Income from private landlords in the UK has dropped by 4%, despite soaring rental prices, according to the latest figures from HMRC. The report reveals that total income from private lettings fell from £49.4 billion in 2020/21 to £47.44 billion in 2022/23.
The decline in income comes amid a slight decrease in the number of private landlords, which fell by 0.7% over the same period. In contrast, the number of furnished holiday lets surged by 8.3%, reflecting a shift in property investment strategies.
The HMRC survey, which covered 14 regions, showed that income fell in nine regions, remained steady in two, and rose in only three.
Significant Declines in Key Regions
London experienced the most significant drop, with rental income plunging by 12.5%. Scotland, where rent control measures have been implemented, saw the second-largest decline, with income down by 6.9%. Any increases in income were modest, with the North West reporting the highest growth at less than 1%.
Heather Powell, Head of Property Tax at Blick Rothenberg, noted that the average rental property income decreased from £17,300 in 2021/22 to £16,700 in 2022/23, with the majority of properties generating less than £10,000 per year.
Concerns for Tenants Amid Tax and Legislative Pressures
The decline in landlord income, coupled with looming tax increases and new regulations, has raised concerns about the availability of rental properties. Blick Rothenberg has warned that these factors could result in a shortage of homes for tenants in the near future.
“This includes restrictions on the proportion of mortgage interest that landlords can deduct when calculating their tax liability,” Powell explained, highlighting the growing financial pressures on landlords that could exacerbate the housing crisis.