Landlords to face 4% tax rise on rental income from 2027

Summarised from 3 outlets · Updated 28 Oct, 15:28 · Archive

Chancellor John Healey announced a two percentage point rise in tax on rental income from April 2027. Combined with the two point increase introduced by his predecessor Rachel Reeves last year, this brings the total tax rise to four per cent.

From April 2027, the basic rate of property income tax is set to be 24 per cent, the higher rate 44 per cent, and the additional rate 49 per cent. The Treasury claims this will affect only 16 per cent of income tax payers, with half of the revenue raised set to come from the top 10 per cent of households.

Property experts warned the rise will be the 'final nail in the coffin' for some buy-to-let landlords, who may decide to sell up. There are also concerns that landlords who remain in the sector may pass on the tax increase to tenants through higher rents.

The Office for Budget Responsibility issued a stark warning that the tax hike risks 'leading to a steady rise in rents' as potential landlords are less likely to enter the market, reducing long-run rental supply.

Landlords to face 4% tax rise on rental income from 2027 — Image: Evening Standard

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How it is being reported

London rents set to rise as property taxes hiked in BudgetChancellor announces hike in rates of tax on income from property and savings by a further two percentage points from April next yearEvening Standard · 28 Oct, 16:49
Budget 2026: Tax raid on landlords ‘final nail in the coffin’ for rental sectorJohn Healey’s decision to push up tax on rental income is set to push up rents and deter new landlords from entering the sector. The Chancellor said in the Budget that tax on property income will rise by a further two per cent, following the two per cent hike imposed by his predecessor, Rachel Reeves, [...]City AM · 28 Oct, 15:06
Landlords face 4% tax rise on rental income from 2027One expert said the rise will be the ‘final nail’ in the coffin for buy-to-let landlords - with concerns the tax increase will be passed on to their tenantsThe i Paper · 28 Oct, 14:16

In this story: John Healey · Rachel Reeves · Office for Budget Responsibility · Treasury

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