Landlord tax hike could be good news for letting agents, says industry commentator

While much of the property industry has condemned the chancellor’s latest tax raid on landlords, one industry commentator believes it could create opportunities for letting agents.

Sally Lawson, CEO of Agent Rainmaker, argues that rising taxes and tighter regulation could encourage more self-managing landlords to seek professional help rather than sell their properties.

Her comments follow the chancellor John Healy’s decision to increase tax on rental income by a further two percentage points, taking rates to 24%, 44% and 49% from April 2027.

The increase comes as landlords face additional obligations under the Renters’ Rights Act and Making Tax Digital.

Lawson believes the combination could make managing rental properties without an agent increasingly difficult.

“Landlords have every right to be angry. This is a second tax rise in two Budgets, on top of the biggest overhaul of renting in a generation,” she said.

“But I’d urge agents not to join the doom chorus, because the Budget has just made the strongest case for using a letting agent that I’ve seen in over two decades.”

Opportunity to win more landlord instructions

Lawson argues that smaller landlords managing their own portfolios could be particularly affected by the changes.

“Think about the self-managing landlord with two or three properties. They now have new tenancy rules to follow, quarterly digital tax returns to file and even thinner margins to protect. One mistake on compliance can cost them far more than an agent’s fee.

“Plenty of those landlords will decide they don’t want to shoulder all of that pressure alone. And others, if they’re not educated otherwise, will decide it’s not worth being in the sector anymore at all.”

From April 2027, Making Tax Digital requirements are also due to extend to landlords with qualifying income above £30,000.

Lawson believes the growing administrative burden could persuade more landlords to appoint managing agents.

However, she warned that agencies cannot simply wait for landlords to come to them.

“The agents who go out and find those landlords now, and show them clearly what they take off their plate, will win the instructions,” she said.

“The ones sitting back waiting for things to calm down will watch competitors take them.”

Could agents prevent landlords from selling?

The latest tax increases have prompted warnings that more landlords could leave the private rented sector.

Lawson accepts that some departures are inevitable but believes agents could persuade others to remain by demonstrating the value of professional management.

“Yes, landlords are leaving the sector, and some of that is inevitable. But a huge number of them are leaving because they’ve been trying to do it all alone.

“They’ve never had an agent alongside them, so they’ve never seen what a good one is really worth. Every one of those landlords is someone our industry failed to reach.

“If agents get out there and show landlords what a proper partnership looks like, plenty of them won’t need to sell at all.”

Her comments offer a different perspective from the widespread criticism of the Budget, although professional management cannot remove landlords’ tax liabilities or guarantee that rental investments remain financially viable.

Lawson will discuss how letting agencies can respond to the changes at Agent Rainmaker LIVE, taking place in London on 12 and 13 November.