the justice system is ready to process cases where landlords have good reason. However, as of yet, they have failed to explain what ready means in practical terms."
Historical Context and Policy Development
The concept of taxing property income has received support from influential policy voices in recent years. Torsten Bell, now serving as Pensions Minister, previously advocated for such measures during his tenure as Chief Executive of the Resolution Foundation think tank.
Industry representatives had warned prior to the Budget announcement that new levies on property income would inevitably translate into higher costs for renters nationwide. The latest survey data appears to confirm these predictions, highlighting the interconnected nature of fiscal policy and housing affordability.
The combination of tax changes and regulatory reforms creates a challenging environment for both property investors and tenants, with implications for housing supply, rental affordability, and market stability across the country.
