The government risks derailing its own goals for economic growth and social mobility if it imposes further tax increases on the rental sector, a landlords association has warned—just weeks ahead of the Chancellor’s Budget.
It argues that the private rented sector plays a critical role in driving opportunity, particularly for the 11 million renters in England who rely on it for access to jobs, education, and training.
A report commissioned by the association, authored by former Treasury economist Chris Walker, highlights that renters are more likely than homeowners to live near town centres and their places of work—underpinning labour market flexibility and urban vitality.
This research reveals that 45% of private renters live within 5km of where they work, compared with just 29% of owner-occupiers. The report concludes that the sector plays a vital role in “supporting opportunity, career progression and productivity.”
This assessment is shared by a specialist buy-to-let lender which notes how the sector has “an important role to play in economic growth by supporting labour mobility.”
Analysis by the landlord association has also found the sector is more likely than the social rented sector to give aspiring first-time buyers the platform from which to buy their first home.
Government figures show that 25% of new owner-occupiers have previously rented privately, compared to just 1% who have moved into homeownership from social housing.
Beyond housing access, the sector also drives local economic activity. Figures from an accountancy firm estimate that small and medium-sized landlords support nearly 400,000 jobs across the UK. Separate research from a major bank finds that landlords spend an average of £6,000 annually on local services, with almost 80% hiring local tradespeople for property maintenance and improvements.
The growing mismatch between supply and demand in the private rental sector is now acting as a drag on productivity and economic mobility, according to housing analysts.
Figures from property portal show that the number of homes available to rent has fallen by 10% since 2019, while tenant demand has surged by 23% over the same period.
Paul Johnson, former director of the Institute for Fiscal Studies, recently told the landlord group in his ‘Listen Up Landlords’ podcast that further tax hikes would worsen the crisis. “Higher taxes mean fewer homes to rent and higher rents for tenants,” he said, urging policymakers to consider the broader economic consequences.
The industry association’s spokesperson says: “The private rented sector is a significant driver of labour and social mobility. It enables people to move for work, access higher education, and seize new opportunities – everything the Government wants to promote as part of its growth agenda.
“Instead, landlords are facing yet more speculation about tax hikes that would hinder investment, reduce supply, and ultimately drive-up rents.
“The Chancellor must use this critical Budget to back responsible landlords who provide good homes and support local economies. That means using the tax system to encourage long-term investment, as opposed to prioritising short-term revenue grabs.”