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Two thirds of landlords planning to raise rents say forthcoming tax increases are a key factor in their decision, according to new research.
In her recent Budget, the chancellor announced plans to increase income tax on rental income by two percentage points from 2027, prompting the Office for Budget Responsibility (OBR) to warn the move could push rents higher.
New polling appears to support that assessment. A survey of National Residential Landlords Association (NRLA) members by research firm Pegasus Insight found that 65% of landlords intending to increase rents over the next year cited the tax rise as a major reason, second only to higher overall running costs, which were mentioned by 68%.
Looking ahead, with the government set to Section 21 evictions from 1 May, landlords identified court backlogs as their main concern. According to the survey, 91% were either very concerned or slightly concerned about delays in the court system for repossessing properties.
Government data shows that it currently takes an average of over seven months for courts to process and enforce possession cases under the system replacing Section 21, the longest average since early 2022.
Regarding broader market conditions, 61% of landlords said tenant demand was strong. However, almost a quarter (24%) reported selling property over the past 12 months, while only 5% reported purchasing property during the same period.
The 19-percentage-point gap between sales and purchases is more than double the level recorded at the start of 2024, when the difference was eight points.
Of those who sold property in the last year, over a quarter (27%) did so with existing tenants in place.
Ben Beadle, chief executive of the National Residential Landlords Association, said: “This research should be a wake-up call to the government. Hiking taxes on rented housing will lead to higher rents. It’s not exactly clear how this approach will address the cost-of-living crisis ministers now say is the Government’s number one priority.
“More broadly, with no fault repossession due to end in just a matter of months, responsible landlords are seriously concerned about court backlogs. Ministers have pledged to ensure the justice system is ready to process cases where landlords have good reason. However, as of yet, they have failed to explain what ready means.
“Warm words mean nothing without a clear plan to ensure legitimate possession cases are processed and, if needed, enforced far quicker than at present.”
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