The Chancellor, John Healey, delivered his first Budget on 28 October 2026. Inevitably, landlords will have been watching closely. There is one change that will affect landlord income, but much of what many in the sector feared did not happen, and the fundamentals of the private rented sector remain as strong as ever.
Here’s our summary of what it means for you.
The headline change: income tax on rental profits
From April 2027, landlords who own property in their own names will pay a higher rate of income tax on rental profits. The previously announced 2% increase has been doubled to 4%, giving rates of 24% for basic rate taxpayers, 44% for higher rate and 49% for additional rate.
We won’t pretend this is welcome news. However, there are still around 18 months to plan before it takes effect, and with the right advice there are often ways to reduce the impact. The new rates apply to individual landlords, not to property held in a limited company, which pays corporation tax instead. Allowable expenses such as letting and management fees, repairs and insurance remain deductible, so keeping costs well documented and making use of every legitimate expense is now more valuable than ever.
What didn’t change, and why that matters
In the run-up to the Budget, there was widespread speculation about much bigger changes. In the end:
- Capital gains tax is unchanged. Despite talk of aligning CGT with income tax rates, residential gains continue to be taxed at the same rates. Landlords who have built up equity over many years can plan for the future with confidence.
- Stamp duty is unchanged. There was no increase to the surcharge on additional properties.
- No rent controls or rent freeze. The Budget contained no rent caps or freezes, so landlords keep the ability to review rents in line with the market through the proper process.
- No National Insurance on rental income. This much-discussed idea did not go ahead.
A market with strong demand
The UK continues to face a chronic shortage of housing, and demand for good-quality rented homes remains high. While the Budget included measures to help first-time buyers and boost social housebuilding, these will take time to have an effect. The private rented sector will continue to play a vital role in housing millions of people for many years to come.
For well-run, well-maintained properties, that means continued demand from reliable tenants, low void periods and stable long-term returns.
Our advice to landlords
- Speak to an accountant now. With 18 months before the new rates apply, there is plenty of time to review how your properties are owned and structured.
- Keep good records. Every allowable expense now reduces a larger tax bill.
- Focus on quality. Well-presented, compliant properties attract the best tenants and command the best rents.
- Don’t go it alone. Between the Renters’ Rights Act, the upcoming landlord register and energy efficiency standards, there has never been a better time to have professional support on your side.
We’re here to help
At Pure Lettings we work with landlords across Keighley and Airedale every day, and we understand the pressures you’re facing. Whether you’d like a review of your rents, help staying compliant, or simply a conversation about your options, we’re always happy to talk.