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Landlords considering post-budget rent increases

New research from the Residential Landlords Association (RLA) has undermined the Government’s case that changes to the way landlords are taxed will not increase rents.

Interim findings from a survey of landlords by the RLA has found that 65% are now considering increasing rents as a direct result of the budget.

The chancellor announced earlier this month that mortgage interest relief for residential landlords would be restricted to the basic rate of income tax.


Also landlords will no longer be entitled to an automatic entitlement to a wear and tear allowance for their properties, leaving them with no recompense for general wear and tear of a property.

The RLA’s findings undermine HM Revenue and Customs’ assessment that these measures will have no significant impact on rent levels and it argued that the basis of the budget assumptions is wrong.

George Osborne had argued that landlords are taxed more favourably than home owners but both the Institute for Fiscal Studies and think tank Policy Exchange have warned that this is not correct. Unlike home owners, landlords are taxed on rental income and capital gains.

RLA chairman Alan Ward said: “The reality is that the chancellor’s belief that rental property is taxed more favourably than home owners is simply not correct.

“Rather than supporting the sector to provide the vital homes needed to support a flexible labour market, today’s Finance Bill will choke off supply and drive up rents.

“The belief that landlords should be compared to home owners is like comparing apples with pears. The two are vastly different. It’s time the Treasury recognised residential landlords as a business.”

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