1. The big one: 2% tax rise on rental income

From April 2027, tax on property income (including rental income) rises by 2 percentage points across the board.

New property income rates will be:

• 22% for basic-rate taxpayers (up from 20%)
• 42% for higher-rate taxpayers (up from 40%)
• 47% for additional-rate taxpayers (up from 45%)

This is on top of all the existing hits landlords have taken over the last decade – loss of full mortgage interest relief, tougher stress tests, and higher running costs. Landlord bodies are already warning this will push some landlords to sell and inevitably increase pressure on rents.

What this means in practice:

If you have £25,000 of taxable rental profit in your own name:

At 20%, tax was £5,000

At 22%, tax will be £5,500

So you’re £500 a year worse off per £25k of rental profit once the change bites.

2. Company landlords & investors: dividend and savings tax up too

A lot of landlords have incorporated, or hold surplus cash in savings and investments linked to their property business. Budget 2025 hits that income as well.

From April 2026, dividend tax rises by 2 points for basic and higher-rate taxpayers, while savings income also sees a 2-point rise from April 2027.

For landlords using a company structure, that means:

Dividends paid out of your property company profits become more expensive personally

Savings income on your company’s retained cash (if held personally) also gets squeezed

The government’s stated logic is simple: income from properties and investments doesn’t attract National Insurance, so they’re tightening those tax rates instead.

3. Stealth tax: income tax thresholds frozen to 2031

There’s no change to the main income tax bands – but the freeze on personal allowances and thresholds is being extended to April 2031.

That “fiscal drag” matters for landlords because:

As rents rise with inflation and interest rates, your rental profit in cash terms goes up

But thresholds don’t move, so more of that income gets pulled into the 40% and 45% bands

Combine that with the 2% hike on property income and you’re hit twice

Even landlords who feel “I’m only just in the higher rate” are likely to see more of their rental profit taxed at 42% in a few years’ time.

4. Mansion tax: council tax surcharge on £2m+ homes

The widely-trailed “mansion tax” has arrived – officially branded a High Value Council Tax Surcharge.

From April 2028, homes worth over £2 million will pay an annual surcharge, with fixed amounts by value band (starting at £2,500 and capped at £7,500 a year).

For landlords, this matters if:

You hold prime London or high-value regional property in your own name

You own high-value properties via companies or SPVs – the government is consulting on how the surcharge will apply to those structures
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It’s not a mainstream landlord issue, but for those at the top end of the market, this is now an annual running cost to factor in, alongside insurance, service charges and repairs.

5. No SDLT reliefs coming to the rescue

Despite a lot of speculation, the Budget did not bring:

• A stamp duty holiday
• Higher thresholds for buyers
• The return of Multiple Dwellings Relief (MDR) for bulk purchases

Given MDR had already been abolished from June 2024, portfolio landlords, HMO investors and block buyers are now stuck with:

Higher upfront SDLT on multi-unit deals

No obvious new reliefs to soften that cost

That makes scaling up more expensive and puts even more focus on deal quality and long-term yield.

6. Capital gains tax: previous changes still matter

The Budget didn’t rewrite capital gains tax for landlords this time, but you’re still living with recent tweaks:

The higher CGT rate on residential property was cut from 28% to 24% from April 2024 – making it slightly cheaper for higher-rate landlords to sell.

In plain English: if you’re thinking of exiting one or two properties, the tax environment for selling is still better than it was a couple of years ago – even as the income tax environment gets harsher.

7. Renters’ Rights Act + Budget = more compliance pressure

Separate from the Budget but running in parallel is the Renters’ Rights Act 2025, which:

• Abolishes fixed-term assured and assured shorthold tenancies
• Tightens standards via a new “decent homes” standard
• Strengthens enforcement and rent repayment orders

The Budget doesn’t unpick any of that. If anything, by pushing more tax onto landlords while also backing stronger tenant protections, the direction of travel is clear:

Fewer marginal landlords, more pressure to professionalise, and higher expectations on property quality and management.

Budget measures on property income tax and frozen thresholds sit on top of this regulatory shift – they don’t replace it.

8. Insurance & climate: what’s changed and what hasn’t

For landlords thinking specifically about property insurance and risk:

Insurance Premium Tax (IPT)

The main IPT rate stays at 12%, so there’s no new across-the-board rise on buildings/landlord insurance premiums.

A specific IPT relief is being removed for Motability and similar vehicle leasing schemes from July 2026, which is more about motor than property.

So your landlord or block policy isn’t being directly hit by an IPT rate hike – but premiums will still be driven by claims inflation, weather events and rebuild costs.

Flood defences and resilience

The wider funding picture really matters for insurability:

Government has committed record investment in flood defences – around £10.5 billion over 10 years, with a focus on deprived communities and smaller schemes being fully funded.

For landlords with property in flood-prone areas, better defences over time should help:

• Reduce some long-term risk
• Support the availability and pricing of flood cover

But in the short term, insurers are still pricing to recent flood experience and climate risk – so you should assume that good risk management and accurate sums insured are more important than ever.

9. So what should landlords do now?

Here’s a simple action list to take away from Budget 2025:

Model the 2% property income rise now

• Work out your likely taxable rental profit in 2027/28
• Add 2% of that figure – that’s the extra annual hit
• Decide early whether that’s absorbed by you, your rents, or restructuring

Review structure: personal vs company

• If you’re already in a company, factor in higher dividend tax as well as property income rates
• If you’re still in your own name, get advice on whether incorporation makes sense after these changes, not before

Watch your tax band

• With thresholds frozen to 2031, check if rising rents are pushing you into the higher or additional rate
• Consider how other income (salary, self-employment) interacts with your rental income

Plan disposals strategically

• CGT on residential property for higher-rate taxpayers is still relatively favourable compared with a few years ago
• If you’ve got poor-performing or high-risk units, this may be the time to plan an exit over the next few tax years

Budget for higher standards and enforcement

• Factor in the cost of meeting the decent homes standard and broader compliance under the Renters’ Rights framework
• Future voids, enforcement action and reputational risk could cost more than doing the work properly upfront

Stay close to your insurer and broker

• Check sums insured, rebuild costs and excesses now, not after an event
• Ask how flood risk, subsidence and building safety issues are influencing your premium