Chancellor Rachel Reeves’ decision to impose a 2% tax hike on landlords’ rental income in last week’s Budget will almost certainly lead to rent increases, as buy-to-let investors seek to recoup yet more punitive levies, new research suggests.
Nearly nine in ten Britons believe the tax rise will force landlords to either pass on the additional costs to tenants or sell up entirely, reducing the supply of rental homes over the longer term.
According to a survey of 2,000 people by Together, 86% said the higher costs faced by landlords would translate into increased monthly payments for already hard-pressed renters. Among Baby Boomers (61 to 79-year-olds), this figure rises to 94%.
The 2% surcharge will be applied across the board, increasing property income tax to 22% for taxpayers on the basic rate, 42% on the higher rate and 47% for those paying the additional rate, to be introduced from April 2027.
Ryan Etchells, chief commercial officer at Together, said: “In our experience many of our landlord customers have chosen not to pass on increased costs to their tenants, instead absorbing extra payments associated with providing homes for tenants, which have been brought about by attacks on the private rental sector by successive governments.
“However, landlords with properties in their own names now face the taxman taking another sizeable bite out of their incomes thanks to Reeves’ rise in property income tax rates. The two percentage point hike will not only leaving landlords out of pocket, but renters too. Our research shows that the public understand that the extra costs will fall to those renting their homes.
“With all the regulatory, legislative and tax burdens of late (on top of the incoming Renters Rights Bill) this will inevitably result in higher rents from next year onwards, and if landlords can’t make their portfolios work for them they could be forced to sell-up altogether.”
Comments (2)
1. Increasing the income tax rate on landlords is a manifesto breach. Landlords are working people.
2. Why are landlords singled out from other businesses? Why not increase the tax on hairdressers’ businesses? Or the local garage owner’s profits? What’s the difference?
3. When will the government learn the simple economics that increasing the tax burden increases consumers’ costs, whether it be more expensive food or higher rents?
4. Growth? Yeah, right.
Originally Reeves was introducing NI for landlords, solicitors, accountants, etc. She changed her mind probably when she realised that thousands of landlords were of pension age. According to Reeves rents like savings are unearned income and should be taxed higher. All of my savings I earned tax paid as did everyone else. 2% increase is just another move to be rid of all private landlords. Government won’t stop bashing private landlords until we are all gone.