In response to the Government’s latest tax increase, the majority of landlords are planning to raise rents, but there are questions over whether the market will support them.
Research consultancy Pegasus Insight surveyed 168 NRLA landlords (National Residential Landlords Association) shortly after the Autumn Budget. Of those, 73% said they would increase rents when it was next permitted.
The largest group (38% of respondents) were considering increases of between 5% and 10%, or more if their rents were below market levels. Another 11% were looking at rises exceeding 10%, and 24% at less than 5%.
The findings come after two successive Budgets announced increases in income tax on rental profits. Together, they will raise the basic, higher and additional rates to 24%, 44% and 49% respectively from April 2027 for landlords holding property personally.
Market rents
Although many landlords are considering substantial increases, the latest rental market data suggest they may not always be achievable.
According to Zoopla’s September Rental Market Report, average rents for new tenancies are rising by 2.6% annually, which is some way below the 5% to 10% increases being considered by many of those surveyed.
The national average, however, masks some substantial regional and local differences. The portal’s data found that rents are increasing faster than the national average in three-quarters of local areas.
At the same time, rental supply is tightening, with 3% fewer properties available than a year earlier and an average of 5.3 enquiries per rental listing.
For an individual landlord currently charging £1,000 a month, a 5% increase would generate an additional £600 in revenue per year. A 10% increase would produce £1,200. Losing a tenant, though, and leaving the property empty would cost £1,000 in lost rent each month, and that’s before any reletting expenses.
What do the new regulations allow?
And since the Renters’ Rights Act changed how landlords in England can increase rents, there are legal reasons why those market rents matter, too.
From May 2026, increases have been limited to once a year, with landlords required to provide at least two months’ notice using the statutory Section 13 procedure.
There is no fixed percentage ceiling on increases, but tenants can challenge any proposed rent rises that exceed open market levels through the First-tier Tribunal.
As BuyAssociation has previously reported, those challenges can sometimes backfire on landlords. In one Manchester case, a landlord seeking a £50 monthly increase ended up having the existing rent reduced by £200.
In addition, if a tenant challenges an increase, the tribunal can take up to ten weeks to reach a decision. If that decision comes after the proposed start date, the new rent will only apply from the next rent payment and will not be backdated.
It means increases of 5% or 10% are only likely to be achievable if the resulting rent is in line with local markets.
Landlords considering selling
But raising rents is not the only way landlords are considering responding to the latest tax increase.
The Pegasus Insight survey also found that 52% of respondents intended to sell rental property over the next 12 months, with 38% planning to reduce their portfolios and 14% considering selling everything.
Just 2% planned to buy additional properties, and 29% anticipated reducing expenditure on maintenance or improvements.
However, to put these figures into perspective, earlier Pegasus findings revealed that although 38% of landlords said they were planning on selling properties, only 22% actually did so in the year to June 2026.
And with yields performing well in many areas, that may not come as a surprise.
