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14/7/25 8:13 pm
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Most people believe that landlords will raise their rents to pay the additional annual 2% tax they will have to pay on their rental income.
The claim has been made by leading BTL mortgage lender Together, which reveals that 86% of the 2,000 people it polled following this week’s Budget said the increased costs for landlords would lead to higher monthly payments for already hard-pressed renters.
The 2% surcharge will be applied across the board in England increasing property income tax to 22% for taxpayers on the basic rate, 42% on the higher rate and 47% for those paying the additional rate, to be introduced from April 2027.
It applies to those with properties in England, Wales and Northern Ireland.
A basic rate tax paying landlord earning £50,000 from rental income will pay an extra £755 a year, while a higher tax rate landlord earning £125,000 a year from their properties will pay an additional £2,460 a year.
"In our experience many of our landlord customers have chosen not to pass on increased costs to their tenants, instead absorbing extra payments associated with providing homes for tenants, which have been brought about by attacks on the private rental sector by successive governments,” says Ryan Etchells, Chief Commercial Officer at Together,
“But landlords with properties in their own names now face the taxman taking another sizeable bite out of their incomes thanks to Reeves’ rise in property income tax rates.
“The two-percentage-point hike will not only leaving landlords out of pocket, but renters too.
Our research shows that the public understand that the extra costs will fall to those renting their homes.
“With all the regulatory, legislative and tax burdens of late (on top of the incoming Renters Rights Bill) this will inevitably result in higher rents from next year onwards, and if landlords can’t make their portfolios work for them they could be forced to sell-up altogether.”
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