Rental tax hikes would damage growth and opportunity
7 Nov 2025 01:09 PM
Imposing further tax rises on the rental market would critically damage the Government’s ambitions for economic growth and social mobility.
That’s the warning just weeks before the Chancellor delivers a pivotal Budget.
The National Residential Landlords Association (NRLA) calls on the Government to recognise that the private rented sector is a vital driver of economic opportunity. With around 11 million renters in England alone, the sector provides the flexibility and mobility they need to access education, training, and jobs across the country.
A report for the NRLA by former Treasury official, Chris Walker, finds that renters typically live closer to town and city centres, as well as their workplaces, than homeowners. This research reveals that 45% of private renters live within 5km of where they work, compared with just 29% of owner-occupiers. The report concludes that the sector plays a vital role in “supporting opportunity, career progression and productivity.”
This assessment is shared by the Nationwide Building Society’s specialist buy-to-let lender which notes how the sector has “an important role to play in economic growth by supporting labour mobility.”
Analysis by the NRLA has also found the sector is more likely than the social rented sector to give aspiring first-time buyers the platform from which to buy their first home. Government figures show that 25% of new owner-occupiers have previously rented privately, compared to just 1% who have moved into homeownership from social housing.
Alongside these research findings, figures published by accountancy firm PwC reveal how small and medium-sized landlords support almost 400,000 jobs across the UK. Likewise, research produced by Aldermore Bank shows how landlords spend an average of £6,000 a year on local services, with nearly four in five using local tradespeople to maintain or improve their properties.
In light of this importance, the shortage of homes for private rent to meet demand is hindering growth and productivity. The leading property portal, Zoopla, reports that the number of homes available to rent is down by 10% compared to 2019, whilst tenant demand has risen by 23% over the same period.
The former head of the Institute for Fiscal Studies, Paul Johnson, who recently spoke to the NRLA’s ‘Listen up Landlords’ podcast, has warned that higher taxes would lead to fewer homes to rent and higher rents for tenants.
Ben Beadle, Chief Executive of the National Residential Landlords Association, said:
“The private rented sector is a significant driver of labour and social mobility. It enables people to move for work, access higher education, and seize new opportunities – everything the Government wants to promote as part of its growth agenda.
“Instead, landlords are facing yet more speculation about tax hikes that would hinder investment, reduce supply, and ultimately drive-up rents.
“The Chancellor must use this critical Budget to back responsible landlords who provide good homes and support local economies. That means using the tax system to encourage long-term investment, as opposed to prioritising short-term revenue grabs.”
Notes:
- According to a report for the NRLA by the former Treasury official and Head of Housing at Policy Exchange, Chris Walker, the private rented sector “supports the efficient use of the housing stock for workers in proximity to places of work and, in so doing, could be supporting opportunity, career progression and productivity”.
- In its summer 2025 report on the potential impact of minimum energy efficiency standards on the private rented sector, The Mortgage Works – the Nationwide Building Society’s specialist buy-to-let lender, said: “The private rented sector is an essential part of the UK housing market providing a relatively easy to access and affordable housing option for many people. As a result, it has an important role to play in economic growth by supporting labour mobility… “Investment by landlords is a key driver of demand in the housing market and alongside more first-time buyers and an increase in social housing, will signal to house builders that supply levels should increase. “Without a thriving private rented sector, Government may struggle to meet its priorities.”
- Whilst 25% of owner occupiers who had been in their homes for less than a year cited the private rented sector as their last housing tenure, just 1% said it was the social rented sector according to the English Housing Survey.
- Small and medium sized landlords support almost 400,000 jobs across the UK, including those in the construction and building maintenance industries, according to PwC.
- 79% of landlords make use of local tradespeople for renovations to their rental properties, spending an average of just over £6,000 a year on said services, according to Aldermore Bank.
- The September 2025 rental market report from leading property portal, Zoopla, reports that the number of homes available to rent is down by 10% compared to 2019, whilst tenant demand has risen by 23% over the same period.
- Last year, the then head of the Institute for Fiscal Studies, Paul Johnson, noted that: “The more harshly that landlords are taxed, the higher rents will be. One of the reasons that private rents have risen so much is that government policy has substantially increased tax payable by private landlords.”
Further information about the NRLA can be found at www.nrla.org.uk. It posts on X @NRLAssociation.
The NRLA’s press office can be contacted by emailing press@nrla.org.uk or by calling 0300 131 6363.