Ladybird Living – Your London Estate Agent
What the Autumn Budget 2025 Means for Landlords and What to Do Next
On 26 November 2025, Chancellor Rachel Reeves delivered the Autumn Budget 2025, which includes several new tax changes and proposals that are especially relevant to landlords and property investors.
Here is a breakdown of the key points and a timeline for when they take effect as well as actions you should consider now.
Key Announcements for Landlords and Property Owners
Property & Rental Income Tax Increase
The government announced that tax rates on property income (i.e. rental income and similar income sources) will rise by 2 percentage points. That means, from April 2027, the basic, higher and additional property income tax rates will go up (to 22%, 42% and 47% respectively).
“Mansion Tax” / High-Value Property Surcharge
A new annual surcharge (sometimes called a “mansion tax”) will be applied to high-value residential properties. This surcharge will start from properties valued at £2 million or more. For houses in the lowest band above £2 million, the surcharge starts at £2,500 per year; for the most expensive homes (valued over £5 million), it could reach up to £7,500 annually. The surcharge is planned to take effect from April 2028.
Tax on Dividend, Savings and Other Non-Employment Income Rises
The tax on dividend income, property income (including rental income), and savings income will increase by 2 percentage points. This affects landlords who receive income from property or savings and may not pay National Insurance on that income. For example, dividend income tax rates will rise to 10.75% for basic-rate taxpayers and 35.75% for higher-rate taxpayers from April 2026.
Timeline: When the Changes Take Effect and Who It Affects
What This Means for Landlords: Risks and Considerations
Reduced net returns: Higher tax on rental income means lower net profits unless costs (or rents) change.
Cash flow pressure: With taxes rising by 2026–2027, landlords need to revisit cash flow projections, especially if mortgage interest rates remain elevated.
Property value sensitivity: If you own higher-value properties, the new surcharge adds significant ongoing cost. This could affect long-term investment returns, viability of letting, or your decision to sell.
Renting strategy might need adjusting: Rising costs for landlords may lead to rent increases, tighter tenant criteria, or re-evaluation of portfolio scale (some may downsize).
Planning ahead is more important than ever: Knowing when changes take effect gives landlords a window to prepare through tax planning, restructuring ownership, refinancing, re-evaluating rents or reassessing investment strategies.
What Landlords Should Do Now
Re-run your numbers
Review property ownership structure
Assess whether rent adjustments are realistic
Plan ahead for the surcharge on high-value properties
Consider timing of sales or acquisitions
Stay alert for further regulatory or tax announcements
Final Thoughts
The Autumn Budget 2025 marks a significant turning point for landlords and property investors. With confirmed tax rises on rental income, a new surcharge on high-value properties and higher rates on savings/dividends, many landlords will face lower returns or increased ongoing costs.
But because these changes are happening at defined future dates, landlords have a window of opportunity to plan. By reviewing finances now, rethinking holdings and preparing for higher taxes, you can make decisions on your terms rather than being forced into reactive selling or quick changes.
The information in this post is valid to the best of our knowledge on the date of posting. It is advised that you seek independent advice based on your individual circumstances.
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