Landlords could pay almost £500 more property income tax a year per property, and nearly £3,500 across an average portfolio, after the Autumn Budget doubled the previously planned increase in rates.
The Budget confirmed that property income tax rates will rise to 24%, 44% and 49% from April 2027. That is four percentage points, twice the increase planned before.
The Letting Partnership analysed the impact on rental profitability. It modelled income, operating costs and tax liabilities for an average buy-to-let property valued at £250,000 and earning £1,406 a month in rent, based on the latest ONS figures, then scaled the result to a typical landlord portfolio.
The model deducts four allowable expenses:
- letting and management fees of £1,687
- repairs and maintenance of £2,500
- landlord insurance of £285
- accountancy and legal fees of £300
- That leaves about £12,100 in annual taxable rental profit.
On that profit, a basic-rate landlord pays £2,420 in tax under current rates. The bill would rise to £2,904 once the new rates apply, an extra £484 a year. Landlords paying the higher and additional rates would face the same £484 increase, assuming their profits sit within the relevant band. Landlords with mortgages will keep mortgage interest tax relief, which will rise in line with the new property basic rate, but the change still raises the tax due on rental profits.
Scaled up, the figures grow. Industry research puts the typical landlord portfolio at 7.2 properties in Q2 2026, and The Letting Partnership estimates that a landlord with comparable profits across those homes could owe an extra £3,485 a year in property income tax.
The increase lands as landlords absorb rising maintenance costs, ongoing regulatory requirements and recent rental reforms. The Renters’ Rights Act took effect in May, abolishing Section 21 no-fault evictions and moving tenancies onto a periodic basis, and the national landlord registration system is still to come.
“The Chancellor has effectively doubled down on the tax increases already heading landlords’ way, and while an additional £484 per property might not sound particularly dramatic in isolation, it quickly becomes a substantial financial burden for those managing multiple rental homes,” said Chris Mason, chief operating officer at The Letting Partnership.
“What’s particularly concerning is the timing. 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.”
“Nobody is suggesting that landlords should be exempt from taxation or regulation, but there has to be a balance. The Government needs to recognise the cumulative impact of these changes, because continually squeezing the financial viability of rental property ownership risks undermining landlord confidence, discouraging investment and ultimately reducing the supply of homes available to tenants.”
