London rents set to rise as property taxes hiked in Budget

Plans to increase taxes for landlords risk a “steady rise” in rent prices, the UK’s official Budget watchdog has warned.It comes on top of an increase of the same size introduced under his predecessor Rachel Reeves at last year’s autumn statement, which is due to take effect at the same time.In analysis published on Wednesday, the Office for Budget Responsibility (OBR) said these steps along with measures over the past decade that have reduced private landlord returns “collectively risk leading to a steady rise in rents”.Read MoreThe risk is driven in part by potential landlords being less likely to enter the market, meaning demand could outstrip supply, “which we think is more likely than not”, the watchdog said.Landlords are likely to pass on more of the costs to tenants in the long run, through a mix of some leaving and giving more price-setting power to those who remain, and greater long-run flexibility to hike rents, it added.“Such rises in rents would offset at least some of the reduction in the commercial viability to landlords from the measures introduced in recent years,” the OBR said.Officials have said the Budget aimed to help renters in other ways, including by looking to support first-time buyers with £4.7 billion in Government-backed lending for the Your First Home equity loan scheme.But the National Residential Landlords Association (NRLA) warned the Budget would “hit renters in their pocket”.Chief executive Ben Beadle said: “The Chancellor has today made life harder for renters right across the country.“As the Office for Budget Responsibility has confirmed, hiking taxes will drive up rents and drive down supply in the rental market when demand is already way ahead of the number of homes available.“How that fits with a commitment to providing households with more breathing space is anyone’s guess.”