Nearly three-quarters of landlords expect to increase rents following the latest Budget tax changes, while more than half are considering selling some or all of their rental properties, according to a snap poll by Pegasus Insight.
The survey found that 73% of respondents expect higher rental income taxes to lead to rent increases when they are next permitted to review their charges. The findings follow the October Budget's further two percentage point increase in tax on rental income. Combined with increases announced last year, the basic, higher and additional rates will rise to 24%, 44% and 49% respectively from April 2027.
The changes announced by chancellor John Healey apply to landlords who own properties in their own names, rather than through limited companies, which are subject to Corporation Tax.
Landlords signal rent increases of up to 10% or more
The survey of 168 National Residential Landlords Association (NRLA) members found that 38% expect to increase rents by 5% to 10%, or to market levels if higher. A further 11% anticipate increases exceeding 10%, or a move to market rents, while 24% expect increases of less than 5%, or to market levels.
The findings suggest further pressure on tenants, although the figures reflect landlords' intentions rather than confirmed rent increases. The relatively small sample of NRLA members also means the results should not be treated as representative of all UK landlords.
More than half consider selling rental properties
The poll also found that 52% of respondents plan to sell some or all of their rental properties over the next 12 months in response to the tax changes. Of those surveyed, 38% intend to sell part of their portfolio, while 14% plan to dispose of all their rental properties.
Just 2% expect to purchase additional rental properties. Another 26% anticipate no changes to their portfolios, while 20% say it is too early to decide. The findings add to concerns about the future supply of privately rented homes.
Separate analysis published by the Intermediary Mortgage Lenders Association (IMLA) highlights the growing tax burden on individual landlords. Its report suggests some mortgaged landlords could face effective tax rates exceeding their rental profits, depending on their wider income and financial circumstances. In one illustrative example, a landlord earning a £100,000 salary could face a tax bill equivalent to 124% of their annual rental profit from 2027/28.
However, IMLA cautions that higher taxation will not necessarily lead to an equivalent reduction in rental housing supply. Properties sold by individual landlords may be acquired by other investors, including limited companies.
Property maintenance spending also under pressure
The Pegasus Insight survey found that 29% of respondents expect to reduce spending on property maintenance or improvements. This includes 13% who anticipate significant reductions. However, a majority of landlords, 55%, expect their spending on maintenance and improvements to remain unchanged.
The findings raise questions about how landlords will fund property improvements alongside rising operating costs and taxation.
Mark Long, director of Pegasus Insight, said: "The industry has repeatedly warned that increasing taxes on landlords risks increasing costs for tenants. Announcing another two percentage point rise before the previous increase has even taken effect suggests those warnings have gone unheard.
"The comments behind these figures are particularly telling. Landlords describe the increases as a stealth tax on tenants and question how they can keep investing in their properties, including improving energy efficiency, while absorbing another hit to their income. For some, the cumulative pressure is prompting them to question whether they want to continue letting property at all.
"The Government needs to consider what it is asking landlords to deliver and whether its tax policy supports that. Tenants need good quality homes at rents they can afford, and providing those homes requires continued investment. Squeezing the income available to fund that investment risks undermining those ambitions.
"These are immediate reactions, and intentions to raise rents or sell will not all become reality. But the strength of the response should give the government serious pause for thought."
