Almost two-thirds of landlords say they will look to raise rents to recover higher costs as the sector braces for next month’s Budget.
New research from Pegasus Insight found 64% of landlords would seek to recoup losses through higher rents.
Meanwhile, 88% expressed concern about the two percentage point increase in income tax rates applying to rental income from personally held properties. That figure has risen three percentage points since the previous quarter.
The findings come ahead of the Budget on 28 October and follow a series of tax and regulatory changes affecting the private rented sector.
Landlords threaten to pass on costs
Pegasus Insight’s Landlord Trends research suggests further increases could influence more than rents.
Some 83% of landlords said tax and regulatory changes would make them more selective when choosing tenants.
The research firm argues that further costs could also influence investment decisions and the number of homes available to rent.
Its separate Tenant Trends research found renters already expect landlords to pass on some regulatory costs. More than a quarter anticipate higher rents as landlords meet requirements under the Renters’ Rights Act, according to Pegasus.
The Act introduced major changes to private tenancies in England from 1 May, including the abolition of Section 21 evictions and the move to assured periodic tenancies.
Court delays worry landlords
The ability to regain possession is another major concern.
Pegasus found 91% of landlords were ‘very concerned’ about potential court backlogs when seeking possession.
Under the new regime, landlords must use statutory possession grounds. Where a tenant does not leave after a valid notice expires, the landlord can apply to the court for a possession order.
Mark Long, founder and director of Pegasus Insight, 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. 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.”
