Budget package deeply regressive for private renters

27 Nov 2025 12:22 PM

The Budget will hit low-income renters hardest as they face a combination of rent increases and frozen housing benefit rates.

This comes despite the Chancellor arguing that she was tackling the cost of living.

The Office for Budget Responsibility has made clear that increasing income tax in property income will result in higher rents.  An initial analysis by the National Residential Landlords Association (NRLA) suggests this could see rents rise by £20-25 per month on a typical private rental property, rising to more than £40 per month in London.

Alongside this, the Work and Pensions Secretary, yesterday confirmed that housing benefit rates will remain frozen for a second year in a row in 2026/27. This will affect almost 1.7 million private rented households across the country in receipt of housing cost support. 

Government data has previously shown that, as of August this year, 53 per cent of this group had a gap between their housing benefit payment and their monthly rents. This is set to rise as a result of higher taxes leading to higher rents.

Just last week the Institute for Fiscal Studies warned that the ongoing freezing on housing benefit rates was widening disparities for low-income renters. An unprecedented coalition of 40 organisations representing landlords, tenants, homeless charities, advice services and local authorities have also called for housing benefit rates to be unfrozen. 

Ben Beadle, Chief Executive of the National Residential Landlords Association, said:

“It beggars belief that the Government thinks it is helping renters. 

“Piling on further tax rises that will drive up rents, whilst keeping housing benefit rates frozen, is a one-way street to hitting low-income tenants the hardest.

“This can only be described as a deeply regressive package that will make life more difficult for renters across the country.”

Notes:

• The Office for Budget Responsibility’s Economic and Fiscal Outlook report notes: “From April 2027, a 2 percentage point increase to the basic, higher and additional rates of property income tax, increasing them to 22, 42 and 47 per cent respectively. This is estimated to yield £0.5 billion a year on average from 2028-29. The costing incorporates a small negative impact as a result of the pass-through of the tax increasing rents and property tax receipts, which is more than offset by a reduction in house prices reducing other receipts.”
  It goes on later to warn: “The measures announced in this Budget reduce returns to private landlords, following various measures over the past 10 years that have also reduced returns. This successive eroding of private landlord returns will likely reduce the supply of rental property over the longer run. This risks a steady long-term rise in rents if demand outstrips supply.”
• An initial analysis by the NRLA suggests that based on average rents, this policy is likely to add £20-25 per month to a typical private rent – rising to more than £40 per month in London. 
• Local Housing Allowance rates were unfrozen in April 2024, but frozen again from April 2025. In a written parliamentary statement yesterday, the Work and Pensions Secretary, Pat McAfadden MP, has confirmed that LHA rates will remain frozen in 2026/27.
• Research by Crisis published earlier this year suggests that fewer than three in every 100 private rented properties in England are now affordable for people on housing benefit (with similarly constrained markets in Scotland, Wales and Northern Ireland). This is down from 12% in 2021-22 – the first year of the previous freeze on Local Housing Allowance rates. 
• According to the Department for Work and Pension’s Stat-Xplore website, as of August 2025, there were 1,693,731 private rented households across the country in receipt of a Universal Credit payment which including support for housing costs (the Local Housing Allowance). Of this group, 904,224 (53.4%) has a shortfall between their Local Housing Allowance payment and their monthly rents. 
• In September, 40 strong coalition of organisations (including the NRLA) representing landlords, tenants, homeless and adviser services wrote to the Government calling on it to re-peg the Local Housing Allowance to at least the bottom 30% of market rents. The letter can be accessed