Landlord survey suggests tax reform also risk accelerating landlord exits despite strong tenant demand
Two thirds of landlords planning to raise rents over the next year say the forthcoming increase in tax on rental income is a significant reason for doing so, according to a new survey of National Residential Landlords Association (NRLA) members.
In the most recent Budget, Chancellor Rachel Reeves confirmed that income tax on rental income will rise by two percentage points from 2027. The Office for Budget Responsibility (OBR) has already warned that the move is likely to feed through into higher rents, and the latest survey data appears to support that assessment.
Research carried out by consultancy Pegasus Insight for the NRLA found that, among landlords intending to increase rents in the next 12 months, 65% cited the tax rise as a key factor. The only more common reason, mentioned by 68% of respondents, was the need to cover rising day-to-day costs associated with running rental properties.
Landlords also highlighted growing concern over changes to possession rules. With the government set to abolish so‑called “no explanation” repossessions from May 1, respondents identified delays in the court system as their main worry. The poll showed that 91% of landlords were either very or slightly concerned about how long it takes for possession cases to progress through the courts.
Official figures indicate that it now takes, on average, more than seven months for courts to process and enforce possession claims under the framework that will replace Section 21. This is the longest average duration recorded since early 2022.
Despite robust tenant demand, the data points to continued net disposals in the private rented sector. Some 61% of landlords surveyed reported that demand from tenants is currently strong. Yet almost a quarter (24%) said they had sold at least one property in the previous 12 months, compared with only 5% who had bought during the same period.
The difference between those selling and those buying, at 19 percentage points, is more than double the eight‑point gap reported at the start of 2024. Among landlords who have sold in the past year, just over a quarter (27%) disposed of properties with tenants remaining in situ.
Commenting on the findings, Ben Beadle (pictured right), chief executive of the NRLA, said the figures highlighted the pressures building within the private rented sector. “This research should be a wake-up call to the government,” he said.
“Hiking taxes on rented housing will lead to higher rents. It’s not exactly clear how this approach will address the cost-of-living crisis ministers now say is the government’s number one priority.
“More broadly, with no fault repossession due to end in just a matter of months, responsible landlords are seriously concerned about court backlogs. Ministers have pledged to ensure the justice system is ready to process cases where landlords have good reason.
“However, as of yet, they have failed to explain what ready means. Warm words mean nothing without a clear plan to ensure legitimate possession cases are processed and, if needed, enforced far quicker than at present.”
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