A letting agency director has accused Rachel Reeves of waging a war on landlords – and warned that tenants will face higher rent as a result of her attacks.
During Wednesday’s Autumn Budget speech, the chancellor announced a two percentage point rise in tax rates on rental income for landlords as part of her overall package set to raise £26bn in tax hikes.
The additional levy, Ms Reeves said, was only fair because no National Insurance was charged on property income.
But the move has been criticised by landlords who say they are already in the firing line on a range of measures, including the Renters’ Rights Bill that will eliminate Section 21 “no fault” evictions from May next year.
Deshal Raja, who owns around 50 rental properties and owns a letting agency, told The Independent that Ms Reeves’ rise in tax rates, although he was still unclear on the detail of the measure, would only lead to higher rents.
He said the move would encourage more small landlords to sell up, creating monopolies in the rental market which would mean less competition on prices and higher rents.
Meanwhile, he said the upcoming Renters’ Rights Bill, which will also mean landlords could face a tribunal on raising rents, will mean many will be now looking to put up rents to market rates before it is implemented next year.
He said: “You’ve got some kind people who look after your properties and unfortunately you just have to put it to market rate now, just to protect yourself . The Budget isn’t the main issue here, but it’s another measure against landlords that will ultimately impact renters.”
He added: “Normally you tax things which you want people to have less of, like you have an alcohol tax, a cigarette tax or gambling tax.
“But if you’re taxing people on their income, on the rental property or whatever, you’re end up with landlords selling up which will lead to a smaller property stock so tenants would have less choice in properties and higher rents.
“It’s actually a war on landlords – we’re an easy target, we can’t move our business abroad.”
The tax on landlords in Ms Reeves’ Budget will mean a landlord sees the basic and higher rate of tax on a rental property increased by 2 per cent.
This will see the property basic rate rise to 22%, the higher rate to 42%, and the additional rate to 47%, applying in England, Wales and Northern Ireland.
The measure is estimated to raise £500 million a year on average from 2028-29.
In her response to the Budget, Tory leader Kemi Badenoch took aim at the policy, saying: “Hiking tax on landlords will only push up rents. It will push landlords out of the market – the people who will suffer are the tenants.”
Rental prices across Britain have already soared to unprecedented levels, with new highs recorded in the third quarter of this year, according to Rightmove.
The average advertised rent across Britain, excluding London, now stands at a record £1,385 per month, a 3.1 per cent increase on the same period last year.
