"Quite simply, this is a regressive Budget for renters"
The National Residential Landlords Association (NRLA) has warned that low income renters could face higher housing costs following the Budget, as the Government announced further tax increases for landlords alongside another freeze on housing benefit rates.
Chancellor John Healey confirmed that income tax rates on rental income will rise by a further two percentage points from April 2027, on top of the two percentage point increase announced in the 2025 Budget.
The changes mean that property income tax rates will increase to 24% for basic rate taxpayers, 44% for higher rate taxpayers and 49% for additional rate taxpayers in England, Wales and Northern Ireland.
The Office for Budget Responsibility (OBR) has warned that the combined tax changes could reduce the supply of private rented homes and lead to higher rents over time.
In its Economic and Fiscal Outlook, the OBR said the measures represented a "material reduction in returns to private landlords" and could discourage new landlords from entering the market.
It also warned that some existing landlords could leave the sector, giving those who remain greater scope to increase rents.
The OBR said: "These measures collectively risk leading to a steady rise in rents through two effects. First, potential landlords are less likely to enter the market, reducing long-run rental supply, which risks a steady long-term rise in rents if demand outstrips supply – which we think is more likely than not."
Meanwhile, the Government has confirmed that Local Housing Allowance (LHA) rates, which determine the maximum housing support available to eligible private renters, will remain frozen throughout 2027/28.
The decision comes despite recent research from the Resolution Foundation showing that the average gap between LHA rates and rents at the 30th percentile of the market has reached a record 23.3%.
For a typical family renting a two bedroom property, this represents a shortfall of £170 a month between their rent and the support available.
The Foundation estimates that, without further government intervention, the gap could rise to 32% by 2029/30, equivalent to £235 a month for a typical family in a two bedroom home.
Its research also found that more than 900,000 families receiving Universal Credit were paying rents above their LHA rate as of May 2026.
The organisation has called on the Government to restore the link between LHA and the lowest 30% of local market rents, estimating that the measure would benefit more than 900,000 households at a cost of £2.3 billion by the end of Parliament.
Ben Beadle, chief executive of the NRLA, said: "The idea that the Government is providing breathing space for any rented households is just a farce.
"Tax hikes leading to higher rents, coupled with doing nothing to unfreeze housing benefit rates will leave low-income renters hit hardest by the Budget.
"Quite simply, this is a regressive Budget for renters."
