Tax reforms introduced in 2026 marked a decisive shift in housing policy, reducing landlord demand and freeing up homes for first-time buyers, according to new research by the Joseph Rowntree Foundation.

The think-tank has released a new report, Rebalancing the housing market through tax reform, in which it says the use of the tax system to dissuade buy-to-let acquisitions and, in doing so, boost the position of first-time buyers (FTBs).

It argues that these reforms helped level the playing field between landlords and owner-occupiers and contributed to helping more than a million households accessing homeownership. At the same time, concerns about potential downsides to renters – namely the risk of higher rents and reduced affordability – have not materialised.

Several reforms introduced since 2016 have focused on strengthening the position of FTBs, recognising that landlords with ready access to borrowing and capital have been able to out-compete residential buyers and drive up prices.

“Unsurprisingly, this approach has proved unpopular with landlords and their lobbyists, who have argued that such policies have led to an ‘exodus’ of landlords, causing pressure on renters as they compete for fewer homes,” the report said.

It continued: “This rhetoric has worsened as interest rates surged following the mini-budget of September 2022. Higher borrowing costs for landlords weakened the buy-to-let model and sparked much coverage of, and concern about, the financial position of landlords and their willingness to remain in the tenure.

“Despite these simple – and often compelling – narratives, the actual impact of fiscal reform on home purchases into the private rented sector (PRS) is less clear and has been subjected to limited analysis. Nor has analysis meaningfully considered what happens to renters when rates of home purchases into, or the overall stock of homes in, the PRS contracts.”

The study found that:

+ Fiscal reform has successfully dampened demand from private landlords, driving down home purchases into the PRS and flatlining the size of the sector

+ Reduced demand from private landlord purchases has benefited residential buyers, particularly FTBs – there are now around 1 million more owner-occupiers than if the trend which preceded the 2016 reforms had been followed, many of whom would have otherwise been living in the PRS

+ This has happened with little negative impact on the renters who remain in the PRS, and those impacts that exist can – and should – be managed by policy and regulatory interventions.

Joseph Rowntree Foundation concluded: “These tax changes, in combination with wider support for FTBs, have had a significant, positive impact on FTBs, and affirms that tax strategies designed to rebalance who has power in the housing market, and with it who owns homes, are viable strategies to pursue. These are important lessons for the government to learn if it is to meet its goal of supporting more households into homeownership.”

Responding to the analysis by the Joseph Rowntree Foundation, the National Residential Landlords Association, has rejected its findings.

Increased taxes on landlords has failed to ease pressure on renters – NRLA