How did the Budget land with the property sector, and what are the key takeaways for landlords? Here, we look at the announcements in more detail and unpack the new opportunities for property investors in 2026.
Yesterday’s Budget was Rachel Reeves’ latest tax grab at landlords. With last year’s increase to the stamp duty surcharge on rental properties and the upcoming implementation of the Renters’ Rights Act, set to increase property maintenance costs, we had been hoping landlords might be left alone this time around.
However, Reeves clearly felt Labour still hadn’t gone hard enough on property investors, having stated yesterday, “a fair society is one where the wealthiest pay their fair share” when referencing landlord income.
But it’s not all bad news. In fact, for some property investors, yesterday’s announcement unveiled a number of opportunities to focus on in 2026.
Key Takeaways from Autumn Statement
Increased taxes on property income
From April 2027, there will be a 2% increase in income tax on property income. This will increase tax rates to 22% for basic-rate taxpayers, 42% for higher-rate taxpayers, and 47% for additional-rate taxpayers. This means reduced net rental income for landlords and potentially rent increases for tenants. Furthermore, this increase also extends to dividends, which will hit Limited Company landlords who take their salary through this route.
For example, a landlord earning £25,000 rental income a year in the basic tax rate band will see the following difference in tax payments:
Before April 2027: £5,000
After April 2027: £5,500
The rationale behind this measure is that, under the current tax system, landlords pay less tax than tenants on the same level of income. This is because rental income is exempt from National Insurance; therefore, the 2% increase is intended to narrow the gap between tax on work and tax on assets.
High-value council tax surcharge
A new ‘mansion’ tax scheme will see owners of properties worth over £2m facing a council tax surcharge. This will be banded, with properties worth £2m to £2.5m incurring a surcharge of £2,500 per year, rising to £7,500 a year for properties worth £5m or more.
This surcharge is to be levied on owners, not occupiers. Consequently, landlords with high-value properties, particularly those in London and the South East, face yet another charge added to their tax bills.
Industry Response
Andrew Lloyd, the Managing Director at property data firm Search Acumen, highlights the key issues with the property taxes announced yesterday:
“For landlords, some will be hit twice in [the] Budget if stung by a council tax surcharge and an increase in property income tax. Some will have no choice but to exit the market entirely, reducing supply of the already squeezed private rental sector. Rents have increased nationally by about 36% since 2020, a figure that sits well above wage growth and has tightened the screws on the cost-of-living crisis. What’s more, the scarcity of rental homes will add further pressures to social care and social housing supply, with a housebuilding sector currently in turmoil.”
Sarah Bush, Head of Residential at lettings agency Cheffins, commented, “Reeves’ new levy for landlords is yet another hammer blow to the private rented sector. Having already endured repeated tax hikes, looming EPC requirements, and the now-legislated Renters’ Rights Act, and this latest measure introduces yet another obstacle for landlords to overcome. […] The government now needs to give the private rented sector a break.”
Landlord Opportunities
However, despite the challenges, some opportunities were presented for property investors to consider.
Reeves announced “permanently lower tax rates” for more than 750,000 retail, hospitality, and leisure properties, funded through higher rates on properties worth £500,000 or more. For commercial property investors or buy to let landlords looking to diversify portfolios, this is a clear signal to start reviewing your options. With lower taxes and higher rental yields on offer, semi-commercial high street properties or a new hospitality or leisure premises could significantly boost your rental profits.
There were also several new government-backed investment areas announced, aiming to drive growth through new transport links, job opportunities, and high-quality housing. These may present fresh opportunities for landlords seeking growth locations or higher-yield markets.
Limited Company investment
For landlords worrying about the 2% increase on property income, this presents an opportunity to review your ownership structure and consider the most tax-efficient way to hold property. This may be through an SPV Limited Company.
Despite the increase on dividends, corporation tax remains unchanged.
Consequently, many Limited Company landlords will feel very little impact, assuming they are exempt from the high-value council tax surcharge, from yesterday’s Budget.
What’s more, we expect mortgage rates to remain at their current pricing level for longer. Many Limited Company rates are just as competitive, if not the same, as those available for borrowers investing in their own name. That means you get tax efficiency as well as competitive rates to support your property investment journey.
One option to consider would be Limited Company Incorporation. Whilst this is not a ‘cheap’ route by any means, it may be that the new taxes on landlords mean that this is the most cost-effective option for your portfolio in the long term.
Looking Ahead
Whilst the challenges and tax increases from yesterday’s Budget are significant, opportunities are still out there. Whether it’s diversifying into semi-commercial spaces, exploring government-backed growth areas, or restructuring through a Limited Company for better tax efficiency, there are plenty of ways to stay ahead of the game.
Think of this as a chance to take stock, review your strategy, and position yourself for long-term success. The private rental sector remains a cornerstone of UK housing, and demand isn’t going anywhere.
Getting expert support from industry professionals will be more important than ever in 2026. Whether it’s to secure competitive mortgage rate pricing, support to navigate the Renters’ Rights Act, or tax advice amidst yesterday's announcement, the key message for landlords is that the industry is on your side, and we’re here to help.
Speak to an expert
If you want to discuss your mortgage or property finance plans, our team of experts are here to help.
Call us on 0345 345 6788 or submit an enquiry here.
>> Visit our Renter’s Rights Act hub for more information on the changes to the PRS
