The UK’s private rented sector is under pressure from every angle: higher financing costs, rising compliance and upgrade bills, and a fresh wave of tax changes. When operating costs go up in a market where demand still outstrips supply, rents tend to follow.
Recent reporting and landlord survey evidence indicates a clear direction of travel: a majority of landlords expect to raise rents and cite recent tax changes as a key driver. Alongside this, the wider trend is that landlords are leaving the sector and aren’t being replaced quickly enough—while demand remains intense.
Below is a clear breakdown of what extra costs landlords are facing, where they come from, and why they increase rents—and why it’s time to stop demonising landlords and start working with the sector to solve the housing crisis across the UK.
1) Higher taxation on rental income
What’s changing
One of the biggest immediate pressures is increased taxation on property income. When tax rates rise on the same rental income, landlords’ net returns fall unless something else changes.
Where the cost comes from
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Government fiscal policy aimed at raising revenue and altering incentives around asset income versus earned income.
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Policy choices that raise the effective tax burden on rental profits.
Why this pushes rents up
Landlords have limited levers:
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absorb the cost (often not possible long-term),
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improve efficiency (limited in housing, especially older stock),
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reduce investment (repairs/upgrades get delayed),
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or increase rent where the market allows.
In practice, where demand is strong and supply is tight, rent increases are the only way to keep properties viable—especially for smaller landlords.
2) Financing: mortgage costs and refinancing pain
Even when interest rates shift over time, many landlords have already been hit by the reset from ultra-low borrowing costs to a much higher cost of finance. The shock is often most acute at remortgage or renewal.
Where the cost comes from
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Higher base rates and tighter lending terms over recent years.
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Larger “stress test” requirements and affordability checks on buy-to-let borrowing.
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Short fixed-rate periods rolling onto higher rates.
Why this pushes rents up
Mortgage interest is commonly a landlord’s biggest outgoing. If borrowing costs jump at renewal, landlords typically respond by:
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raising rent (if achievable),
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injecting cash (often unsustainable),
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or selling the property.
That selling reduces rental supply—adding even more upward pressure on rents.
3) Regulation and compliance: more obligations, more admin, more risk
Landlords are facing increasing complexity in day-to-day compliance and a growing regulatory burden. Reform in the sector can be positive, but it still has a cost—and when process risk rises, landlords price that risk in.
Where the cost comes from
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Expanded compliance obligations and enforcement expectations.
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More paperwork, record-keeping, inspections, and operational admin.
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Greater perceived risk around dispute resolution and regaining possession when things go wrong.
Why this pushes rents up
When risk rises, investors expect higher returns to justify staying in the market. In housing, higher returns generally come from one place: rent.
4) Energy efficiency upgrades: improving homes costs money
The direction of policy is clear: private rented homes are expected to become more energy efficient over time. That is good for tenants and the country’s carbon goals—but funding upgrades still falls largely on landlords.
Where the cost comes from
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Insulation upgrades, ventilation improvements, heating system changes, glazing, and related works.
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Surveying, certification, contractor costs, and the disruption of works.
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The challenge of upgrading older housing stock, particularly solid-wall and harder-to-treat homes.
Why this pushes rents up
Upgrades are capital costs. If a landlord invests thousands to keep a property compliant and lettable, rents tend to rise over time to support:
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the upfront spend,
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the financing cost of that spend,
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and the ongoing maintenance of improved systems.
5) Day-to-day operating costs: repairs, labour, insurance, licensing
Even without major legislative change, the underlying cost of running a rental property has risen.
Where the cost comes from
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Maintenance inflation: parts, materials, and trades.
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Higher insurance premiums (and sometimes stricter policy terms).
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Letting and management fees.
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Safety requirements: gas, electrical testing, alarms, and inspections.
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Licensing schemes in many areas: fees, compliance conditions, and admin workload.
Why this pushes rents up
Landlords can’t indefinitely absorb:
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higher repairs and contractor costs,
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higher insurance,
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higher compliance overhead.
If net returns fall below a sustainable level, landlords either raise rents, cut back investment (which helps no one), or exit the market.
6) The supply crisis: landlords are leaving and not enough are replacing them
This is the point that often gets missed in public debate.
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Many landlords are selling up due to reduced profitability, higher risk, and mounting costs.
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At the same time, fewer new landlords are entering to replace the homes being sold.
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Some existing landlords are also shifting away from long-term rentals into alternative uses where regulation feels more predictable or returns feel stronger.
Why this pushes rents up
When the number of rental homes falls but the number of households needing to rent remains high, competition rises:
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more applicants per property,
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faster lets,
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and upward pressure on rent levels.
7) Demand is soaring — and councils are competing for homes
One of the clearest signs of intense demand is that local authorities are offering incentives to landlords to help them secure properties for households facing homelessness.
This matters because it shows:
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the need is urgent,
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temporary accommodation costs are high,
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councils are trying to source stable housing options quickly,
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and the PRS is being relied upon to prevent homelessness when other supply isn’t available.
Why this pushes rents up
If councils are offering incentives or guaranteed-rent type arrangements, it signals that:
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demand is outstripping supply,
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landlords have multiple routes to let their properties,
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and market rents tend to increase as competition intensifies.
The simple logic: why higher costs lead to higher rents
Rents rise when these forces stack together:
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Costs rise: tax, mortgage interest, repairs, insurance, licensing, compliance
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Risk rises: uncertainty, enforcement, dispute resolution pressures
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Supply falls: landlords exit faster than new supply arrives
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Demand remains high: households still need homes; councils compete for properties
Not every landlord can pass on every cost immediately—but over time, in a constrained market, higher operating costs and reduced supply translate into higher rents.
Stop demonising landlords. Start solving the housing crisis.
A serious housing strategy has to hold two truths at once:
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Tenants deserve safe, decent homes and fair treatment.
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The UK needs a sustainable private rented sector as part of the solution—particularly while social and affordable housing supply remains insufficient.
If policy continues to push costs up and returns down while demand keeps rising, the predictable outcome is:
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fewer homes to rent,
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higher rents,
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and more pressure on councils and public services.
Working with good landlords—raising standards while keeping the sector investable and stable—will do more to help tenants in the long run than turning landlords into a political punchbag.
Telephone: 01352 721300
Email: support@netrent.co.uk
Disclaimer: NetRent does not provide legal advice. This article represents our understanding of rental property law and market conditions at the time of writing.