With speculation seemingly running wild around which decisions the Chancellor, Rachel Reeves, would announce, leaks and U-turns, it’s unsurprising that landlords eyed the Autumn Budget with some trepidation.
The arrival of the Budget was arguably softer than many had anticipated, but taking centre-stage within its announcements were some high-profile changes for landlords.
The question for many property owners will now be whether the Budget was more lenient than they expected, or if now is the time to re-evaluate their rental portfolios.
Of the key concerns for landlords ahead of the Budget, further changes to Capital Gains Tax (CGT) and increased taxation of rental income were arguably the biggest.
In this respect, the Chancellor’s announcements have certainly been a mixed bag for landlords.
Many will be thankful that the Chancellor chose not to add National Insurance (NI) to rental income, but this will be tempered by a two per cent increase in income tax rates on property from April 2027.
A silver lining for landlords could be that the Budget contained no further changes to Stamp Duty Land Tax (SDLT) or CGT.
For landlords feeling the pinch of rising costs, the knowledge that it will not cost them more to dispose of assets could lead to some choosing to exit the market or to restructure their portfolios.
One of the most obviously impactful changes for landlords will be the introduction of separate tax rates for property income from April 2027.
Currently, there are specific tax rates for savings and dividend income, while other forms of income (including employment, pension, trading or property earnings) are grouped together as ‘non-savings, non-dividend’ income and taxed first.
Under the new rules, the way income tax is calculated will change to the following model:
The level of taxation on property will also fall into three bands, as follows:
A new rate of taxation for landlords will inevitably see their rental income fall; however, the formulation of new tax calculations could also increase the financial impact.
Under the new rules, tax allowances must be set off against earnings that are not property, savings or dividend income first. This means that in many cases, the full amount of rental income earned by landlords will be considered for tax.
Relief for residential finance costs will remain in place and will be calculated at the basic property rate of 22%.
Landlords are already under a lot of pressure from an evolving market, with the introduction of the Renter’s Rights Act bringing with it changes to rental rules and property requirements.
Furthermore, as of 2030, landlords will need to ensure that their properties meet a higher Energy Performance Certificate (EPC) standard of ‘C’ or above, which could significantly increase the cost of maintaining rental properties.
With so many changes coming to the rental landscape in a relatively short time, it is unsurprising that some landlords are choosing to exit the market.
Whether this is the right decision for individuals will depend on their own portfolios and finances, but Edward Mellor has recently experienced an increase in rental stock coming up for sale, particularly at auction, as landlords decide to dispose of their assets.
Further to the introduction of new Property Income Tax rules, the Chancellor also introduced new rates for Dividend and Savings income, as part of the government’s attempt to ensure that income from these assets is taxed fairly.
While there will naturally be some debate over whether these new rules achieve the desired fairness, it is nevertheless up to landlords to prepare for the incoming changes.
According to HM Treasury (1), additional taxation from assets will include:
Anyone with income from dividends and savings will pay higher rates of tax from 2026 and 2027 respectively.
Landlords who manage property through a company structure may see their dividend returns squeezed through higher taxation, meaning that they’ll need to reconsider their strategies before the new rates come into effect.
Again, a change in the tax rates and returns on investment could have an impact on landlords’ decision-making when it comes to holding or investing in new property.
The High Value Council Tax Surcharge (HVCTS) is a new charge on owners of residential property in England worth £2 million or more in 2026.
Although the surcharge is set to take effect in 2028, a full public consultation on the details of the levy is to take place in early 2026.
The new surcharge will be applied in bands, as follows:
The tax will be paid by property owners and will be administered alongside existing Council Tax by Local authorities, who will collect this revenue on behalf of the central government.
Landlords with high-value portfolios will see their rental income fall with the new tax on their properties.
Arguably, the impact will be most noticeable on properties within the £2-2.5 million band, and some landlords may consider divesting luxury properties rather than shoulder the new tax.
It remains to be seen whether landlords have deep enough pockets to absorb this cost, or what the appetite for these high-value properties will be if owners decide to sell.
It is believed that less than 1% of UK homes will be impacted by HVCTS.
While housing stock made available by landlords exiting the market has previously attracted high numbers of first-time buyers (FTB), the market for premier properties is likely to comprise savvy investors who have the resources to navigate the so-called ‘mansion tax’.
Although the Autumn Budget was softer than expected, a number of the measures introduced by the Chancellor either target landlords directly or will have a significant impact on their rental earnings.
This will be particularly pronounced for owners of luxury property, who will be subject to HVCTS, in addition to the rates of property income tax.
With many landlords already feeling pressured by the Chancellor’s previous budget, the introduction of the Renters’ Rights Bill, and incoming energy performance rules, it is reasonable to assume that this fresh round of policy changes could see more landlords deciding to exit the market.
How this new housing stock will be received remains to be seen, but it is certainly possible that formal rental properties will continue to attract savvy investors and first-time buyers – particularly at auction.
Property auctions have rapidly grown in popularity in recent years, and have proven to be an effective route for selling formal rental and tenanted homes quickly, while achieving good market prices.
The North West, in particular, has continued to grow as a rental and auction ‘power house’, and a flurry of activity in these areas could make the region even more attractive.
For landlords seeking to navigate an evolving rental market, Edward Mellor Estate Agents are on hand to assist with every stage of your property journey.
We’ve been helping people across the North West to buy and sell homes for over 40 years, and our friendly local branches can provide expertise that you simply won’t find anywhere else.
Whatever your property needs for the New Year, we’re here with the best local advice. To get your property journey moving, contact your nearest branch today.
(1) – HM Treasury: Budget 2025 (Updated November 2025)
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