The Autumn Budget 2025 introduced several changes that landlords should be aware of. Nothing dramatic, but enough to influence cash flow, long-term returns and future planning for many in the private rented sector. Here is what changed, what didn’t, and the practical steps Thetford landlords should consider now.
What changed
From April 2027, tax on rental income will rise by 2 per cent across all bands. The new rates will be 22 per cent for basic rate taxpayers, 42 per cent for higher rate and 47 per cent for additional rate. For every £1,000 of net rental profit, landlords will pay an extra £20 in tax. These increases also apply to income from savings and dividends to bring passive income taxation closer to earned income.
A new High-Value Property Surcharge will begin in April 2028. Homes valued above £2 million will face an additional annual charge on top of standard council tax. This mainly affects prime London and South East properties, but it signals a shift towards taxing higher-value assets more heavily.
Income tax thresholds remain frozen, which extends the effect of fiscal drag. As rents and costs rise, more landlords will gradually be pulled into higher tax bands, even if their real-terms profit hasn’t increased.
What didn’t change
There is no National Insurance charge on rental income, despite speculation. Stamp Duty remains unchanged, and no new levies were introduced for mainstream rental properties aside from the £2 million surcharge. Rent controls were not part of the Budget, though the overall direction of travel remains one of increased regulation and taxation within the sector.
What this means for landlords
For many landlords, net yields will reduce. The 2 per cent income-tax rise directly trims margins, and frozen thresholds may push more landlords into higher tax bands as rental income increases. Those already operating with slim profits may find the numbers increasingly tight, which could lead some to exit the sector.
Owners of premium properties will face higher long-term holding costs once the surcharge begins.
These factors make it more important than ever for landlords to re-evaluate their portfolio strategy. Reviewing rent levels, maintenance plans, mortgage costs and cash-flow projections will help clarify whether each property still meets your expectations for return and risk.
What smart landlords should do now
Run updated cash-flow projections using the new tax rates of 22, 42 and 47 per cent. Check whether each property still delivers a satisfactory return.
Review your rent-pricing strategy and consider modest, fair, market-aligned increases to offset rising tax costs.
If you own multiple properties, assess whether older or lower-yielding homes still justify their place within your portfolio or whether selling or restructuring might improve your overall position.
With proper professional advice, explore whether a limited company structure could produce better post-tax returns.
Plan your communication with tenants if rent adjustments are necessary. Clear and fair conversations build trust and help maintain positive relationships.
If you would like to talk through how the Budget affects your plans or need help reviewing your portfolio, our team is here to help.
Article by Andrew Overman | Partner | Location Location East
