In this blog:
- What did the 2026 Budget change for landlords?
- What will the tax rate on rental income be from April 2027?
- How much more tax will I pay on my rental income?
- Does the property income tax rise apply to limited companies?
- Will I still get tax relief on my buy-to-let mortgage interest?
- Can I put the rent up to cover the tax rise?
- How can landlords protect their rental income after the Budget?
- What do Leeds landlords need to do before April 2027?
From April 2027, landlords will pay more tax on their rental income. The rates rise to 24% for basic-rate taxpayers, 44% for higher-rate taxpayers and 49% for additional-rate taxpayers.
That is four percentage points more than you pay now. Half of the rise was announced in last year’s Budget. The other half was added in the Budget on 28 October. Most of the coverage focused on the newest part, so it’s easy to underestimate the full change.
What has changed
At the moment, profit from letting property is taxed in the same way as a salary. From April 2027 it gets its own, higher rates. The simplest way to picture it: for every £1,000 of profit your property makes after costs, you’ll pay £40 more in tax than you do today.
The change applies to landlords who own property in their own name or jointly with someone else. Property owned through a limited company is taxed differently and isn’t affected.
If you have a mortgage on the property, the tax credit you receive for the interest rises to match the new basic rate. That reduces the impact slightly, but it doesn’t cancel the rise out.
The independent Office for Budget Responsibility expects this and other recent changes to reduce what landlords earn and, over time, to push rents up.
April 2027 is a busy month for Leeds landlords
The tax rise isn’t the only thing happening in April. The same month, the new national landlord register opens for property in Leeds. Every landlord will need to register themselves and each property they let, there’s a yearly fee for each property, and in time you won’t be able to advertise a property without a registration number. Our blog on landlord registration in Leeds explains what you’ll need.
That comes on top of the Renters’ Rights Act, which has already changed how lettings work this year. Tenancies now run on with no end date, landlords can no longer end one without giving a reason, and tenants can leave with two months’ notice. The government is also looking at extending Awaab’s Law, which sets deadlines for fixing problems such as damp and mould, to privately rented homes.
Each change is manageable on its own. What matters is that they all arrive at once, and they hit some properties harder than others.
What to do before April
Work out what each property really earns. Not the rent, but what’s left once the mortgage, insurance, repairs, fees and tax have come out. Most landlords know their rent to the pound. Far fewer know this figure, and it’s the one the Budget has changed.
Check whether your rent is where it should be. You can raise the rent once a year by giving your tenant formal written notice, often called a Section 13 notice, at least two months in advance. If your tenant thinks the increase is too high, they can ask a tribunal to decide what the property would let for on the open market. So any increase needs to be based on what similar properties nearby are letting for, not on your tax bill. If you haven’t reviewed the rent in the past year, doing it early in the new year means an increase can be in place by the spring.
Talk to your accountant now, rather than after April. Some landlords will be wondering whether to move their property into a limited company. That comes with its own costs, and the right answer is different for everyone. It isn’t tax advice.
Hold, reshape or sell
For most landlords, the Budget won’t change whether letting is worth it. For some, it will tip the balance. There are three sensible ways to respond.
Hold, and tighten the numbers. If a property still works after tax, the job is to protect that return: a rent set on evidence, costs kept in check and as little time empty between tenants as possible.
Reshape. Landlords with more than one property often find that one of them is doing most of the damage. It’s usually the one with the lowest rent for its size, the highest repair bills or the poorest energy rating. Selling that one and keeping the rest can leave you with a smaller but stronger portfolio.
Sell. If a property no longer works for you, our sales team can talk you through the options, with or without a tenant in place. There are rules on when you can ask a tenant to leave in order to sell, so speak to us before you decide.
Guy Roberts, who heads our lettings and management team, puts it plainly: “Over the last few months, the message from our landlords has been consistent. There’s more administration and red tape than ever, and further tax rises only add to that.” It’s a fair point, and the impact won’t be the same everywhere in Leeds. A mortgaged city centre apartment with a service charge to cover has far less room in its numbers than a family house in Horsforth or Roundhay owned for years with little or no mortgage, and a shared house in Headingley or Hyde Park has more running costs and compliance than a single let. That’s why we look at each property on its own numbers.
Know your numbers before April
The landlords who come through April in the best shape won’t be the ones who reacted fastest to the headlines. They’ll be the ones who know, property by property, what each one really earns and what would improve it.
That’s what a rental review gives you. Our lettings team will check your rent against what similar properties nearby are letting for, which is the same evidence a tribunal would use, and tell you plainly whether there’s room to move. If you’re a fully managed landlord, we already hold the certificates and tenancy details the register will ask for. And because we started as surveyors, if a property would serve you better sold, our sales team will tell you what it would achieve, with or without a tenant in place.