Chancellor Rachel Reeves’ move to raise landlords’ rental income tax by 2% in the latest Budget is expected to trigger higher rents, as buy-to-let investors seek to offset yet another financial burden, according to new research.

Public opinion strongly reflects this concern. Nearly nine in ten people believe the tax hike will either push landlords to pass costs directly onto tenants or prompt them to exit the market altogether, reducing the supply of rental homes in the long run.

A survey of 2,000 adults conducted by a finance provider found that 86% expect the additional costs to result in steeper monthly payments for renters already under financial strain and with Bay Boomers aged between 61 to 79 with 94% shoots to 94%.

From April 2027, a new 2% surcharge will apply across all income brackets for property earnings. This change will lift the basic rate of property income tax to 22%, the higher rate to 42%, and the additional rate to 47%, tightening the fiscal burden on landlords across the board.

A spokesman for the financial provider, said: “In our experience many of our landlord customers have chosen not to pass on increased costs to their tenants, instead absorbing extra payments associated with providing homes for tenants, which have been brought about by attacks on the private rental sector by successive governments.

“However, landlords with properties in their own names now face the taxman taking another sizeable bite out of their incomes thanks to Reeves’ rise in property income tax rates. The two percentage point hike will not only be leaving landlords out of pocket, but renters too. Our research shows that the public understand that the extra costs will fall to those renting their homes.

“With all the regulatory, legislative and tax burdens of late (on top of the incoming Renters Rights Bill) this will inevitably result in higher rents from next year onwards, and if landlords can’t make their portfolios work for them they could be forced to sell-up altogether.