Increased taxes on landlords could create new opportunities for letting agents, according to Sally Lawson, CEO of Agent Rainmaker. Her comments follow the chancellor's decision to raise tax on rental income by two percentage points, taking rates to 24%, 44% and 49% from April 2027.
The increase adds to existing pressures, including new obligations under the Renters' Rights Act and the extension of Making Tax Digital. Lawson believes these changes could make managing rental properties without an agent increasingly difficult.
Landlords under pressure
Lawson acknowledged that landlords have reason to be frustrated. "Landlords have every right to be angry. This is a second tax rise in two Budgets, on top of the biggest overhaul of renting in a generation," she said. "But I'd urge agents not to join the doom chorus, because the Budget has just made the strongest case for using a letting agent that I've seen in over two decades."
She pointed to smaller landlords managing their own portfolios as particularly affected. "Think about the self-managing landlord with two or three properties. They now have new tenancy rules to follow, quarterly digital tax returns to file and even thinner margins to protect. One mistake on compliance can cost them far more than an agent's fee."
"Plenty of those landlords will decide they don't want to shoulder all of that pressure alone. And others, if they're not educated otherwise, will decide it's not worth being in the sector anymore at all."
Opportunity to win more instructions
From April 2027, Making Tax Digital requirements are due to extend to landlords with qualifying income above £30,000. Lawson believes the growing administrative burden could persuade more landlords to appoint managing agents.
However, she warned that agencies cannot simply wait for landlords to come to them. "The agents who go out and find those landlords now, and show them clearly what they take off their plate, will win the instructions," she said. "The ones sitting back waiting for things to calm down will watch competitors take them."
Could agents prevent landlords from selling?
The latest tax increases have prompted warnings that more landlords could leave the private rented sector. Lawson accepts that some departures are inevitable but believes agents could persuade others to remain by demonstrating the value of professional management.
"Yes, landlords are leaving the sector, and some of that is inevitable. But a huge number of them are leaving because they've been trying to do it all alone," she said. "They've never had an agent alongside them, so they've never seen what a good one is really worth. Every one of those landlords is someone our industry failed to reach."
"If agents get out there and show landlords what a proper partnership looks like, plenty of them won't need to sell at all."
Her comments offer a different perspective from widespread criticism of the Budget, although professional management cannot remove landlords' tax liabilities or guarantee that rental investments remain financially viable. Lawson will discuss how letting agencies can respond to the changes at Agent Rainmaker LIVE, taking place in London on 12 and 13 November.
