From MoneyWeek · · 1m 30s
Landlords face tax hike after Budget
New tax rules threaten buy-to-let returns as landlords weigh exit.
In brief
New tax rules threaten buy-to-let returns as landlords weigh exit. Landlords face higher taxes and costs after Budget, with some considering selling properties. Originally reported by MoneyWeek.
Budget tax changes
Chancellor John Healey announced higher income tax rates for rental income starting April 2027.
Tax rates increase
Basic rate taxpayers will pay 24% on rental income versus 22% today, with higher rates rising to 44% from 42%.
Landlord financial impact
Landlords face an extra £480 annual tax burden, reducing profits for basic rate taxpayers by £140.
Renters Rights Act costs
New rules add annual registration fees and Ombudsman membership costs for landlords.
Mortgage interest relief
Mortgage interest relief is a 20% tax credit based on mortgage interest payments.
Landlord sentiment
Chris Norris of NRLA warns higher taxes could push more landlords to exit the sector.
Profit calculations
Basic rate landlords see annual profit drop from £2,796 to £2,656 after tax changes.
Mortgage-free landlords
Mortgage-free landlords face a £2,880 tax bill versus £2,400 today, reducing retained profits.
Market pressures
Average UK rents rose 3.8% to £1,406 in the 12 months to September 2.026.
Landlord decisions
Two-thirds of landlords plan to sell properties or exit the rental market within three years.
Company ownership shift
Some landlords move portfolios to company ownership to avoid higher personal tax rates.
Long-term outlook
Landlords may absorb costs, reconsider expansion, or sell as tax pressures mount.
The big picture
Landlords face higher taxes and costs after Budget, with some considering selling properties.
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