The Budget’s increase to property income tax rates came as an unwelcome surprise and adds yet more pressure on landlords holding property in their personal name.

Here is a snippet from the Treasury Guidance published just after Rachel Reeves delivered her budget speech:

🔹 Tax on savings income will increase by 2 percentage points across all bands. The basic rate will rise from 20% to 22%, the higher rate from 40% to 42%, and the additional rate from 45% to 47% from April 2027.

🔹 The government is creating separate tax rates for property income. Income tax is already charged on property income. These separate rates mean property income will have its own individual tax rates (as already occurs for the taxation of savings and dividend income). From April 2027, the property basic rate will be 22%, the property higher rate will be 42% and the property additional rate will be 47%. Finance cost relief will be provided at the separate property basic rate (22%).

🔹 The way individuals report and pay tax on property, savings and dividend income will remain the same – it is only the rates of tax charged that will change. 

The latest Budget announcement has raised understandable concerns among landlords, particularly those who own property in their personal name. With increases to property income tax rates and the backdrop of rising borrowing costs, upcoming EPC requirements, and the introduction of the Renters’ Rights Act, many landlords are feeling the cumulative weight of constant change.

While limited company landlords continue largely unaffected, it’s individual owners - those who make up most of the private rented sector - who are now under the greatest pressure.

What is often forgotten in political conversations is that the majority of landlords are not large-scale investors with vast portfolios. Many are small or accidental landlords: individuals who inherited a home, invested in property as an alternative to pension savings, or purchased during years of steady growth. These landlords provide a significant proportion of the UK’s rental housing, yet they are frequently the ones hit hardest by tax increases and regulatory shifts. As the financial demands continue to rise, some may feel that remaining in the sector is simply not sustainable.

With operating costs increasing, ensuring that rental properties are set at true market rent is becoming essential, not just for landlords’ financial stability, but for the long-term health of the rental sector.

Market rent isn’t about pushing prices unnecessarily high; it's about ensuring that rent aligns with local demand, property standards, and economic realities. When landlords undercharge, they absorb costs that the market would otherwise support - reducing their ability to maintain homes, reinvest, or stay in the sector at all.

If more landlords choose to exit because their properties are no longer financially viable, rental stock will fall. And when supply dips, rents inevitably rise thus placing even greater strain on renters already working hard to save for their first home. Maintaining market rent today helps protect the rental supply of tomorrow.

What the private rented sector needs now is consistency and support. The Renters’ Rights Act should not frighten responsible landlords who care for their properties and their tenants. At Cope & Co., we’re working closely with clients to ensure they remain fully compliant and confident as these changes take effect, and to help them benchmark their rents appropriately in line with the market.

The hope is that, in time, the essential role of small-scale landlords will be properly recognised. They are the backbone of the rental market, providing homes for millions. If they feel their money is safer elsewhere, some will sell, and renters will ultimately pay the price.

For landlords, keeping rents aligned with the market isn’t just advisable in 2025, it’s vital. It protects your investment, supports your tenants in the long run, and helps ensure the private rented sector remains stable for everyone.