Landlords weigh selling properties after new rental income tax, prompting rent-rise warnings

More than half of private-rental landlords say they are contemplating selling their properties after the Treasury announced a 4% surcharge on rental income effective April. The figure comes from a Propertymark poll of its members, representing about 2,860 properties, in which 57% reported receiving inquiries about leaving the sector following the tax announcement.

Savills’ residential research head Lucian Cook warned that a reduction in rental stock could intensify the existing undersupply, potentially pushing average rents up by 15% by 2031 and by 16% in London. He said, \"the issue that [landlords leaving the sector] creates is that, as that stock is lost, it means the under-supply which you have in the private rented sector, which already exists... becomes more concentrated in those people who remain.\"

Shadow housing secretary Katie Lam criticised the budget measures, stating that they would leave tenants \"fighting over fewer homes and facing ever-higher rents.\" A Ministry of Housing, Communities and Local Government spokesperson responded that there is no evidence of large-scale landlord exits and highlighted the Renters’ Rights Act, which aims to protect tenants from excessive rent hikes and bidding wars.

Industry data show that while the total number of private-rented homes in England has risen above five million, the sector’s share of the overall housing market has slipped from 20.3% in 2016 to 19.5% today. Property-market site TwentyEA notes that former rentals now make up about 15% of homes on sale, with over 800,000 properties sold since 2020, many of which are being purchased by owner-occupiers. At the same time, new supply is increasingly driven by corporate developers offering higher-priced luxury flats.