The Office for Budget Responsibility warns that the Budget's higher tax on landlords' income risks pushing rents steadily upwards. It says a long-term rise is "more likely than not".
From 6 April 2027, property income tax rates in England, Wales and Northern Ireland rise by a further two points to 24%, 44% and 49%, Tax Policy Associates reports. That comes on top of the two-point rise announced at Budget 2025, which also starts in April 2027. Finance cost relief for landlords stays aligned to the property basic rate, so it also rises to 24%.
In its October 2026 Economic and Fiscal Outlook, the OBR calls the two measures together "a material reduction in returns to private landlords", according to Estate Agent Today.
"These measures collectively risk leading to a steady rise in rents through two effects."
The first, the OBR says, is that fewer potential landlords will enter the market. That "risks a steady long-term rise in rents if demand outstrips supply", an outcome the OBR says "we think is more likely than not". The second is that landlords who stay will pass their costs on.
"Such rises in rents would offset at least some of the reduction in the commercial viability to landlords from the measures introduced in recent years," the OBR adds.
The OBR also expects housing transactions over the forecast period to be about 4% lower than it predicted in March, because higher mortgage rates are putting buyers off.