Landbay warned that the Chancellor’s plan to apply National Insurance (NI) to rental income could shrink the supply of rental homes and push up rents.
Research found that more than seven in 10 (72%) brokers said their landlord clients would sell properties if the Government pressed ahead with the move.
Nearly half (45%) of brokers said landlords would sell up entirely and leave the market, while just over a quarter thought landlords would sell some properties but stay in the sector.
Only 23% of brokers said landlords would make no changes, and 5% said their clients might expand their portfolios.
Rob Stanton, sales and distribution director at Landbay, said: “Rachel Reeves is looking for tax raising measures that will enable Labour to claim it has not broken its election promise to increase VAT, income tax or NI.
“But she may not raise as much as she expects. The amount of tax she expects to raise is based on ONS figures which show that, during the most recent tax year data published (2022/3), some 2.2 million landlords received £27 billion in rental income.
“I am worried this might backfire though. First, she’s not going to raise that much if a million landlords sell-up, however resilient the sector is in the face of market interference.”
Stanton added: “Second, this could drive up rents – as demand for rental property outstrips diminishing supply and remaining landlords look to recoup the cost by raising rents. That could exacerbate the housing crisis for renters.
“If there’s a positive here, given that smaller landlords are the ones most likely to leave the market, this could lead to increasing professionalisation of the private rented sector – and drive moves to limited company structures as landlords look to adapt to the change.”
