Nearly nine in ten Brits fear the Chancellor’s decision to increase tax on landlords will lead to higher rents, according to research by property lender Together.
Rachel Reeves hit landlords with a 2% tax hike on their rental income in this week’s Budget, a move seen by many as breaking Labour’s manifesto pledge not to increase taxes on working people.
Now new research published today from a survey conducted immediately after the Chancellor’s announcement on Wednesday suggests that the tax rise will lead to pain for renters as landlords pass on the extra costs to their tenants or sell up altogether, cutting the supply of rental homes in the long term.
A huge number - 86% - of 2,000 people polled in Together’s survey said the increased costs for landlords would simply lead to higher monthly payments for already hard-pressed renters. This rises to 94% of Baby Boomer generation (61 to 79-year-olds) surveyed.
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.”
The 2% surcharge will be applied across the board, increasing property income tax to 22 per cent for taxpayers on the basic rate, 42 per cent on the higher rate and 47 per cent for those paying the additional rate, to be introduced from April 2027.
