Retired landlords who rely on rental income to top up their pensions face almost 36,000 pounds in extra tax over the next 25 years, new calculations from wealth manager Rathbones show.
From April 2027, landlords will pay four percentage points more tax on property income than today after increases across the past two Budgets. Rates rise from 20 percent to 24 percent for basic-rate taxpayers, 40 percent to 44 percent for higher-rate taxpayers and 45 percent to 49 percent for additional-rate taxpayers.
The sting lands hardest on a group policymakers rarely picture when they talk about landlords. Government research suggests almost a third of private landlords in England, 31 percent, are small-scale retired investors who typically own one or two homes and treat the rent as part of their retirement income. For these owners, bricks and mortar bridge the gap between pension income and everyday spending, so a higher tax take bites well beyond the wealthiest portfolios.
Extra 1,122 pounds in year one on average London rent
Rathbones illustrates the squeeze using today’s average London rent and assuming rents rise 2 percent a year. The four-point increase means around 1,122 pounds more tax in the first year alone, 12,288 pounds more over ten years and almost 36,000 pounds more across 25 years.
The hit scales with local rents. Using average private rents across English regions on the same 2 percent growth assumption, the first-year impact runs from about 380 pounds in the North East to 1,122 pounds in London. Over 25 years the cumulative toll stretches from more than 12,000 pounds in the North East to nearly 36,000 pounds in the capital. Charlie Newsome, senior investment director at Rathbones, said the squeeze is tightening from all directions. “With more than 150 pieces of lettings legislation estimated to navigate alongside rising tax and costs, being a landlord has become increasingly demanding,” he said. “We are hearing from clients considering cutting their portfolios or selling up altogether.”
Newsome warned the landlord squeeze risks becoming a renter squeeze. “If landlords sell up or feed higher costs through into rents, aspiring homeowners could find themselves paying more each month while having even less left over to save for a deposit,” he said.
Third of landlords are retired with one or two homes
Owning an extra property can make someone look asset-rich on paper without being cash-rich in retirement, Rathbones notes. Some retirees bought buy-to-let during their working lives; others inherited property and use the rent to supplement pensions and savings. Either way, the April 2027 rise lands on income many had already earmarked for living costs.
This follows Landlord Knowledge’s report on the Budget’s second two-point raid on rental income, which showed the typical landlord paying around 400 pounds more a year. The Rathbones figures put a long tail on that annual hit: small yearly rises compound into five-figure sums over a retirement. Disposal losses are already climbing, up 32 percent to 1.15 billion pounds, a sign some owners are crystallising exits before the higher rates bite. The 31 percent retired-landlord finding comes from the English Private Landlord Survey 2024.
What this means for landlords
- If you are retired with one or two lets: model the April 2027 rates now – a London let costs around 1,122 pounds extra in year one, rising each year rents grow.
- If you hold property personally: take advice on whether incorporation still pays, but weigh stamp duty, capital gains and mortgage costs before moving anything.
- Watch for rent pressure: passing costs to tenants is harder under current affordability strain and tribunal scrutiny, so test what your local market can absorb.
- Review succession plans: higher income tax plus inheritance tax exposure makes early estate planning more valuable for asset-rich, cash-tight retirees.
- Bottom line: small annual rises compound fast – a 25-year view turns a few hundred pounds a year into a five-figure retirement shortfall.
Editor’s view
Taxing rental income at 24 percent and above treats small retired landlords like businesses while regulating them like public services. The likely result is fewer one- and two-property lets and more consolidated corporate stock. That may suit the Treasury’s sums, but it shrinks choice for tenants too.
Author: Editorial Team – UK landlord & buy-to-let news, policy, and finance
Published: 05 November 2026
Sources: Rathbones, English Private Landlord Survey 2024
Related reading: Budget’s second 2% raid adds £400 to typical landlord tax bill
