Further landlord tax changes in the Budget could add to the financial pressure already facing tenants, according to the latest Landlord Trends research from consultancy Pegasus Insight. The research says the government should resist imposing more costs on landlords.
With the Budget due on 28 October, the findings reveal widespread concern among landlords about the cumulative impact of tax and regulatory changes on the private rented sector (PRS). Many indicate that higher costs will ultimately influence rents and their approach to letting property.
Landlord tax changes feed into rent expectations
Almost nine in ten landlords (88%) are concerned about the 2% rise in income tax rates on rental income from properties held in personal names, up three percentage points on the previous quarter. Landlords also indicate that the consequences of landlord tax changes will not necessarily be absorbed within their businesses. Almost two thirds (64%) say they will look to recoup losses through higher rents, while 83% agree that tax and regulatory changes will make them more selective about the tenants they let to.
Worry about the practical operation of the new regime under the Renters' Rights Act is also significant, with 91% of landlords saying they are 'very concerned' about potential court backlogs when seeking to regain possession of a property.
Previous Pegasus research has already highlighted how sensitive landlord behaviour is to changes in taxation and regulation, with landlords responding by selling property, incorporating or delaying further investment. Pegasus said the latest findings suggest further landlord tax changes in the Budget could have consequences beyond landlords themselves.
Meanwhile, its Tenant Trends research indicates that renters are already conscious of the potential for additional landlord costs to feed through into rents. More than a quarter of tenants expect rents to rise as landlords pass on the cost of complying with the Renters' Rights Act, compared with 9% who expect them to fall.
Affordability is already stretched. Tenant Trends found the typical renter pays £917 a month, 11% more than a year earlier, and 46% of tenants who had been in their property for at least a year had faced a rent increase in the previous 12 months.
The Landlord Trends findings draw on 567 online interviews, each lasting 25 minutes, with members of the National Residential Landlords Association, conducted between 21 June and 10 July 2026. Tenant Trends is based on 3,000 online interviews of 15 minutes with UK private renters, carried out between 25 February and 20 March 2026.
"Landlords are already preparing for significant change under the Renters' Rights Act, and the prospect of further tax changes in October's Budget is adding to the uncertainty facing the sector," said Mark Long, founder and director of Pegasus Insight.
"The growing concern about the courts should also give policymakers pause. The new possession regime will depend heavily on a court system landlords can have confidence in, so ensuring it has the capacity to cope must be a priority.
"The Private Rented Sector needs a period of stability. Further tax increases or additional costs could change landlord behaviour in ways that ultimately affect tenants through higher rents, reduced choice or fewer homes available to rent. The Budget should not add to those pressures."
