Writing in Property118, Mark Alexander comments how stealth taxes are becoming an increasing burden for UK landlords, impacting profitability and ultimately influencing the broader rental market. While high-profile taxes such as Capital Gains and Stamp Duty get the most attention, there are numerous lesser-known charges that landlords must navigate:

1. Council Tax on Vacant Properties
   Council tax on vacant properties doubles after two years, ostensibly to push empty homes back into the market. However, landlords dealing with slow markets or extensive refurbishments are especially vulnerable to these costs, which can run into thousands. In areas with low demand, the tax adds an extra burden, turning vacant properties into significant liabilities.
2. Selective Licensing Fees
   Selective Licensing, designed to improve rental standards, requires landlords to pay substantial fees (between £500 and £1,000 per property) and meet regulatory criteria. While aimed at poor housing, these schemes disproportionately affect responsible landlords, especially those with multiple properties, who face either absorbing the fees or increasing rents.
3. EPC Requirements and Compliance Costs
   The upcoming changes to Energy Performance Certificate (EPC) standards, requiring a C rating by 2030, force landlords to make expensive energy-efficiency upgrades. This regulatory push effectively becomes a stealth tax as landlords face fines of up to £5,000 if they don’t comply. Older properties, in particular, are often costly to upgrade, putting small landlords under even greater financial strain.
4. HMO Licensing Fees
   Houses in Multiple Occupation (HMOs) require specific licensing, with fees that can reach £1,500 alongside strict compliance for fire and safety standards. While HMOs can offer higher yields, these licensing and compliance requirements cut into profitability and act as a hidden cost, often deterring landlords from entering or staying in the HMO market.
5. Right to Rent Fines
   Right to Rent rules mandate landlords to verify tenants’ legal rental status. Though intended to regulate tenancy eligibility, the rule introduces fines of up to £3,000 per tenant for non-compliance. The burden of complex compliance and the associated fines add yet another layer of cost, further straining landlords managing multiple properties.

Broader Impact
These stealth taxes have cumulative effects that contribute to an ongoing landlord exodus, with many opting to leave the rental market altogether. Those who stay often pass these costs to tenants, inadvertently worsening the housing crisis and pushing rents up further. In the face of increased regulation, ongoing cost demands, and rising compliance costs, both landlords and tenants feel the squeeze, leading to limited supply and escalating rental prices across the market.

The article can be seen here.