"This is unlikely to encourage further investment in the private rental sector, particularly among landlords already questioning whether individual properties remain financially viable."
- Rob Stanton - Landbay
Landlords did not feature strongly in the 2026 Budget set out today, the first since Andy Burnham became Prime Minister and John Healey was named Chancellor.
However, the Chancellor did announce a further 2 percentage point increase in tax on property and savings income, following the announcement in last year’s Budget that basic, higher and additional rates would each increase by 2% from April 2027.
"The 2-percentage point increase in property income tax rates in this Budget will be implemented on top of the 2-percentage point increase announced at Budget 2025," said Ben Beadle, chief executive of the National Residential Landlords Association (NRLA).
"Both of these measures will come into force from April 2027 and represent a material reduction in returns to private landlords. This follows various measures over the past 10 years that have also reduced private landlord returns.
"These measures collectively risk leading to a steady rise in rents through two effects. First, potential landlords are less likely to enter the market, reducing long-run rental supply, which risks a steady long-term rise in rents if demand outstrips supply - which we think is more likely than not.
"Second, landlords are likely to pass on more of these costs to renters in the long run through a combination of some current landlords leaving, thereby giving more price-setting power to remaining landlords, and greater long-run flexibility to raise rents. Such rises in rents would offset at least some of the reduction in the commercial viability to landlords from the measures introduced in recent years."
Rob Stanton, sales and distribution director at Landbay, added: "Having already announced a 2% increase in income tax on property income in last year's Budget, the Government has now doubled that increase to 4%, which will take the basic rate to 24%, the higher rate to 44% and the additional rate to 49% from April 2027.
"This applies to landlords who hold their rental properties in their personal names across England, Wales and Northern Ireland, rather than those who own through limited companies, and clearly represents a significant additional tax burden at a time when landlords are already managing higher mortgage costs, growing regulatory responsibilities and the expense of maintaining their properties.
"This is unlikely to encourage further investment in the private rental sector, particularly among landlords already questioning whether individual properties remain financially viable.
"Our latest landlord survey - issued just this morning - showed that almost 80% of landlords were concerned about further tax changes ahead of the Budget, and today's announcement suggests those concerns were well founded.
"The consequences of this decision are unlikely to be felt by landlords alone, because when the costs of providing rental housing increase, there is a real likelihood that some of those costs will eventually be passed on to tenants through higher rents.
He continued: "Equally concerning is the potential impact on rental housing supply, with further taxation likely to make some landlords reconsider purchasing additional properties, while others may decide to sell existing investments.
"At a time when we need to encourage investment and ensure there are sufficient rental homes to meet demand, measures which risk reducing supply could ultimately make life even more difficult for tenants, particularly if fewer available properties place additional upward pressure on rents."
Elliot Vure, sales director at Together, agreed that "the government’s decision to levy an extra 2% tax on rental income on second homes adds an extra notch of pressure to small-portfolio landlords.
"The government needs to be careful not to overstretch this key cohort of landlords, who provide a large percentage of the housing stock in the rental market.
"Each year they are losing incentives to maintain or expand their portfolios. This is through extra tax requirements, as well as the additional layers of legal complexity following the Renter’s Rights Act’s introduction.
"More buy-to-let landlords selling up will be a headache for renters, and another downward pressure on property prices. Time will tell whether the benefits of the potential £575mn yearly tax receipts generated by this move will outweigh the lost rental stock as a result."
Similarly, Dominic Agace, chief executive of Winkworth, commented: "What the housing market needs right now is stability, economic growth and a pathway to lower borrowing costs, yet today's Budget provides little confidence on any of those fronts.
"The additional 2% burden on landlords from April is another disincentive to invest, particularly when many are already facing increased costs and regulation through the Renters' Rights Act. As more households remain in the rental sector due to market uncertainty, measures that discourage investment only make this worse."
Timothy Douglas, head of policy and campaigns at Propertymark, added: "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.
"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. Propertymark is concerned about the cumulative impact of successive changes on landlords’ confidence and willingness to invest in the private rented sector. This will be bad news for tenants if the supply of rental homes dwindles."
Brendan Kay, managing director of Parkers Properties, said the increase is "only likely to further accelerate the exit by landlords from the private sector.
"This, in turn, will reduce the ability of tenants to save for their deposits and become tomorrow’s first-time buyers."
However, Claire Whisker, founder of First In The Door, described the news as "a relief", saying "the Budget has passed without any major property tax changes that would put further pressure on the market.
"Activity has slowed in recent weeks, as it often does in the lead-up to a Budget, with buyers and sellers holding off on decisions until they know what lies ahead.
"This autumn, however, has felt particularly challenging, with a slow start to the season and confidence already fragile. Keeping the mansion tax threshold at £2 million will be especially welcome for buyers who feared their next home could be brought into its scope. It gives them greater certainty when assessing their budgets and deciding where to buy.
"For those purchasing above the threshold, however, the ongoing cost will still need to be factored in alongside stamp duty, mortgage payments and maintenance, and it will continue to influence what some buyers are prepared to offer.
"Not reducing stamp duty, however, is a missed opportunity to make moving more affordable. Buyers will continue to deduct a substantial tax bill from the overall funds they have available, which directly affects what they can offer for a home.
"For families needing more space and older owners considering downsizing, the cost can be enough to postpone a move altogether, limiting choice elsewhere in the market. Buyers who do proceed need to establish their total acquisition budget before viewing, so that the purchase price leaves sufficient room for tax, essential work and a sensible financial buffer."
