The Government’s latest Budget has triggered strong criticism from across the property sector. Many landlord groups and housing commentators have voiced their frustration, describing the measures as yet another financial blow at a time when the rental market is already under strain.
Income Tax Rise for Landlords from 2027
One of the most contentious changes is the planned increase to property income tax rates. From April 2027, the basic, higher and additional rates applied to rental income will all rise by 2%. This will lift the respective rates to 22%, 42% and 47%, increasing the tax burden on landlords across the country.
Revenue Forecasts and Economic Impact
According to Government projections, the policy is expected to generate around £0.5 billion a year on average from 2028–29. The Office for Budget Responsibility noted that although higher tax may slightly push rents upwards, this effect would likely be offset by a downward pull on house prices, influencing other parts of the tax system.
Industry Reaction Turns Heated
The broader industry response has been overwhelmingly negative. Many argue that the measures overlook the difficulties facing both landlords and tenants, and that the long-term effects could be far more disruptive than the Government anticipates.
Concerns from the National Residential Landlords Association
Ben Beadle, Chief Executive of the NRLA, strongly criticised the move. He warned that the tax hike contradicts the Government’s stated ambition of easing living costs, as higher expenses for landlords will inevitably filter through to renters. Beadle stressed that nearly a million additional rental homes will be needed by 2031, and increasing taxes on landlords will only push costs higher while failing to address supply issues.
Rightmove Expert Highlights Knock-On Effects
Colleen Babcock of Rightmove added that landlords are often unfairly portrayed as easy targets. She explained that rental market taxation typically harms tenants rather than helping them, particularly when investors struggle to meet higher mortgage rates, compliance costs and the challenges created by previous tax changes. She warned that the Budget could discourage much-needed investment.
Lettings Sector Warns of Further Pressure
Sarah Bush of Cheffins pointed out that many landlords are already juggling several new regulations, including EPC requirements and the Renters’ Rights Act. She emphasised that a large share of landlords are not wealthy investors but individuals who turned to property as a more reliable way to save. She urged the Government to give the private rented sector some breathing space.
Property Data Experts Predict Market Exits
Andrew Lloyd of Search Acumen noted that some landlords could face a double hit from both property income tax changes and a potential council tax surcharge. He warned that a number may be pushed out of the market altogether, reducing rental supply at a time when rents have risen sharply since 2020. He added that this shortage could place further pressure on social housing and essential public services.
Introduction of a New Mansion Tax
The Chancellor also confirmed the introduction of a new council tax surcharge for high-value homes. Properties worth over £2 million will face an additional £2,500 a year, rising to £7,500 for homes valued at £5 million or more. The measure will largely impact properties in London and the South East.
Worries About Affordability in High-Value Regions
Mortgage specialist Zara Bray noted that although few homes will fall into this bracket, those affected are often owned by households whose wealth is tied up in the property rather than in liquid assets. She warned that using property value as a measure of ability to pay could place heavy financial pressure on some owners.
Estate Agents Question Valuation Practicalities
Jeremy Leaf, a north London agent, described the tax as politically motivated rather than economically sound, noting the relatively small revenue expected. He cautioned that the process of revaluing affected homes could be lengthy, costly and contentious, potentially eroding much of the revenue raised.
Homeowners Could Face Negative Equity Risks
Nick Leeming of Jackson-Stops raised concerns about high-value homeowners with mortgages. He said price adjustments could push some into negative equity, particularly in areas where property prices have grown rapidly over decades. He argued that a full council tax rebanding would have been a far more balanced approach.
Worries Over Accuracy and Possible Legal Challenges
Leeming also warned that a blanket national threshold ignores regional differences, meaning many ordinary homes in high-value areas could be unfairly included. He suggested that errors or disputes during the revaluation process may open the door to legal challenges.
Savills Suggests Market Activity Could Rebound Before 2028
Lucian Cook of Savills said that although the tax is unwelcome, the certainty finally provides clarity to buyers and sellers after months of speculation. He believes the delay before implementation may prompt a small increase in market activity as people move ahead with delayed plans. However, he warned that the tax could encourage some owners to downsize over time.
Knight Frank: Long-Term Uncertainty Likely
Tom Bill of Knight Frank noted that until revaluations are completed, which could take years, many buyers and sellers will be left unsure about their future tax position. He added that exemptions and challenges could reduce the revenue raised, while gradually more properties are likely to fall into the new tax bracket as prices rise. Bill criticised the policy as politically driven and unlikely to offer meaningful economic benefit.
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