Rachel Reeves warned landlord tax raid will backfire as London rent hits crazy £2,694

Real estate giant Rightmove is calling on Rachel Reeves to give landlords new tax relief as an incentive to stay in the market, as London rents continue going through the roof.

The Chancellor is being warned that the cost of living crisis for people in the capital will hit breaking point unless she devises a new way of incentivising landlords, many of whom are selling up in the face of Labour's rumoured capital gains hike.

Rightmove data has revealed that Londoners now face paying an eyewatering £2,694 a month on average, up 2.5 percent on last year and a new record high.

In the rest of the country, advertised rents are also a backbreaking £1,344 per month, but half that of the capital.

The rental crisis in the capital is largely down to there being 25 percent fewer rental properties on the market than five years ago.

Rightmove property expert Tim Bannister is now calling for tax relief for landlords, as an incentive to stay in the market.

Mr Bannister said: "We are seeing some landlords choosing to exit the market with potential tax changes and stricter EPC regulations as additional factors in landlords' decision-making."

"With rental supply under strain, incentivising landlords to invest in energy-efficient upgrades or offering tax relief could help maintain rental supply and, ultimately, ease affordability pressures for tenants."

However Labour appears intent on doing the opposite, and potentially making the cost of renting much worse.

Alongside rumoured hikes to capital gains tax, which would clobber those selling second homes, Labour's renters rights bill will significantly increase costs and red tape for landlords.

Labour want to ban no-fault evictions, meaning it will become very difficult for Landlords to remove tenants at the end of their contract.

The NRLA, which represents 110,000 landlords, has said its members are discussing how to adjust rents to mitigate the risk posed by renters who, under the new laws, will be able to sign a tenancy agreement and pay for only two months before leaving their contract early.

They also warn it could turn parts of the private rental sector into "Airbnb Lite".

Oxfordshire agent Pheasant Retreats have similarly warned that they're seeing fewer rental properties come onto the market as a result of Labour's new policies.

Lynda Woodcock warned: "The rental market has been incredibly busy, but that's largely due to the ongoing shortage of available properties."

"With so many landlords considering selling their properties ahead of new legislation, such as the proposed changes around EPC requirements and tax increases, we're seeing fewer new instructions coming through."

Letting agency trade body Propertymark, said: "Landlords have faced continuous financial and regulatory hurdles with many having to pass on certain costs by raising rents just to break even on their increasing expenditure."

"As the Renters' Rights Bill makes its way through Parliament there is a danger it may not actually benefit all tenants and it's important that full impact assessments are conducted.

"The UK Government is right in pursuing reform within the sector to ensure higher standards; however, for this to work, there needs to be a balanced approach to protect both landlords and tenants equally."