Chancellor Rachel Reeves’ decision to impose an extra 2% tax on landlords has drawn cautious approval from campaigners critical of the rental sector, and yet activists remain dissatisfied, arguing the wider Budget fails renters and is unfair.

The activists’ Renters’ Reform Coalition (RRC) is a network of student, housing, and tenant advocacy groups and has condemned the government’s refusal to raise Local Housing Allowance, saying the omission undermines support for struggling households.

The director of the coalition, says: “Overall, this is not a renters’ budget – the continued freezing of housing benefit means tenants on low incomes will continue to struggle to keep a roof over their head while paying for the essentials. Soaring rents are a major cause of homelessness, driving renters out of their homes or into poverty, and refusing to increase housing allowance means many families will remain trapped in emergency homelessness accommodation, unable to afford to move.” 

From April 2027, landlords will face a 2% hike in income tax on rental earnings, a measure the Office for Budget Responsibility (OBR) warns will squeeze profits and drive rents higher.

Tax bands will climb to 22% at the basic rate, 42% at the higher rate, and 47% at the additional rate. Analysts suggest this could add £20–£25 a month to average rents in England. The change follows earlier reforms to Mortgage Interest Relief and Stamp Duty, which have already raised costs for property owners.

While critical of the wider Budget, the Renters’ Reform Coalition has welcomed the tougher tax regime for landlords and praised the abolition of the two-child benefit cap.

The director adds: “Many renters will benefit from other changes announced … like the end of the two-child benefit cap, and we welcome tax changes like the mansion tax and increasing taxes on property income. It’s only right that those with the broadest shoulders – which in England usually means those who own multiple properties – should bear more of the load. Landlords should be taxed at the same rate as their tenants who work to pay the rent.”