The government has confirmed that it has not carried out a combined assessment of how recent tax changes and Renters’ Rights Act reforms could affect landlords.
In a written parliamentary response, Baroness Taylor of Stevenage stated that no single review had been conducted to measure the overall financial impact landlords may face from the combination of increased regulation and planned tax rises.
No Combined Cost Review Carried Out
The issue was raised by Lord Truscott, who asked what assessment had been made of the combined costs created by new requirements under the Renters’ Rights Act alongside proposed increases to landlord taxation.
Responding on behalf of the government, Baroness Taylor said that no assessment had been completed covering the combined effect of both measures.
She explained that the government had separately announced a planned 2 percentage point increase to property income tax rates, which is due to come into effect from April 2027.
The government said the tax change is intended to reduce the difference between taxation on employment income and income received from assets such as property.
An individual Tax Information and Impact Note was published for the policy, which described the expected administrative impact on landlords as “negligible”.
The assessment stated that around 2.4 million landlords could experience a tax increase by 2029/30, representing approximately 6% of taxpayers during that period. However, it suggested that the additional administrative requirements would have little impact on affected individuals.
Concerns Over Pressure on Landlords and Renters
Despite the government’s assessment of the tax change in isolation, industry figures have previously warned that landlords could face increasing pressure when tax rises are considered alongside new rental regulations.
Experts have raised concerns that higher costs could encourage more landlords to leave the private rented sector, reducing available housing supply and placing further pressure on rents.
Jonathan Stinton, head of mortgage relations at Coventry Building Society, warned that increasing taxes on landlords could ultimately affect tenants as well.
He said that when the cost of owning and operating rental properties increases, landlords may need to reflect those higher expenses in rent prices.
He also highlighted that similar tax increases on dividends could affect landlords who operate through limited companies, increasing costs across different ownership structures.
Mr Stinton added that if fewer landlords choose to remain in the rental market, reduced supply and continued demand could push rents higher, creating additional challenges for tenants and first-time buyers trying to save for a home.
Landlords Facing More Challenges
Sam Humphreys, head of M&A at Dwelly, said the increase in property income and dividend taxation creates another challenge for landlords at a time when many are already adapting to significant regulatory changes under the Renters’ Rights Act.
The comments come as landlords continue to navigate changes affecting the private rented sector, including new compliance responsibilities and increased operational costs.
While the government has assessed individual policies separately, the lack of a combined impact review has raised questions about whether the full financial burden facing landlords has been properly considered.
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