The Autumn Budget this month could push up housing costs for millions of tenants across England if the government decides to squeeze landlords again, research reveals.
Sector research reveals 88% of landlords are expressing deep anxiety over a proposed 2% income tax rate increase levied against personally held portfolios, representing a three-percentage point rise in concern from last quarter.
The landlord survey by Pegasus Insight also found that 64% of landlord respondents state clearly that they intend to pass on these extra administrative and fiscal losses to tenants with higher rents.
Meanwhile, 83% of those surveyed admit that the expanding web of taxation and regulatory adjustments will force them to become tougher on tenant selection.
Budget changes fuel landlord anxiety
Mark Long, the firm’s founder and director, said: “Landlords are already preparing for significant change under the Renters’ Rights Act, and the prospect of further tax changes in October’s Budget is adding to the uncertainty facing the sector.
“The growing concern about the courts should also give policymakers pause.”
He added: “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.
“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.
“The Budget should not add to those pressures.”
Court backlogs prompt eviction worries
Fears over the implementation of the Renters’ Rights Act extend well beyond financial liabilities, the survey reveals.
A striking 91% of landlords report being very concerned about court delays when attempting to gain possession of their homes.
Previous sector findings show landlords frequently respond to changing legislative environments by selling off stock, transferring portfolios into limited companies or putting future acquisition plans on hold.
Consequently, additional tax burdens introduced by the Chancellor risk creating fallout that hits ordinary households far harder than landlords themselves.
Rising costs squeeze tenant budgets
Tenants are becoming increasingly aware of how these operational pressures directly impact their own monthly outgoings.
A quarter of renters anticipate rent increases as landlords sell off properties, while barely 9% expect any reduction.
The average tenant now pays £917 a month, representing an 11% jump year-on-year, while 46% of existing occupiers residing in homes for more than 12 months faced a rate increase over the past year.
Landlords face higher taxes
Along with growing fears about the Budget, landlords face higher taxes on rent profits from April 2027, Rob Morgan, the chief investment analyst at Charles Stanley Direct says.
He warns: “Residential property is the largest store of wealth in the UK, making it a perennial target for revenue raising tactics, and this October’s event could certainly be another one to monitor closely.”
Mr Morgan highlighted the scheduled rise in tax rates on rent profits to 22%, 42% and 47%, alongside speculation about higher Capital Gains Tax and the prospect of further details on the proposed council tax surcharge for homes worth £2 million or more.
On the potential impact of a Capital Gains Tax increase, he said: “Yet for those looking to realise investments over a shorter time frame, any CGT increase would mean selling becomes more expensive.”
Although broader property tax reform remains a subject of debate, Mr Morgan said no specific proposal had been announced and sweeping changes would take time to introduce.
No surprise for landlords
The managing director of Accommodation for Students, Simon Thompson, said: “It shouldn’t come as a surprise to student landlords that new legislation and proposed tax hikes are forcing residential investors to rethink portfolio sizes and tenant selection.
“Rumours of what might be in the Autumn Budget could see landlords, especially small operators, reconsidering their role in the PRS.”
He added: “While there has been a lot of change for student landlords this year, so far, the impact on tenants and a lack of choice will soon be felt.
“In addition, landlords also face a court bottleneck to evict tenants, and the situation will also be off-putting to potential new landlords looking to invest too.”
