Landlords in the South East could pay £22,109 more property income tax over 25 years, while those in the South West face an extra £19,234, according to analysis by wealth and asset management group Rathbones.
The figures follow the chancellor’s decision in the Budget to raise tax rates on rental income, with retirees across the South of England who rely on property to supplement their income among those affected.
Landlords will pay four percentage points more tax on property income from April 2027, following rises the chancellor announced across the past two Budgets. Property income tax rates will climb from 20% to 24% for basic-rate taxpayers, 40% to 44% for higher-rate taxpayers and 45% to 49% for additional-rate taxpayers.
The four-point rise could cost South East landlords £22,109 more over 25 years and South West landlords £19,234 more, based on average rents and assuming rental income grows by 2% annually. The South East faces the highest illustrative increase of any English region outside London, and a bigger impact than the neighbouring East of England, where the equivalent 25-year figure is £19,956.
“The landlord squeeze is tightening from all directions and Southern England is particularly exposed,” said Faye Church, head of the firm’s Guildford office.
“With more than 150 pieces of lettings legislation estimated to navigate alongside rising tax and costs, being a landlord has become increasingly demanding. We’re hearing from clients considering cutting their portfolios or selling up altogether.
“But today’s landlord squeeze risks becoming tomorrow’s renter squeeze. If landlords sell up or feed higher costs through into rents, aspiring homeowners across the South could find themselves paying more each month while having even less left over to save for a deposit.”
Property income tax and retirement
The change could be particularly significant for small private landlords who rely on property income in retirement. Government research found 31% of private landlords surveyed in England were small-scale retired landlords, typically owning one or two properties and viewing their portfolios as investments to supplement retirement funds.
The group’s own New Retirement Reality research found one in ten current retirees already receive rental income from property, while 39% expect property to help fund retirement. Among those expecting to use property, 43% plan to downsize and 42% expect to generate rental income.
“For a generation of retirees, bricks and mortar have become an important part of the retirement income mix,” Church added. “Some invested in buy-to-let during their working lives, while others acquired property through inheritance and use the rental income to supplement pensions and savings.
“Owning an additional property can make someone look asset-rich on paper, but that doesn’t necessarily mean they’re cash-rich in retirement. For some, rent helps bridge the gap between pension income and everyday spending, so a higher tax take could be felt well beyond the wealthiest landlords.”
Separately, 42% of respondents said tax planning and tax efficiency is an area where they most value financial advice. The group’s 2026 Don’t Bet the House research warns against relying too heavily on property to fund retirement, and found that weaker house-price growth, higher borrowing costs and a more demanding tax and regulatory environment have changed the investment case for property.
“Property can be an income stream, a source of capital and a later-life safety net all rolled into one,” noted Lloyd Gardner, financial planning director based in the firm’s Exeter office. “But retirees shouldn’t look at it in isolation.
“This is particularly relevant in the South West, where second-home hotspots have come under pressure: house prices fell by 6.6% in South Hams, 2.4% in Cornwall and 2.3% in North Devon in the year to the first quarter of 2026.
“As property’s tax treatment becomes less favourable and values in some popular locations weaken understanding how property sits alongside pensions, ISAs and investments, and which assets are best placed to provide income at different stages of retirement, becomes increasingly important.”
