Chancellor announces increase to property income tax in November Budget

Following the November Budget announcement, instead of the widely anticipated announcement of National Insurance being levied on landlords’ rental income, the Chancellor has instead decided to increase basic, higher and additional property income tax rates from April 2027.

Our Chief Commercial Officer Steve Cox shares his insights on what the  mean for landlords and the PRS.

“The Chancellor has decided to increase basic, higher and additional property income tax rates from April 2027. This means landlords will now pay 22%, 42% and 47% from that date, and this is anticipated to raise £0.5bn every year from 2028-29 onwards. It means landlords will once again see their incomes squeezed, at a time when costs continue to rise, and the introduction of the Renters’ Rights Act was already adding further costs to landlords next year, all of which are likely to be passed on to tenants in the form of higher rents.

“Add in this income tax increase to all the extra costs and responsibilities, and again landlords are going to see their margins on properties under further pressure. It is far too early to say how this will impact supply within the PRS, but of course it will require a reassessment by landlords and we are likely to see rents being reviewed in order to maintain profits. I think we can be fairly certain that this decision will move landlords even further towards using corporate vehicles for their portfolios; our most recent Rental Barometer already showed 81% of all mortgage applications we received were from limited company borrowers, and the direction of travel now looks likely to move even further towards this.”