Presenting the Autumn Budget this week, Rachel Reeves announced that the 2% surcharge would apply across the board and property income tax would rise to 22% for basic-rate taxpayers, 27% for higher-rate taxpayers and 47% for those paying the additional rate. The change will be introduced from April 2027.
Together polled 2,000 people and found that nearly nine in 10 believed that landlords would pass on the extra costs to tenants or sell up, reducing the supply of rental homes.
This rose to 94% among people aged 61-79.
The Office for Budget Responsibility (OBR) acknowledged that this could be a possibility, as its own forecast suggested that the measures would “reduce returns to private landlords” on top of other changes in the last decade, which had also reduced returns.
The body said the “successive eroding of private landlord returns will likely reduce the supply of rental property over the longer run. This risks a steady long-term rise in rents if demand outstrips supply.”
Are your clients ready for the first Making Tax Digital reporting deadline?
Sponsored by BM Solutions
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 leave landlords out of pocket, but renters too. Our research shows that the public understands that the extra costs will fall to those renting their homes.”
He added: “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.”
