Landlords face a further tax hit from next April after Chancellor John Healey announced an additional two-percentage-point increase in income tax rates on property income in today’s Budget.

From 6 April 2027, rates will rise to 24% for basic-rate taxpayers, 44% for higher-rate taxpayers and 49% for additional-rate taxpayers across England, Wales and Northern Ireland.

Last autumn’s Budget had already raised the rates of tax on property and savings income by two percentage points across all bands from April 2027. The latest announcement adds a further two points, taking the planned increases to four percentage points in total. This year’s Budget report called it a “fair and proportionate approach” and said 84% of income taxpayers would be unaffected by these changes.

The move has been met with dismay by many in the sector, with experts warning that raising tax rates adds yet more pressure on landlords already navigating rising costs and substantial regulatory change.

Heather Powell, a partner at Blick Rothenberg, labels it “the final nail in the coffin for private investors in rental properties” and says it will mean that landlords will be looking to sell up and invest their money elsewhere. “Tenants looking for good homes to rent will find reduced supply, and thus higher rents due to competition, and will be driven into the arms of corporate build to rent investors.”

Imposed

The private rented sector has once again become the government’s pin cushion, reckons Greg Tsuman, MD for lettings at Martyn Gerrard, who fears that this could be the move that finishes off the sector.

“The OBR was already warning that the level of tax being imposed on landlords was likely to drive up rents and reduce rental property supply,” says Tsuman. “This is lunacy and I fear that the government is actively trying to dismantle the PRS. At this point, the government may as well criminalise renting out a property.

Exodus

“Landlords have endured successive measures against them for years and we’re already seeing an unprecedented exodus from the rental market. There was a desperate need to reassure and provide confidence. Instead, we’ll see the rush to the door intensifying.”

NRLA chief executive Ben Beadle (pictured left) believes the Chancellor has made life harder for renters. “As the Office for Budget Responsibility has confirmed, hiking taxes will drive up rents and drive down supply in the rental market when demand is already way ahead of the number of homes available,” says Beadle. “How that fits with a commitment to providing households with more breathing space is anyone’s guess.”

Shamplina

Paul Shamplina, founder of Landlord Action (pictured right), says far too many landlords are already questioning whether it is worth staying in the sector.

"Of course, landlords should pay their fair share of tax, but there has to be a balance,” Shamplina tells LandlordZONE. “If you keep making it more expensive and less attractive to let property, many more will inevitably decide to sell.

“The problem is that the tenants do not just disappear when a landlord sells up. They still need somewhere to live, and in many areas there simply are not enough rental properties available. Less choice and more competition are hardly going to help people who are already struggling with the cost of renting.

“We need good, responsible landlords to stay in the market. The government should be encouraging them, not giving them another reason to walk away.”

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