Government plans to tax landlords on their income rather than after allowances – part of the loss of mortgage interest relief – has brought a warning from the Residential Landlord’s Association (RLA) that inevitable rent increases could make tenants the victims of the government’s tax changes.

Legislation now going through Parliament to implement the Budget will see landlords’ tax bills soar and in some cases will wipe out their profit altogether.

As the supply of rental homes falls and remaining landlords face higher overheads it is inevitable that rents will rise to cover costs.

In a recent survey of RLA members, 84% said they are likely to consider increasing rents following the Chancellor’s tax hikes – which also include a 3% stamp duty surcharge on the purchase of homes to rent.

The RLA is now calling for reasonable changes to the Finance Bill to protect both landlords and tenants. It wants the Government to scrap its MIR changes and to remove the stamp duty levy where landlords invest in new property to increase supply in the private rented sector (PRS).

It has warned this tax raid will have a devastating impact on PRS landlords – at a time when the Government needs them more than ever.