The UK government may spark a rental crisis if it continues its regulatory push against private landlords, a leading tax expert has cautioned. A wave of new legislation is forcing many landlords to exit the market, making it increasingly difficult and expensive to operate, according to Heather Powell, head of property at tax advisory firm Blick Rothenberg.

In the 2022-2023 financial year, 2.81 million individuals reported rental income to HMRC, amounting to £44.7 billion in rent, Powell noted. The number of private landlords declaring rental income has also risen slightly from 2018 to 2023, despite growing challenges in the sector.

Fewer Homes for Rent Expected

Powell warns that unless the government reconsiders its approach, the rental market could face a significant reduction in available homes. “Landlords are grappling with a barrage of legislation over the last decade, including restrictions on the amount of mortgage interest they can deduct for tax purposes,” she said.

One of the latest hurdles landlords face is the government’s Energy Performance Certification (EPC) requirements. Under current plans, all rental properties must achieve an EPC rating of C by 2030, a deadline many landlords are struggling to meet. Coupled with rising mortgage rates and the prospect of higher capital gains taxes from April 2025, the financial burden is pushing some landlords to consider selling their properties.

Impact on Tenants and the Economy

The knock-on effects of landlords leaving the market could be severe, Powell suggested. “Tenants, many of whom are graduates or key workers, are unlikely to be in a financial position to buy homes. At the same time, the delivery of new rental properties has slowed due to economic pressures on social housing providers,” she said.

This could leave a growing number of renters with limited housing options, further straining an already tight rental market. Powell stressed the need for careful consideration of tax and legislative changes to ensure private landlords remain incentivized to stay in the sector. Without that, she warns, the housing shortage could worsen, affecting both individuals and the broader economy.