More than one million households have been able to buy their first home since 2016 thanks to tax reforms targeting private landlords, according to new analysis from the Joseph Rowntree Foundation (JRF).
The think tank said measures such as restricting finance cost relief for individual landlords and introducing higher rates of stamp duty on additional properties had helped “reset the balance” of the housing market.
Darren Baxter, principal policy adviser at JRF, argued the changes had given first-time buyers – particularly younger people – a better chance at homeownership.
“The previous government rightly recognised that the tax system had swung too far in favour of landlords,” Baxter said. “Reforms to address this imbalance have allowed more first-time buyers to own their own home, without the dire consequences for renters predicted by opponents.”
The private rented sector in England doubled in size between 2000 and 2015. But growth has since slowed dramatically, creating space for a surge in homeownership. JRF estimates that 1.1 million additional households now own homes than would have if buy-to-let lending had continued growing at pre-2016 rates.
Shift from renting to ownership
Data shows the share of gross mortgage lending to first-time buyers rose from 29% in 2015 to 41% in 2024. Among 20- to 34-year-olds, the proportion renting fell by seven percentage points between 2015 and 2024, while homeownership increased by four percentage points.
Tax reforms were central to the shift. From 2015 onwards, landlords gradually lost the ability to fully deduct mortgage interest from their taxable income. Meanwhile, a higher rate of stamp duty land tax on additional properties was introduced at 3% before rising to 5% last year.
Further reforms announced in 2024 included abolishing the furnished holiday lettings tax regime, scrapping multiple dwellings relief from stamp duty, and reducing capital gains tax on property disposals.
Despite industry warnings, JRF found little evidence that the changes caused rents to rise in real terms. Instead, the think tank said demand for rental housing eased as more people bought homes, with recent rent hikes driven by wider shortages in housing supply.
Calls for further reform
JRF urged the government to go further, including aligning tax on rental income with wages and closing loopholes that benefit landlords operating through limited companies. Baxter said applying national insurance contributions to investment income and tightening rules on corporate ownership could “level the playing field” further.
Campaigners backed the calls. Dan Wilson Craw, deputy chief executive at Generation Rent, described the reforms as “a huge success” and urged the Treasury to crack down on the growing number of rental homes owned by companies.
“Most renters want to buy a home,” he said. “For years, tax advantages for landlords worked against them. Reducing investors’ appetite has allowed a million more households to buy. But people who work shouldn’t be paying more tax on their income than landlords do on theirs.”
Landlord backlash
The findings have been strongly criticised by the National Residential Landlords Association (NRLA). Chief executive Ben Beadle said higher taxes discouraged investment and risked worsening the rental crisis.
“The idea that higher taxes are good for renters is simply not correct,” Beadle said. “There are still 11 renters chasing every available home, according to Rightmove. Further tax hikes will only push rents higher and reduce tenant choice.”
The NRLA has called instead for tax policies that encourage investment in new rental housing, improve energy efficiency and bring empty homes back into use.
With both major parties pledging to boost homeownership, the battle over the role of landlords in the housing market looks set to remain a central political issue in the run-up to the next budget.