A second rise in the tax on rent
CThe Budget of 28 October 2026 sets the property basic rate at 24%, the higher rate at 44% and the additional rate at 49% from 6 April 2027, for England, Wales and Northern Ireland, to be legislated in Finance Bill 2026-27. Scotland and Wales can set their own property rates1.
CThe OBR records that Budget 2025 had already added 2 points from April 2027 and this Budget adds 2 more, so every band rises four points on 2026-27. It expects the latest step to raise £0.4bn a year on average from 2028-29, after small responses including more landlords incorporating2.
The same rent, taxed by who owns it
CThe Treasury's costing says the measure taxes unincorporated landlords, and that relief for finance costs stays aligned to the property basic rate, so the credit for mortgage interest rises to 24%3. The OBR calls the two rises together a material reduction in returns to private landlords2.
CRents are still outrunning prices. UK private rents rose 3.8% to £1,406 a month in the year to September 2026, while house prices rose 0.9% to £273,000 in the year to August, both provisional4.
Gross and net yields part company
ARising rent on a flat price widens the gross yield. A higher tax on that rent narrows what a landlord who owns in their own name keeps. For a higher rate landlord with a mortgage, tax is charged at 44% while the interest credit is given at 24%, so 20 points of tax on the interest stays unrelieved, as it does today at 40% against 20%.
AFour tests now decide whether a personally held property is worth keeping as it is: the owner's tax band, the level of borrowing, whether a company structure is open to them, and how far the local rent can rise. The listing yield answers none of them.
Hold, sell or restructure is now a priced decision
AInvestors and lenders should value portfolios on rent after tax, by owner. A basic rate landlord with little debt is the least affected. A higher rate landlord with a high loan to value is the most exposed, and the case for comparing a personal with a company holding is stronger than it was. This is information, not tax advice: confirm with your accountant on your facts.
OUR PERSPECTIVEThe rent is the same. The owner decides what is left of it.
What would prove this wrong
CThe OBR thinks a steady long term rise in rents more likely than not, as fewer landlords enter the market and remaining landlords pass on more of the cost2. If rents rise that way, part of the tax moves to tenants and the hold case for personal landlords improves.
IThe OBR also expects the incorporation response to be small, and moving property into a company carries its own costs. If few landlords restructure, the structure gap matters less than this analysis suggests. Both depend on behaviour not yet seen.