One group who will be directly impacted by the recent budget changes are property landlords.
If you are investment planning in Cheshire or Oswestry, and looking at buy-to-lets, property income tax rates are set to increase by 2%, effective from April 2027. Basic rates are now 22%, whilst higher and additional rates are rising to 42% and 47% respectively.
The government says this will raise approximately £500 million in additional tax revenue. Property experts have warned that the increases could end up being passed on to tenants, although the question remains whether these extra costs will be offset by downward pressures on house prices.
Some analysts, such as Aneisha Beveridge, head of research at Hamptons, have said that it is individual landlords who are likely to be most impacted, rather than those currently operating through limited companies. The challenge facing the industry now is whether reduced returns in property investments will lead to fewer rental properties appearing on the market, if existing landlords sell up. Such a scenario could lead to future demand from prospective tenants far outstripping supply. It could also mean considerable upward pressure on rents.
The head of lettings at Chesterton, Adam Jennings, said that it was likely many landlords will now sell up. Other industry analysts concurred, arguing that the market had changed over the last ten years, following cuts to mortgage relief, higher stamp duty surcharges, wear-and-tear allowance removal and more admin fees. The industry estimates that nearly 1 million new rental homes are needed to meet demand by 2031.
