"When you continuously pummel landlords, tenants will also feel the pain"

It's easy to forget that the rental market makes up around a third of overall housing stock. And yet the country's landlords have been weathering a fiscal and monetary storm for a decade now. Reliefs have been removed, stamp duty increased by an additional 2% on any new buy-to-let purchases and now additional taxes on dividend income are incoming. Coupled with the introduction of the Renters Rights Act, the benefits of being a landlord, versus the risk, have made it an increasingly unattractive proposition, especially when you can get a fair rate in a long-term savings account right now. But when you continuously pummel landlords, tenants, too, will feel the pain. Many landlords simply do not have the financial wriggle room to keep on taking the hit and hiking rents is the only option left. That or leave the sector altogether. In which case, as the Nationwide suggests, the outcome is more upwards pressure on rents and more pressure on the people who can often least afford it.

The Nationwide is almost certainly on the money with regard to the future trajectory of rents. Rents will continue to rise into 2026, primarily due to landlords passing on the increased costs they now face. Landlords face financial strain from persistently high mortgage rates, ongoing tax disadvantages (like limited mortgage interest relief), and the compliance burden of the Renters' Rights Act, which comes into force on May 1 next year. That will indeed be the day many landlords cry out Mayday. This act ends "no-fault" evictions, boosting tenant security, but these rising operating costs are expected to be absorbed by tenants through rent hikes. Landlord sentiment is low, leading to some selling properties, which further shrinks the supply and pressures rents upward. Tenants will undoubtedly bear a lot of the pain.

The relentless onslaught on landlords is causing severe damage to the private rented sector. The latest Budget income tax increase by another 2% is crippling. Landlords are not rich, nor are they a charity. In reality, most use this as a retirement plan. Providing around a third of housing, they aren't obligated to provide housing to anyone but support housing, which councils no longer offer due to their stock sell off. Coupled with the upcoming demands of the disastrous Renters Rights Act, some smaller landlords will have no choice but to exit or to increase rents to pass on the costs to tenants in higher rents, some of whom are the most vulnerable in our society. Local Housing Allowance has been stagnant, meaning social tenants having to find ways to bridge the gap. We are seeing landlords with larger portfolios expanding and diversifying as they have the resources to do so. The corporate giants are also starting to dominate the sector, which creates a very dangerous playing field.

With the Renters Reform Act already placing many landlords on red alert ahead of its introduction in 2026, the additional 2% property income has made them brace for impact. Landlords unable to move their properties into limited companies now face shrinking margins or even losses, pushing some to sell up and step away from investing altogether. We have had multiple own goals in the rental market by this government and previous governments. Combined, all these measures risk reducing rental supply and worsening conditions for tenants rather than improving them, leaving the market increasingly dominated by large corporate landlords able to operate at scale.

The Budget's 2% property tax hike is the straw breaking the camel's back. Small landlords are selling up because the numbers no longer work. When they exit, rental supply shrinks and rents climb. Professional landlords with deeper pockets are staying but passing every cost increase straight to tenants through higher rents.
The rental market provides roughly a third of UK housing stock, yet landlords have faced a decade of financial punishment. Mortgage interest relief got slashed, stamp duty jumped 2% and now dividend taxes are rising. Add the Renters Rights Act's compliance burden, and you can see why many are cashing out. The cruel irony? Tenants who need stable, affordable housing will pay the price through relentless rent increases or fewer properties available to rent.