Higher taxes on property income could push typical rents up by £20-25 per month, according to analysis by the NRLA.

Chancellor Rachel Reeves increased tax on property, savings and dividend income from April 2027 when the property basic rate will be 22%, the property higher rate will be 42% and the property additional rate will be 47%. The NRLA believes the move announced in yesterday’s Budget will hit low-income renters hardest as they face a combination of rent increases and frozen housing benefit rates.

The Office for Budget Responsibility says increasing income tax on property income will result in higher rents, and the NRLA reckons this could see rents rise by £20-25 per month, rising to more than £40 per month in London.

Belief

“It beggars belief that the government thinks it’s helping renters,” says chief executive Ben Beadle. “Piling on further tax rises that will drive up rents, whilst keeping housing benefit rates frozen, is a one-way street to hitting low-income tenants the hardest. This can only be described as a deeply regressive package that will make life more difficult for renters across the country.”

Meanwhile, the Work and Pensions Secretary, has confirmed that housing benefit rates will remain frozen for a second year in a row in 2026/27. Government data has previously shown that 53% of recipients had a gap between their housing benefit payment and their monthly rents. This will only rise as a result of higher taxes leading to higher rents, says the NRLA.

Freezing

Just last week the Institute for Fiscal Studies warned that the ongoing freezing on housing benefit rates was widening disparities for low-income renters.

The Office for Budget Responsibility’s Economic and Fiscal Outlook report warns: “The measures announced in this Budget reduce returns to private landlords, following various measures over the past 10 years that have also reduced returns. This successive eroding of private landlord returns will likely reduce the supply of rental property over the longer run. This risks a steady long-term rise in rents if demand outstrips supply.”

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