The government could trigger a rental crisis if attacks on private landlords continue, warns a leading tax advisory expert, amid an overall drop in rental income.

Latest official figures show that income from rental property declared by unincorporated landlords fell from £49.4 billion in 2021/2022 to £47.44 billion in 2022/2023 while total income from UK furnished holiday lettings also fell from £2.5 billion in 2021/2022 to £2.2 billion in 2022/2023.

Heather Powell, head of property at Blick Rothenberg (main image), believes that if the government doesn’t stop imposing costly tax rises and legislation on private landlords, tenants will be left without homes.

“The statistics published today show that 2.81 million individuals reported income from rental properties in 2022 to 2023 to HMRC, accounting for £44.7 billion of rents. The number of private landlords declaring rental income has also increased slightly from 2018 to 2023.

“However, the government needs to ensure that landlords do not decide to sell up or there will be a major decrease of homes available for rent. Unincorporated landlords have faced a tsunami of legislation in the last ten years. This has included a restriction in the proportion of their mortgage interest that can be deducted when calculating their tax liability.”

Poor outlook

Powell adds that private landlords are now considering their options, especially with a poor outlook for future house price growth. “Combine this forecast with the cost of remortgaging when fixed rate loans mature, the threat of a requirement to upgrade homes for costs that will significantly exceed the increase in rents that could be charged…many may decide to sell up, especially if the expected change in capital gains rates is imposed from April 2025.”

Average income from UK property remained relatively stable at about £16,800 between 2018 to 2019 and 2022 to 2023. In 2022/2023, 33% of all unincorporated landlords who declared income from a UK property were based in London or the South East.