Is the Government Destroying the UK’s Rental Market?

Landlords across the UK are facing mounting challenges, from skyrocketing taxes to endless regulations, making it harder and harder to stay in the rental market. It feels as if the government has declared a war on landlords, and it’s not just landlords who are feeling the heat—tenants are being dragged into this crisis too.

So, is the government actively destroying the UK’s rental market? Many landlords would argue that the answer is a resounding “yes.”

Section 24: A Financial Noose for Landlords

One of the most destructive policies introduced in recent years is Section 24, which dramatically altered how landlords are taxed on their rental income. Before Section 24, landlords could deduct their mortgage interest from their rental income, paying tax only on their actual profits. But now, landlords are taxed on their gross rental income—even if they make little to no profit once mortgage payments are factored in.

Take Jane, a small-time landlord with two buy-to-let properties. Under the new tax regime, Jane’s tax bill has skyrocketed, even though her real profit is minimal. After covering her mortgage, maintenance, and other costs, she’s left with less money than before, but her tax liability has more than doubled. Now, Jane is seriously considering selling her properties.

This kind of financial pressure is forcing thousands of landlords like Jane to leave the market, creating a rental supply crisis.

Regulatory Overload: Strangling Small Landlords

The barrage of regulations is adding to landlords’ woes. While tenant protection is crucial, many of the new regulations are becoming overwhelming, particularly for smaller, independent landlords.

For example, the Minimum Energy Efficiency Standards (MEES) require landlords to upgrade properties to meet certain energy efficiency levels. But for older properties, making these upgrades can be prohibitively expensive. A small landlord with a handful of properties may not be able to afford the costs of retrofitting insulation, upgrading heating systems, or replacing windows to meet the required standards.

Then there’s the proposed abolition of Section 21 “no-fault” evictions, which is causing many landlords to feel like they no longer have control over their own properties. While the goal of protecting tenants from unfair evictions is commendable, landlords are left feeling vulnerable. For example, if a tenant stops paying rent or causes damage, it can now take months to evict them through the courts, resulting in substantial financial losses.

Landlords like Simon, who rents out his late parents’ home as a retirement fund, feel trapped by these growing obligations. With every new regulation, the risk of staying in the market outweighs the reward, and many, like Simon, are selling off.

Who’s Paying the Price? Tenants.

At first glance, these policies might seem like they’re protecting tenants, but the reality is quite the opposite. With landlords leaving the market in droves, the supply of rental properties is shrinking. Fewer rental homes mean higher rents as tenants compete for what’s left. And it’s not just about affordability—tenants are also losing out on the personalised care they often received from small, independent landlords.

Take Laura and Tim, who’ve been renting from a small landlord for several years. Their landlord has been flexible with rent payment dates and quick to fix any maintenance issues. But now that their landlord is selling the property due to tax pressures, Laura and Tim are facing higher rents and less responsive corporate management when they move into their next home.

With more corporate landlords entering the market, tenants are increasingly treated as just another number—their concerns pushed aside in favour of profit-driven systems.

The Government’s Role in the Crisis

While the goal of government intervention is often to protect tenants and ensure the private rented sector is well-regulated, many of the recent policies are backfiring. Instead of stabilising the market, they’re pushing landlords out and reducing the supply of rental homes.

Policies like Section 24 and rent caps may have been intended to level the playing field between homeowners and landlords, but they’re having the opposite effect. They’re pushing the very people—landlords—who supply homes for rent out of the market, creating a worsening crisis.

The Stamp Duty surcharge on second homes has further discouraged potential landlords from entering the market. Even those who want to invest in buy-to-let properties are now faced with a daunting 5% surcharge, making it less appealing to expand portfolios.

What Needs to Change?

If the government truly wants to protect tenants and ensure a healthy private rented sector, it needs to rethink its approach. Here’s what can be done:

1. Scrap or Reform Section 24: The current tax system unfairly punishes landlords, particularly those with mortgages. Reforming this policy would help keep rental properties available for tenants and prevent rents from rising further.
2. Provide Incentives for Small Landlords: Rather than adding more burdens, the government should introduce incentives that help small landlords stay in the market. Grants for energy efficiency improvements or tax relief for long-term tenancies could ease the strain.
3. Balance Regulation: Tenant protections are crucial, but regulations must be fair to both parties. Streamlining regulations and speeding up processes (like eviction cases in extreme situations) would give landlords more confidence to stay in the market.

Support Property118 in the Fight for Fairer Policies

At Property118, we’ve been at the forefront of fighting against these harmful policies and advocating for a balanced, fair rental market. We believe that with the right tax reforms and sensible regulations, landlords can be encouraged to stay in the market, providing homes for tenants and ensuring rents remain affordable.

But we can’t do this without your support. If you believe in protecting the future of the UK rental market, please consider supporting Property118.

Every donation counts. Use the form below to help us fight for a fairer, more sustainable future for the UK rental market.

The UK’s rental market doesn’t have to collapse, but without urgent changes, we’re heading toward a crisis. Let’s work together to stop it before it’s too late.

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