The OBR report has warned that the measures announced by Rachel Reeves will cause rent prices to soar.
This comes with a warning that the erosion of private landlord returns will reduce the supply of rental property, thus forcing upward pressure on prices for tenants.
Rent prices are set to go up
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The report said: "The measures announced in this Budget reduce returns to private landlords, following various measures over the past 10 years that have also reduced returns.
"This successive eroding of private landlord returns will likely reduce the supply of rental property over the longer run.
"This risks a steady long-term rise in rents if demand outstrips supply."
Tax rates on property, savings and dividend income will rise by two percentage points, Chancellor Rachel Reeves said.
She told the Commons: “Currently, a landlord with an income of £25,000 will pay nearly £1,200 less in tax than their tenant with the same salary because no National Insurance is charged on property, dividend or savings income.
“It’s not fair that the tax system treats different types of income so differently and so I will increase the basic and higher rate of tax on property, savings and dividend income by two percentage points, and the additional rate of tax on property and savings income by two percentage points.“
Even after these reforms, 90 per cent of taxpayers will still pay no tax at all on their savings.”
Rachel Reeves announced her Budget on Wednesday
| POOLAround one‑third of UK households now live in rental accommodation — that’s roughly 12 million households, equating to more than 25 million people.
Rental prices across Britain have soared to unprecedented levels, with new record highs recorded in the third quarter of this year, according to a leading property website.
The average advertised rental price across Britain, excluding London, now stands at a record £1,385 per month.
This represents a 3.1 per cent increase compared to the same period last year, Rightmove reported.
Zena Hanks, partner at Saffery, comments: “Landlords must be wondering what they have done to upset successive Chancellors, as they have faced an onslaught of tax changes since 2020, starting with the restriction of mortgage interest relief, and this Budget delivers yet another blow.
"Higher taxes on property income, potentially together with the High Value Council Tax Surcharge, will tighten already thin margins, leaving many landlords feeling they have little option but to pass costs on to renters in order for their rental business to stay viable.
"For some, it could be the final straw that pushes them out of the market altogether.”