Mortgage brokers have issued a stark warning that the government’s latest interventions in the housing market risk driving landlords out of the sector and pushing rents higher.
The backlash follows the passing of the Renters’ Rights Act, which gained Royal Assent yesterday, and comes as further property tax reforms are expected to be unveiled in next month’s Budget.
According to the Family Building Society’s latest six-monthly Business Outlook Survey, four in five brokers believe the Renters’ Rights Act will have a negative effect on both landlords and tenants. Many said they expect it to hasten the departure of private landlords and reduce the supply of rental properties.
One broker described the Act as “really awful”, warning: “It will drive more landlords out of the market and will lead to fewer buy-to-let properties available to rent.”
Almost seven in 10 brokers also voiced concern about the property tax changes thought to be under consideration ahead of the 26 November Budget. Among the measures being discussed are the extension of National Insurance contributions to landlords and the replacement of stamp duty with an annual property tax. One respondent said such changes “could have a massive impact on the housing market which could take a dive.”
The survey also revealed widespread scepticism over the government’s pledge to deliver 1.5 million new homes by 2029, with 94% of brokers saying the target will not be met. “Absolutely no chance,” commented one.
Alistair Nimmo, director of marketing at Family Building Society, said: “Our survey, tracking the sentiments and views of brokers on the mortgage and housing market in general, which we have been running since 2023, reveals the depth of feeling to the government’s tinkering with property tax and proposed legislation.
“Brokers are also nervous of the continued speculation about the Budget next month and the potential effect on the housing market.”
The report also found that first-time buyers remain the most active group of mortgage seekers, although brokers noted a decline in enthusiasm among younger buyers. The proportion of brokers reporting strong demand from first-time purchasers fell from 76% in April to 64% this time.
Meanwhile, 75% of brokers said they had seen an increase in demand for two-year fixed-rate mortgages over five-year deals, suggesting borrowers are uncertain about the direction of interest rates.
The findings highlight the tension between government efforts to reform the housing system and industry fears that policy changes could further destabilise the private rented sector at a time when supply is already under pressure.
