A new report from the Joseph Rowntree Foundation (JRF) claims almost a decade of tax changes has “levelled the playing field” for first-time buyers by slowing down buy-to-let (BTL) investment. But landlord groups warn the reality is fewer rental homes, higher rents, and worsening affordability for tenants.

Tax Burden Mounts on Landlords

Since 2016, landlords have been hit with:

• The phased removal of mortgage interest relief, capped at the basic rate.

• A stamp duty surcharge on second homes (5% in England, 8% in Scotland).

• Rising capital gains tax liabilities on disposals.

• Mortgage rate spikes after the 2022 mini-Budget, which undermined the BTL model.

Now, reports suggest Chancellor Rachel Reeves may add National Insurance to rental profits in November’s Budget, potentially raising £2bn – a move JRFhas warned could “accelerate the exodus of landlords.”

The JRF Argument

The JRF study claims these reforms helped push homeownership rates back up to 64%, equivalent to 1.1 million more owner-occupier households than if pre-2016 trends had continued. It argues tax reforms reduced “speculative investment” and shifted housing market “power” away from landlords.

The report concludes that further restrictions would “strengthen the position of first-time buyers” and should remain a central plank of housing policy.

Landlords’ Reality: Rents Rising, Supply Falling

The NRLA has strongly rejected the idea that higher taxes are a win for renters. Chief executive Ben Beadle said:

“Tax policy affects rent levels. It is not clear how higher taxes, leading to higher rents, makes it easier for tenants to save for a home of their own.”

Beadle highlighted that there are already 11 renters chasing every available home, according to Rightmove. He warned that further tax hikes will:

• Reduce investment in the sector.

• Limit tenant choice.

• Push rents even higher at a time when affordability is already stretched.

A Better Approach

Rather than “piecemeal tax grabs,” the NRLA argues government policy should focus on:

• Incentivising landlords to invest long-term in quality homes.

• Supporting energy efficiency upgrades in the private rented sector.

• Bringing empty homes back into use.

Without such measures, Beadle cautions, the government risks destabilising the rental market further and locking more tenants out of affordable housing.

Outlook

As ministers aim to build 1.5 million homes this Parliament, the choice is clear: support responsible landlords as part of the solution – or risk shrinking the private rented sector at a time when demand has never been higher.