Landlords face paying almost £500 in additional annual tax per property, rising to nearly £3,500 across an average portfolio, following the Chancellor’s decision to hike income tax rates from April 2027 by 4%.

The Letting Partnership modelled the estimated annual income, operating costs, and tax liabilities associated with the average buy-to-let property, valued at £250,000 and generating £1,406 in monthly rental income once property income tax rates rise to 24%, 44%, and 49% next year.

After accounting for the average cost of typical allowable deductible expenses such as letting and management fees (£1,687), repairs and maintenance (£2,500), landlord insurance (£285), and accountancy and legal fees (£300), the analysis found that a landlord could generate about £12,100 in annual taxable rental profit.

Under current income tax rates, a basic-rate landlord would pay £2,420 in tax on this profit. However, from April, this would increase to £2,904, an additional £484 per year.

Increase

The same increase would apply to landlords paying the higher and additional rates of income tax, assuming their rental profits fall within the respective basic, higher, and additional rate tax bands.

Based on industry research indicating that the typical landlord portfolio comprises 7.2 properties (Q2 2026), the firm estimates that a landlord with comparable rental profits across their properties could face an additional £3,485 in annual tax liabilities.

Chief operating officer Chris Mason says: “Landlords are already adjusting to some of the most significant changes to the private rented sector in years following the introduction of the Renters’ Rights Act, with further regulatory requirements still on the horizon. Increasing their tax burden by an even greater margin than originally planned is a real kick whilst they’re already down.”

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