Tenants will pay for tax rises, say landlords

Landlords are planning to raise rents to cover the cost of higher taxes, a new poll warns. Letting agents can help them not to price themselves out of the market.

The poll on behalf of the National Residential Landlords Association shows that, of the landlords planning to increase rents in 2026, 65% say tax rises are a key reason. From April 2027, landlords will pay an extra 2% income tax on property revenue. At the time, the Office for Budget Responsibility said the tax hike could reduce supply and lead to higher rents.

Finding a balance

Agents will have the critical role of helping landlords set rents that are sustainable for everyone. Tenants are already feeling the strain: a survey by referencing firm Canopy recently found that renters are spending on average 41% of their income on rent. On the flipside, however, landlords have rising costs to cover. 68% of the NRLA’s survey respondents said they would be raising rents to cover the increased cost of running a property – the most common reason given.

Agencies can help by using local market data to help price properties appropriately. Tenant demand is still strong, according to the survey, so agents can at least afford to be selective by vetting tenants carefully to make sure they can afford rents comfortably.

The stakes are high for industry supply and tenant tenure as well as sustainable landlord and agency income. Instead of trying to recoup their higher costs, many landlords are simply selling up. 24% said they had sold properties in the last 12 months, compared to just 5% who had bought new homes. Of those who sold, only 27% did so with tenants in situ.  

As an alternative to helping landlords stay in the market, agencies may be able to connect sellers with investors, thereby keeping properties on their books. Having an end-to-end PropTech platform that connects sales and letting departments will protect rental portfolios and agency growth.