Property Expert Says 2% Tax Increase For Landlords is a ‘Step Back’

In a move announced on 26 November 2025, the government revealed that from April 2027, landlords will face a 2% rise in the income tax applied to rental properties.
The new rates will see basic‑rate taxpayers paying 22 %, higher‑rate 42 %, and additional‑rate 47 % on property income — up from 20 %, 40 % and 45 % respectively.
Chancellor Rachel Reeves described the move as part of a broader effort to make income from assets taxed more in line with earnings, arguing that rental and savings income have benefited from lower tax burdens because they escape National Insurance.
Industry groups, including National Residential Landlords Association (NRLA), warned that the changes will squeeze landlords’ profit margins even further — coming on top of previous reforms reducing mortgage‑interest tax relief.
In its reaction the NRLA warned the hike could push up rents by as much as £20–£25 per month for the average tenant.

Speaking to London property expert, Jessica Hall, of J Property Management, she believes the 2% tax increase is a step in the wrong direction.
“From my point of view, I believe the 2% hike to property-income tax is a backward step and for many landlords, especially smaller private landlords, it’s more than just a bit of extra tax; it could be the straw that finally breaks the camel’s back.”


“After years of rising mortgage rates,” she continues, “Also limits on interest-offsetting, increased regulations (which we support, but which carry real costs) and already-squeezed margins, another tax rise risks pushing marginal landlords out of the market.”


“That isn’t just bad news for landlords, it could reduce the supply of available housing & forcing rents up at a time when many tenants are already under pressure.”


“If the Government claims to support rental affordability and a healthy private-rented sector, this feels like the wrong direction.”


Critics suggest that with returns diminished, some smaller landlords may choose to exit the market, reducing the supply of rental properties at a time when demand remains high.


For tenants, the concern is that higher costs for landlords will be passed on in the form of higher rents. For the broader housing market, fewer private landlords may make it harder to meet the demand for rental homes — a dynamic that could intensify affordability pressures.


Meanwhile, the budget also introduces a separate “mansion tax” on properties worth over £2 million, additional taxes on savings and dividends, and extends a freeze on income‑tax thresholds — adding to what many see as a substantial tightening of the UK’s tax regime.