The buy-to-let boom era of the side-hustle investor landlord has been drawing to a close since chancellor George Osborne forced them to pay more tax in 2015. And, in yesterday’s Budget, Chancellor John Healey moved to bring about the end of the small-time landlord once and for all.

Following on from his predecessor Rachel Reeves, who added two per cent of tax to property rental income last year, Healey announced that he would add another two per cent on top from 2027, bringing the additional tax paid by landlords on top of their regular tax rate to four per cent. Britain’s economic watchdog, the Office for Budget Responsibility (OBR), has said that these tax hikes will make it less likely that people decide to become landlords in the future.

But if you think for a moment that this is a mistake on Labour’s part, think again.

Just as Osborne explicitly intended to professionalise the private rental sector, capture its profits and encourage private landlords to run their businesses via incorporated companies as opposed to as a side-hustle, Healey is deliberately disincentivising people from investing in buy-to-let homes.

So, why would a government want to do that? Let’s break it down.

The average age of a landlord was last reported to be 58 in 2021, according to government figures, which means it could well be higher now. Many of them bought up their “property portfolios” in the 90s, 00s and after the 2008 financial crisis, when it was easier for people with cash to buy than for first-time buyers with small deposits.

So, while there are around 2.3 million, generally older people in England who own somewhere between one and four rental homes on average, we know that millions of younger people – most of them in their 20s, 30s and 40s – are caught in a rent trap and struggling to buy homes of their own. One reason is that millions of their elders own so many!

In recent years, private renters have also been hit with above-inflation rent hikes which have squeezed their finances. This is bad for them, but it’s also bad for our economy because it means younger working-age people have less disposable income to spend because so much of it goes to their landlords, who may be using it to fund holidays or even second homes abroad.

For this reason, much to their chagrin, small-time private landlords are not generally regarded as being good for growth or productivity.

Both the Tories and Labour began to agree in the late 2010s that something needed to change. That’s why we’ve not only seen the amount of tax landlords pay on their income go up, but also new regulation – now called the Renters’ Rights Act – to make it harder for landlords to evict people at short notice and put up their rents beyond what is reasonable in their local area. This new legislation also makes it much harder for landlords to pass on their costs – whether it is a tax bill or a mortgage rate hike – onto their tenants, who can now challenge rent increases at a specialist tribunal.

There was a fear that all of this would cause landlords to sell up in droves. However, that hasn’t actually happened. The best available data from the independent think-tank, the Joseph Rowntree Foundation (JRF), says that while fewer people are becoming landlords, there has not been a drop in the number of rental properties available. In fact, the number of people privately renting a home is at a near-historic high.

And, on top of that, the number of new homes added to the private rental market in newly built specialised build-to-rent blocks is around 150,000, with the growth of this sector year on year now at around 13 per cent, according to market experts at Savills.

Ben Beadle from the National Residential Landlords Association (NRLA) has told me that he doesn’t think Labour’s new legislation or tax hikes will “kill off” smaller landlords but that he thinks the government have made it clear that they “don’t think that smaller landlords are the solution” to the housing crisis.

Evidently, Labour are much more enthusiastic about build-to-rent because it creates jobs during the construction process and adds new homes to our housing market. And they will have made the calculation that if some smaller landlords do sell up, the homes they sell will end up back in the market where a younger person who is currently stuck in a starter flat and looking to upsize can buy it. In London, we’re already seeing this happen and those are words that I never thought I’d write.