Chancellor John Healey has confirmed that tax on property income will rise by a further two percentage points from April 2027, taking landlord rates to 24 percent, 44 percent and 49 percent across the tax bands.
The move stacks on top of the two-point rise announced in the November 2025 Budget and now in the Finance Act 2026, which had already lifted rental income rates to 22, 42 and 47 percent. Taken together, landlords face a four-point increase on the old 20/40/45 percent system within the space of two Budgets.
On taxable profit of £20,000, the second rise alone adds £400 a year for a basic-rate landlord, or £800 a year against the pre-2025 system. A higher-rate landlord on £40,000 of taxable profit pays £800 more because of this Budget, or £1,600 more than under the old rates. With interest relief still capped at basic rate, leveraged landlords feel each extra point hardest.
Industry verdict: an underhand blow for landlords
Andrew Lloyd, managing director of Search Acumen, said landlords will feel an underhand blow from the Chancellor. “Raising tax rates on income from property by a further two percentage points from April 2027 is a concern for small and accidental landlords whose margins have already been eroded this year, and we will undoubtedly see this impact in supply and rents over the next year,” he said.
Lloyd added that the Chancellor had at least avoided bigger shocks, with no mention of a land tax, a wealth tax or rises in capital gains tax. But he warned that fiscal drag and rising bond yields will keep weighing on the market while borrowers race to beat what he called a rate rollercoaster.
Jennifer Lawler, director of operations at Elite Realty Invest, said investors will be relieved that the Budget avoided another round of property tax surprises. “However, standing by the rise in tax on property income from April 2027 does little to send the signal that the UK wants their capital,” she said.
Lawler pointed to slowing growth and said private capital is what gets developments off the ground, with the strongest effect in regional cities with solid employment, regeneration and tenant demand. Her warning echoes the NRLA’s pre-Budget call for a tax overhaul to keep landlords investing.
David Adams, managing director of Cheshire and North Wales estate and letting agent Cavendish, said the double rise will land hardest on smaller landlords. “The 2% increase in property income tax on top of last year’s 2% rise will have a major impact on the rental sector,” he said. “The tax affects unincorporated landlords, typically accidental landlords or those with only one or two properties, rather than those with larger portfolios.”
Adams said some landlords will see incorporation as an opportune moment, but many others will head for the exit while the Renters’ Rights Act piles on compliance requirements and the risk of prosecution. Shrinking rental stock and higher rents would then hit the first-time buyers the Government says it wants to champion, leaving them struggling to save a deposit, he said.
Timothy Douglas, head of policy and campaigns at Propertymark, called the rise steep and punitive. “The proposed steep and punitive rise in income tax on property income from April 2027 is a further disincentive to potential landlords from entering the market, and it will hit existing landlords badly,” he said. “As the Office for Budget Responsibility has pointed out, this decision to raise the tax will result in a steady, long-term rise in rents, impacting tenants as well as landlords.”
Nick Leeming, chairman of Jackson-Stops, welcomed the First Time Buyer ISA and the fix to the Lifetime ISA penalty, but said stamp duty remains the blockage for everyone else. “Stamp duty remains a substantial upfront cost for growing families and downsizers,” he said, adding that first-time buyers become second-steppers who need a market they can move in.
What this means for landlords
- If you are a basic-rate landlord: rework your 2027-28 cashflows now, as a £20,000 taxable profit costs £400 more from this Budget alone, on top of the first rise already in law.
- If you are a higher-rate landlord: the combined two-Budget uplift is £1,600 a year on £40,000 of profit, so test whether incorporation or debt reduction changes the maths before April 2027.
- Watch for: lender repricing in the next two to four weeks and any consultation on the High Value Council Tax Surcharge, with first bills due in March 2028. Landbay found 80 percent of landlords feared Budget-day tax rises, and many had already paused buying decisions.
- Bottom line: the tax direction is set for April 2027, so the landlords who act early on structure, rents and refinancing keep the most options open.
This follows Landlord Knowledge’s report on the NRLA’s Budget plea, which showed the gap between housing support and market rents at a record. The Chancellor answered none of the association’s asks on property tax, and the second 2 percent rise points the same trend sharply up. The full Budget document confirms the April 2027 timing.
Editor’s view
Two Budgets, four extra points of tax, and still no plan to keep landlords in the market. Healey has banked the revenue and left tenants to pay the price in dearer rents. Landlords who run the numbers before April 2027 will cope; those who wait will simply earn less.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 28 October 2026
Sources: HMT, Search Acumen, Elite Realty Invest, Jackson-Stops, Cavendish, Propertymark
Related reading: NRLA urges Budget tax overhaul as LHA gap hits record
