Both aspiring first-time buyers and tenants risk being collateral damage if the Government continues its fiscal and regulatory crackdown on private landlords, industry leaders have warned.

The warning follows mounting speculation that Chancellor Rachel Reeves may look to increase the tax burden on landlords to help balance the books, with proposals floated by tax experts that could see National Insurance applied to rental income at a future fiscal event.

Speaking at a recent roundtable on the future of the UK mortgage market, hosted by financial services communications firm MRM, senior figures from across the housing and finance sectors argued that further squeezing of the buy-to-let market could backfire – by shrinking supply, pushing up rents and putting more pressure on would-be homeowners.

The comments come amid ongoing political scrutiny of landlords’ role in the housing market. Since George Osborne’s 2015 budget, landlords have faced higher stamp duty, the phased removal of mortgage interest tax relief, and restrictions on wear-and-tear deductions – reforms intended to cool investor appetite and tilt the market in favour of first-time buyers.

LANDLORDS LEAVING, RENTS RISING

“The more you tax landlords, the more you squeeze them out of the market, which means that rents rise and fewer people can afford to rent,” said John Davison, Head of Product, Proposition & Distribution at long-term mortgage lender Perenna.

“So, ultimately, it’s the tenants that lose out.”

The new Labour government has signalled its intent to go further, pressing ahead with the long-debated Renters’ Rights Bill and proposing stricter energy efficiency targets for private rented homes by 2030.

But concerns are growing that additional fiscal pressure could accelerate the exodus of landlords already weary of regulation and tightening margins.

LANDLORD PROFILE CHANGING

Elise Coole, Managing Director at buy-to-let lender Keystone Property Finance, highlighted the sector’s rapid professionalisation in response to the evolving landscape.

“We are seeing more Limited Company landlords and, on the whole, they are the younger generation responding to new market conditions.

“The limited company is now firmly the structure of choice for younger investors starting out on their journey.”

This shift is partly driven by tax efficiency. Corporate landlords benefit from different treatment of interest relief and lower headline tax rates, making incorporation an increasingly attractive option for newer entrants – even as older landlords exit the market.

STARMER’S REHOTORIC RAISES EYEBROWS

Landlord sentiment also took a hit following remarks by Prime Minister Sir Keir Starmer during the general election campaign, when he suggested landlords may not qualify as “working people” – a statement many in the sector saw as a precursor to further tax hikes.

But despite what she called a “barrage of assaults” on landlords over the past decade, Jeni Browne, Sales Director at specialist broker MFB, remains optimistic about the long-term health of the buy-to-let market.

“There was a big influx of buy-to-let landlords in their 30s and 40s after the credit crisis, with more lenient lending parameters at that time.

“Most are now building up to retirement and now seeing too much hard work, too much regulation and now just want to sell,” she said.

“But I do think we’re going to have a new wave of smaller landlords coming back to the table with a clean slate who have their eyes more open to what being a landlord is now. The private rental sector is a fantastic place to be – it offers social security and provides a really important service as well.”