The Budget must put rental housing investment back on the agenda

Rental housing belongs in the growth agenda

A successful housing market requires both owner occupation and a thriving rental sector. The Budget therefore needs to give landlords and investors the confidence to provide more rental homes and improve those we already have. A healthy private rented sector supports labour mobility, helps employers attract and retain talent, and provides housing for households at every stage of life. It should be viewed as an essential part of the Government's growth agenda. 

The scale of its contribution is significant. The English Housing Survey found that the private rented sector accommodated 4.7 million households in England in 2024-25, representing around 19% of all households. Decisions affecting investment in the sector therefore have consequences far beyond landlords' balance sheets. 

Assess the combined cost of investment

The first priority for the Treasury should be to assess the cumulative impact of taxation, regulation and compliance costs on rental housing supply. Individually, many of these measures have understandable objectives. Collectively, however, they influence whether investment remains commercially viable. Acquisition costs, finance, maintenance, compliance obligations and future improvement requirements all compete for funding from the same investment return. 

If policymakers are serious about improving housing choice, they must ensure that residential property remains an attractive asset class in which to invest. Without continued investment from private landlords, professional operators and institutional capital, the supply of rental homes will continue to tighten. The inevitable result is fewer homes available to renters, greater competition and higher rents.

The Budget should also review transaction taxes and the treatment of property investment funds, recognising the complementary roles played by both private landlords and institutional investors. Different sources of capital serve different parts of the market, and the tax system should encourage investment into additional rental housing rather than discourage it.

Help landlords deliver warmer homes

Improving existing homes also requires greater attention. The Government has set out plans for privately rented homes in England and Wales to achieve higher energy efficiency standards broadly equivalent to EPC C by October 2030, subject to exemptions. Its consultation response estimates average expenditure of £5,400 per property requiring improvements, taking account of the proposed £10,000 cost cap. Across large portfolios, this represents a substantial capital commitment. 

Warmer homes and lower energy bills are worthwhile objectives. However, the Budget should support delivery through targeted tax reliefs, enhanced capital allowances or accessible financing solutions for qualifying works. Clear technical standards, realistic implementation periods and sufficient contractor capacity will be equally important. With only a few years remaining until the proposed deadline, investors need certainty around both the scope of improvements required and the mechanisms available to fund them. 

Professional portfolio management can help landlords assess properties, prioritise expenditure and programme improvements around tenancy cycles. Government should actively encourage early action so that investment is spread sensibly over the coming years rather than creating a last-minute surge in demand for labour and materials. 

Make new rental development viable

Finally, the Budget should recognise professionally managed rental housing, including Build to Rent (BTR), as critical housing infrastructure. Families need high-quality homes close to schools and services. Key workers, graduates and employees relocating for work need well-managed accommodation in locations where they can access employment opportunities. 

However, demand alone does not make development viable. Construction costs, financing requirements and delivery risk continue to challenge the viability of many schemes. Where projects stall, policymakers should examine how taxation, development costs, planning obligations and regulatory timelines interact, then target those barriers that can realistically be addressed through public policy. 

Support for home ownership and support for rental housing investment should not be viewed as competing priorities. Both are essential to a functioning housing market. If Government succeeds in helping more households buy, that is to be welcomed. But there will remain millions of people who rent by necessity or by choice, and they deserve access to a well-supplied, professionally managed rental sector. 

My hope is for a Budget that recognises this reality and makes the provision of good-quality rental housing a financially sustainable long-term commitment. Without investment there will be fewer homes, less choice and higher rents. With investment, tenants, communities and the wider economy all benefit

Adam Hills, Client Services Director, LRG Living Markets