When the Chancellor of the Exchequer, Rachel Reeves, confirmed the Budget for November 26, one comment she made about how Britain’s economy wasn’t working well enough for working people was particularly poignant for landlords: “Getting ahead feels tougher. You put more in, get less out. That has to change,” she said.
It’s a sentiment landlords have shared for some time. Yet it mostly feels like it’s going to get tougher for landlords, rather than easier. Many of the rumoured changes in the Budget involve possible tax hikes on landlords in the private rented sector.
What’s even more frustrating for landlords is that they come on top of the increased responsibilities and costs that they face once the Renters’ Rights Bill comes into force.
National Insurance on rental income
Landlord concerns are rife over suggestions that the government will launch plans to charge National Insurance on rental income, a move that could add up to £3 billion to the Treasury’s coffers. For around 360,000 landlords who earn between £50,000 and £70,000 in annual rental income, this will mean an additional bill of more than £1,000 on top of the income tax they already pay on their profits.
Capital gains tax changes
Last year, rumours that capital gains tax changes in the property sector were rife. But they didn’t materialise. This has led to speculation that they may emerge in this autumn’s Budget instead. Rates could be increased or the tax-free allowance could be reduced further.
Keeping income tax thresholds frozen
Income tax thresholds are currently frozen until 2028 but extending this deadline could deliver additional tax as rental income increases. Reeves has refused to rule this out.
Changes to inheritance tax
Changes to inheritance tax could also raise more money for government. However, it would impact many landlords – particularly ‘accidental landlords’ who may inherit properties they then rent out. Changes could include raising the 40% inheritance tax rate or lowering the threshold at which it is paid.
Stamp duty revamp
Stamp duty changes have also been mooted, with the tax scrapped and replaced with a national property tax of some form – either a one-off tax when a property is sold or an annual property tax similar to council tax based on the property value.
What impact are these rumours having?
The speculation is undoubtedly spooking landlords, many of whom already have frayed nerves about the future. Even before it became law, The Renters’ Rights Bill was already causing some landlords to exit the market.
The added budget concerns aren’t helping. We are seeing more landlords choosing to sell, leading to a surplus of properties on the market. Currently, there are around 450 properties available in SE16, compared to the usual 300–325 at this time of year.
We’ve also seen less overseas and local investment from buy-to-let landlords, something the area has relied on heavily in the past, and as a result prices have softened slightly in some cases. In London prices are down 1.4% in London, year on year, according to Rightmove.
The positive side is that this has created more opportunities for local first-time buyers who know what they want and what they’re willing to pay. Although the current market is disrupted we’re
expecting it to pick up early in 2026 when hopefully interest rates come down further. Until then the shift means it remains a buyers’ market so if you a landlord looking to expand your portfolio or a buyer looking to take advantage of the changing market then now is a good time to buy.
Meanwhile, for help with managing your rental strategy, get in touch with us at welcome@living-london.net for expert advice on how to make the most of the opportunities ahead!
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