Kemi Badenoch has launched a fierce assault on the chancellor after Rachel Reeves unveiled plans to hike property taxes for landlords – a transfer the Conservative chief says will go away tenants footing the invoice.
Responding to the Finances within the Commons, Badenoch warned that Reeves’s resolution to boost taxes on rental earnings would push landlords out of the market and drive rents even increased, at a time when hundreds of thousands are already battling report prices.
She informed MPs the transfer was “short-sighted” and would “hit renters hardest”, insisting the chancellor’s tax technique would shrink provide and power up costs.
Reeves’s Finances, delivered on Wednesday, confirmed a two-percentage-point improve in tax charges on property, financial savings and dividend earnings from April 2027 – a change that may notably improve the tax burden on landlords and reshape the rental market.
The chancellor informed MPs: “Presently, a landlord with an earnings of £25,000 pays almost £1,200 much less in tax than their tenant with the identical wage as a result of no Nationwide Insurance coverage is charged on property, dividend or financial savings earnings.”
“It’s not truthful that the tax system treats several types of earnings so otherwise, and so I’ll improve the fundamental and better fee of tax on property, financial savings and dividend earnings by two share factors, and the extra fee of tax on property and financial savings earnings by two share factors.
“Even after these reforms, 90% of taxpayers will nonetheless pay no tax in any respect on their financial savings.”
Badenoch attacked the coverage announcement in her response to the Finances, saying: “Climbing tax on landlords will solely push up rents. It can push landlords out of the market – the individuals who will endure are the tenants.”
The Workplace for Finances Accountability’s fiscal outlook additionally warned that the coverage may result in growing rents, stating: “The measures introduced on this Finances cut back returns to non-public landlords, following numerous measures over the previous 10 years which have additionally decreased returns.
“This successive eroding of personal landlord returns will possible cut back the provision of rental property over the longer run. This dangers a gentle long-term rise in rents if demand outstrips provide.”
