The October budget brought unwelcome news for private landlords in England, Wales and Northern Ireland. From April 2027, they will pay a further 2% tax on rental income, in addition to the 2% increase announced in the 2025 budget.
Author
- Emma Laurie
Emerita Fellow, University of Southampton
Given the notoriously high cost of private renting in the UK, there may be little sympathy for landlords . And the new tax rise will most likely be passed on to tenants through rent increases anyway - a view shared by both the National Residential Landlords Association and the UK's public finance watchdog .
I'm a law professor specialising in social and private rental markets. I believe that the new tax represents a major missed opportunity. Instead of increasing landlords' tax burden - and indirectly raising rents for tenants - the government could have taken the chance to negotiate with landlords to cap rent increases.
But given that the new tax will probably be passed on to renters, how much power do tenants themselves have to resist rent hikes?
How to fight a rent raise
The Renters' Rights Act 2025 was rightly hailed as a landmark change in tenants' rights. It abolished the notorious section 21 "no fault" eviction , effective as of May 1, 2026.
But the act is very unlikely to protect tenants from a rent increase that is in line with the going rate. Landlords can only give notice to raise the rent once a year, and must provide a minimum of two months' notice. Tenants can challenge an increase by applying to a tribunal, but they will only be successful if the new rent is more expensive than the local market rate.
Both tenants and landlords are encouraged to provide information about rents for other similar properties. There is no single approved source for such information, but websites such as Zoopla and Rightmove are typically used.
Before applying to the tribunal, it is sensible to try to reach agreement over the rent. The 2025 act does give tenants much greater flexibility. They can now end a tenancy with two months' notice, whereas before the act, tenancies would often have a defined duration, for example 12 months. This means that tenants are no longer tied to paying for a tenancy that has become unaffordable. It may also make landlords more willing to negotiate to keep good tenants.
But the broader point remains: the 2025 act cannot protect against rent increases in areas where demand outstrips supply .
When the Renters' Rights Act was going through Parliament, the government was adamant that rent caps would not be introduced. At the time, I argued that it was part of an unspoken deal to win landlords' support for abolishing section 21 evictions.
How the government can protect renters
Rent controls are a source of controversy in the UK, largely because of the legacy of measures in force for most of the 20th century. But since rents were brought out of control by Margaret Thatcher's government in 1988, the private rental sector has adopted a classically neoliberal approach.
There is no universally agreed definition of neoliberalism. In housing, it generally means that private landlords should be free to charge market rents for homes that offer relatively little stability.
Prime Minister Andy Burnham has recently recognised that the neoliberal model "simply doesn't work well enough for ordinary people". What, then, is the alternative?
Instead of imposing the additional 2% tax on landlords, the government could have taken a first step to making renting more affordable by getting landlord support to cap rent increases. In other words, a trade-off between tax income, benefiting the government, and rent capping, which would potentially benefit tenants.
Rent control measures have become increasingly sophisticated, but they are certainly not a silver bullet for the housing crisis.
However, reducing landlords' tax obligations in exchange for modest price capping - for example by tying rises to the Consumer Prices Index, as Scotland has done - could work for landlords and renters alike.
Landlords have long expressed dissatisfaction with the numerous changes to their tax position since 2015. They do have a point: cumulative changes have made the English tax and regulation regime one of the least favourable in Europe and North America.
Any such deal would, of course, mean the government giving up the expected additional tax income - estimated at £35 million in 2027-28 and £445 million by 2030-31. But if the prime minister is serious about moving away from a rental housing market dominated by four decades of neoliberal thinking , this proposal would represent a modest first step in the right direction - one that would benefit everyone.
Emma Laurie does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
