The leaked Office for Budget Responsibility (OBR) forecast, published ahead of Chancellor Rachel Reeves’ Budget, has revealed to a planned rise in property income tax rates from April 2027.
The basic, higher and additional rates would each increase by 2% taking them to 22%, 42% and 47% respectively.
The change is expected to raise around £0.5bn a year on average from 2028-29.
The OBR noted a minor negative effect from higher taxes being partly passed through into increased rents and property tax receipts, but said this is more than offset by the resulting downward pressure on house prices, which reduces other tax revenues.
It also claimed that: “The measures announced in this Budget reduce returns to private landlords, following various measures over the past 10 years that have also reduced returns.”
The OBR said this gradual erosion of landlord returns is likely to reduce rental supply over time, “risk[ing] a steady long-term rise in rents if demand outstrips supply.”
