Agents urge Chancellor for fairer landlord tax review in Budget

Agents urge Chancellor for fairer landlord tax review in Budget

Propertymark has called on Chancellor Jeremy Healey to conduct a comprehensive review of the tax burden on private landlords in the upcoming Budget, highlighting the impact of cumulative property taxes on investment decisions and rental supply.

Propertymark, representing letting agents and landlords, has made a last-minute plea ahead of the Autumn Budget for the UK Government to address the complex and cumulative tax pressures facing private landlords. The trade body emphasises that the current tax framework, including restrictions on mortgage interest relief, higher Stamp Duty surcharges, and Capital Gains Tax, is discouraging property investment and affecting the availability of rental homes.

The call comes as the government prepares to deliver its Budget, with Propertymark urging a holistic approach to property taxation rather than isolated policy changes. The organisation stresses the need for stability and predictability in tax rules to support landlords’ confidence in maintaining and expanding rental portfolios.

Propertymark’s detailed tax concerns and proposals

Propertymark highlights several specific areas where tax policies are impacting landlords. The organisation points to the phased removal of mortgage interest tax relief, which has increased the effective tax rate on rental income for many landlords, reducing net returns and potentially pushing some out of the market. Additionally, the higher Stamp Duty Land Tax (SDLT) surcharge on additional properties has raised upfront costs, discouraging property purchases that could otherwise increase rental supply.

The trade body calls for a review of the cumulative tax burden, encompassing Income Tax, Capital Gains Tax, and SDLT, with particular attention to differences between individual and corporate ownership structures. It argues that tax treatment should better recognise reinvestment in property improvements, which are essential for maintaining quality rental housing and meeting evolving safety and energy efficiency standards.

Propertymark also raises concerns about the proposed High Value Council Tax Surcharge on residential properties valued over £2 million. The organisation warns this could disproportionately affect landlords and homeowners in high-value regions, urging the government to consider regional disparities and the surcharge’s interaction with existing property taxes.

Energy efficiency and housing support in the tax agenda

Beyond direct property taxes, Propertymark stresses the importance of practical financial support for energy efficiency improvements. Retrofitting older homes can require significant upfront costs, and the trade body urges the government to restore and expand tax incentives such as the Landlord’s Energy Saving Allowance and consider VAT relief on eligible works. Clear information on grants and loans is also called for to help landlords plan necessary upgrades without jeopardising rental supply.

On housing support, Propertymark reiterates its long-standing demand for Local Housing Allowance (LHA) rates to cover at least the cheapest 30% of local market rents, with an annual uprating guarantee. This would help tenants on housing benefits afford rents and maintain access to private rented accommodation, indirectly supporting landlords by reducing rent arrears and turnover.

Context of tax changes and landlord challenges

The private rented sector has faced a series of tax changes over the past decade, often introduced separately without a full assessment of their combined effects. The restriction of mortgage interest relief since 2020, increased SDLT surcharges on second homes and buy-to-let properties, and rising Capital Gains Tax rates have cumulatively increased costs for landlords. These changes coincide with growing regulatory burdens, such as enhanced safety standards and tenancy reforms, further squeezing margins.

As a result, some landlords have reduced their portfolios or exited the market entirely, contributing to rental supply shortages and rent inflation. The sector’s response to tax policy is complex, with investment decisions influenced by after-tax returns, financing costs, and regulatory compliance expenses. Propertymark’s call for a comprehensive review reflects a desire for a more coherent and balanced tax system that supports sustainable investment in rental housing.

Practical implications for landlords and letting agents

If the government heeds Propertymark’s call, landlords could see changes that improve tax predictability and reduce upfront costs, potentially encouraging more investment in rental properties. A review might lead to adjustments in SDLT thresholds or reliefs for reinvestment in property improvements, which would help landlords comply with ongoing safety and energy efficiency regulations without excessive financial strain.

For letting agents, a more stable tax environment could facilitate portfolio growth among clients and reduce the churn caused by landlords selling up due to tax pressures. Agents may also need to advise landlords on navigating any new tax rules or incentives introduced following the review.

However, until any Budget announcements are made and official guidance issued, landlords and agents should continue to monitor developments closely. The cumulative impact of tax changes remains a significant factor in portfolio management and investment planning.

Uncertainties and what to watch next

The scope and timing of any government review remain uncertain. Propertymark calls for clear terms of reference, sector engagement, and a published timetable, but it is unclear whether the Chancellor will commit to these steps in the Budget. The balance between raising revenue and supporting the rental market will be a key consideration for policymakers.

Landlords should also watch for any changes to the High Value Council Tax Surcharge and potential adjustments to SDLT rates or thresholds. Energy efficiency tax incentives and housing support levels may also evolve as part of wider government strategies on housing and climate goals.

Given the complexity of the tax system and its interaction with other regulatory requirements, landlords and agents should seek up-to-date official information and consider professional advice when planning investments or portfolio changes.

What landlords should consider now

• Review current tax liabilities and how recent changes have affected portfolio returns.
• Stay informed about the Autumn Budget announcements and any subsequent government consultations or reviews.
• Assess planned or ongoing property improvements to understand potential eligibility for tax incentives or reliefs.
• Monitor Local Housing Allowance rates if renting to tenants on housing benefits, as changes could affect rent affordability and arrears risk.
• Consider the impact of proposed new taxes such as the High Value Council Tax Surcharge on high-value properties in your portfolio.
• Maintain thorough records of property investments, improvements, and tax filings to support compliance and future planning.

Supporting landlords through tax and compliance challenges

The Landlord Association (TLA) membership offers practical resources to help landlords and letting agents manage the complexities of property taxation and compliance. Through TLA’s compliance materials, members can access guidance on tax-related documentation and record-keeping, which are essential for meeting HMRC requirements and preparing for potential tax reviews.

TLA’s new property management and compliance platform, ORBIT, is currently available in BETA testing. ORBIT is designed to assist landlords and agents in organising portfolios, managing rental documents, and recording key actions such as property improvements and tax filings. This can help maintain a clear audit trail and support decision-making amid changing tax policies.

Membership also provides updates on regulatory developments, enabling landlords to stay informed about government consultations and Budget measures affecting the private rented sector. Exploring TLA membership and ORBIT BETA access can provide valuable support in navigating the evolving tax landscape.

As the government’s approach to property taxation develops, landlords and agents who maintain organised records and stay engaged with sector updates will be better positioned to respond effectively.

Sources: Letting Agent Today