Since 2015, the UK government has introduced a range of tax and regulatory changes aimed at improving conditions for renters. From abolishing mortgage interest tax relief (MITR) for higher-rate taxpayers to introducing additional stamp duty surcharges and proposed rental reforms, each measure was designed with the intention of making renting fairer and more affordable. However, the reality has been starkly different.
Instead of improving conditions for tenants, these changes have led to a mass exodus of landlords, reduced rental property supply, and significant rent increases. For responsible landlords committed to long-term, high-quality rental provision, the escalating financial and regulatory burdens have made it increasingly difficult to operate. For tenants, competition for properties has intensified, making it harder to find affordable and secure housing.
Albert Einstein famously said, “Insanity is doing the same thing over and over again and expecting different results.” The UK government’s approach to landlord regulation and taxation over the past decade is a textbook example. Despite clear evidence that each new measure has made things worse, policymakers have continued down the same path, deepening the crisis in the private rental sector.
In this article, we examine every major change to landlord tax and regulatory policy since 2015 and show how these well-intentioned interventions have, in practice, made the rental market worse for both landlords and tenants.
Table of Contents
The Key Changes and Their Consequences
1. The End of Mortgage Interest Tax Relief (MITR) – Section 24
What Changed?
In the 2015 Summer Budget, then-Chancellor George Osborne announced the gradual removal of full mortgage interest tax relief for landlords. Under the old system, landlords could deduct 100% of their mortgage interest payments from rental income before tax, a system designed to align property investment with other business models.
The phasing out of MITR, which occurred between 2017 and 2020, replaced this with a flat 20% tax credit on mortgage interest, regardless of the landlord’s tax bracket. This is the only business sector in the UK where financial expenses cannot be written off against tax.
Impact on Landlords and Renters
Higher tax burdens for landlords: Landlords in the higher-rate (40%) and additional-rate (45%) tax bands saw their taxable profits artificially inflated, leading to significant increases in tax liability.
Forced rent hikes: Many landlords had little choice but to pass on the increased costs to tenants in the form of rent rises.
Smaller landlords pushed out: Landlords with mortgages, particularly those who relied on rental income for retirement or long-term financial planning, found themselves unable to sustain ownership.
Instead of improving affordability for renters, the policy reduced rental stock, forcing rents higher as demand outstripped supply.
2. The 5% Stamp Duty Land Tax (SDLT) Surcharge
What Changed?
In April 2016, the government imposed a 3% SDLT surcharge on additional residential properties, including buy-to-let investments. This was in addition to standard stamp duty rates, making property acquisition significantly more expensive for landlords.
Impact on Landlords and Renters
Increased upfront costs: With the surcharge now at 5%, many landlords reconsidered expanding their portfolios, while others withdrew from the market altogether.
Fewer new rental homes: The drop in buy-to-let purchases reduced the availability of rental properties, further driving up rents.
More pressure on existing tenants: With fewer properties available, existing tenants found it harder to move, leaving them trapped in unsuitable or overpriced housing.
3. Changes to Capital Gains Tax (CGT) for Landlords
What Changed?
Despite reductions in Capital Gains Tax (CGT) rates for most asset classes in 2016 (falling to 10% for basic-rate taxpayers and 20% for higher-rate taxpayers), residential property was excluded, remaining at 18% and 28%, respectively. Additionally, in 2020, the government introduced a 30-day payment window for CGT liabilities after the sale of a rental property.
Impact on Landlords and Renters
Discouraged long-term investment: Landlords seeking to sell properties to reinvest in better rental opportunities were penalised with higher tax rates.
Reduced incentive to stay in the market: The CGT changes added further financial burdens, contributing to the landlord exodus.
Diminished rental stock: As more landlords exited, rental property availability fell, again pushing up rents for tenants.
4. The Proposed Abolition of Section 21 ‘No-Fault’ Evictions
What Is Changing?
The Renters (Reform) Bill, currently in progress, seeks to remove Section 21 of the Housing Act 1988, which allows landlords to evict tenants without proving fault, provided they give adequate notice.
Impact on Landlords and Renters
Reduced flexibility for landlords: Without Section 21, landlords may struggle to regain possession of properties for legitimate reasons, such as selling or accommodating family.
Increased risk perception: Landlords are now more cautious about taking on new tenants, fearing difficulties in managing problematic renters.
Higher rents: To mitigate risk, landlords are increasing rents, conducting stricter tenant checks, or shifting towards short-term lets (e.g., Airbnb).
5. The Cost of Compliance: EPC Targets and Awaab’s Law
What Is Changing?
EPC C requirement: By 2030, all rental properties must achieve an EPC rating of C or higher.
Awaab’s Law: New legislation enforcing stricter housing conditions to prevent tragedies like that of Awaab Ishak, who died from prolonged exposure to mould in social housing.
Impact on Landlords and Renters
Welcome improvements, but at a cost: These changes will raise living standards, but landlords need financial capacity to meet them.
Contradictory policies: Increasing taxes and compliance costs make it harder for landlords to afford property upgrades while keeping rents stable.
Risk of rental stock reduction: If landlords cannot afford improvements, they may sell up, further reducing the availability of rental homes.
How the War on Landlords has Affected the Market
1. Fewer Landlords, Fewer Homes
Regulatory and tax changes have resulted in a significant reduction in the number of private landlords. Many smaller investors have chosen to exit, while institutional investment in rental property remains insufficient to fill the gap.
2. Higher Rents Across the UK
Rents have surged to record highs due to dwindling supply. According to property analysts, rental price inflation has been running above wage growth, meaning tenants are spending an increasing share of their income on rent.
3. Less Security for Long-Term Tenants
Landlords facing rising costs are less likely to offer long-term tenancies or maintain stable rents. Many are opting to sell properties or convert them to short-term lets, reducing stability for renters.
A Call for Balance in Housing Policy
While the intention behind these policy changes was to create a fairer and more affordable rental market, the results have been counterproductive. By overburdening landlords with excessive costs and regulations, the government has inadvertently worsened conditions for renters.
A more balanced approach is needed—one that recognises the vital role landlords play in providing rental housing. Solutions could include targeted tax relief for long-term landlords, a more flexible eviction framework, and incentives for rental property investment.
For now, responsible landlords who remain in the market must navigate an increasingly challenging environment, while tenants face rising costs and fewer housing options. Without urgent action, the UK’s private rental sector will continue to contract, exacerbating the housing crisis rather than alleviating it.
How Clarice Carr & Co Can Help
At Clarice Carr & Co, we specialise in sourcing, refurbishing, and managing high-yield residential property investments in Newcastle and the North East. We provide end-to-end property investment solutions, allowing landlords to maximise returns while navigating an increasingly difficult regulatory landscape.
Our Services:
Property Sourcing: We identify high-potential investment opportunities tailored to client needs.
Refurbishment Planning & Management: Our team assists in property renovations to improve value and rental yield.
Project Management: We oversee the entire investment process, ensuring efficient and cost-effective execution.
Ongoing Property Management: Our management services help landlords maintain high occupancy rates and tenant satisfaction while minimising compliance risks.
We take care of the complexities of property investment, allowing landlords to focus on growing their portfolios while ensuring compliance and profitability.
Contact us today to find out how we can help you navigate the ever-changing property market with confidence.
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