Nearly three quarters (73%) of landlords expect to raise rents due to Budget landlord tax hikes, according to research from Pegasus Insight.

The tax increase will take the basic, higher and additional rates of tax on rental income to 24%, 44% and 49%, respectively, from the 2027/28 tax year.

A poll of members of the National Residential Landlords Association (NRLA) found that most would pass at least some of the additional tax burden on to tenants through higher rents.

The largest proportion of respondents (38%) said they expected to increase rents by between 5% and 10%, or to market levels, whichever was higher.

A further 11% anticipated increases of more than 10% or to market rates, while 24% expected increases of less than 5% or to market levels.

The research also points to a potential reduction in the number of privately rented properties, with 52% of landlords saying they intend to sell some or all of their rental portfolio over the next 12 months in response to the tax changes.

Of those considering selling, 38% said they planned to dispose of some of their properties, while 14% intended to sell their entire portfolio.

Just 2% of respondents said they planned to purchase additional rental properties.

Meanwhile, 26% expected to make no changes to their portfolios and 20% said it was too early to decide.

Landlords also indicated that increased taxation could affect investment in existing rental homes.

Almost three in ten (29%) anticipated reducing spending on maintenance or improvements, including 13% who expected to make significant cuts. However, 55% said they expected their spending in these areas to remain unchanged.

Mark Long, director of Pegasus Insight, said the findings reflected longstanding concerns within the sector about the potential impact of higher landlord taxation on tenants and the quality of rental accommodation.

Long said: “The industry has repeatedly warned that increasing taxes on landlords risks increasing costs for tenants.

“Announcing another two percentage point rise before the previous increase has even taken effect suggests those warnings have gone unheard.”

Long said comments from landlords taking part in the research highlighted concerns about their ability to continue investing in properties, particularly in energy efficiency improvements, while facing further pressure on rental income.

He added that some landlords were questioning whether to remain in the private rented sector altogether.

“The government needs to consider what it is asking landlords to deliver and whether its tax policy supports that,” he said.

“Tenants need good quality homes at rents they can afford, and providing those homes requires continued investment. Squeezing the income available to fund that investment risks undermining those ambitions.”

Long stressed that the figures represented landlords’ immediate reactions to the Budget and that not all stated intentions to increase rents or sell properties would necessarily translate into action.