More tax on property: what the Budget means for landlords and homeowners

For property owners, the practical concern is how these measures fit alongside the other costs and obligations they already face.

A further increase in tax on rental income

From 6 April 2027, the Government proposes to increase the property income tax rates by a further two percentage points. This will bring the basic rate to 24%, the higher rate to 44% and the additional rate to 49% for individuals in England, Wales and Northern Ireland. These replace the rates of 22%, 42% and 47% previously set for that date. The changes are to be introduced through the Finance Bill 2026–27.

Landlords should therefore revisit their projections for the next tax year with their accountant. The effect will depend on their taxable property income, available reliefs, and wider circumstances.

My concern is the cumulative effect. Landlords are already having to absorb the cost of maintaining their properties and complying with an increasingly demanding regulatory framework. Building safety obligations and changes to tenants’ rights add further matters to manage.

An additional tax charge may persuade some landlords that continuing to let is no longer worthwhile. If that leads to fewer properties being available, tenants may also feel the consequences through reduced choice and pressure on rents

The “mansion tax” is moving forward

The High Value Council Tax Surcharge, announced in the 2025 Budget, remains targeted at residential properties in England worth £2 million or more.

It is due to begin in April 2028 and will be collected alongside existing Council Tax. The £2 million threshold remains in place.

The description “mansion tax” may suggest something rather different from the properties it will capture. In London and parts of the South East, a family home bought many years ago can now be worth more than £2 million without its owners having a particularly high income.

The Government has confirmed a deferral scheme for eligible owners who face difficulty paying. However, postponing payment will leave a liability to be settled later, generally when ownership changes. Details, including the interest arrangements, are still to follow.

Leaseholders and trustees need to pay attention

The surcharge will generally fall on the legal owner. Where a lease was originally granted for more than 21 years, liability is intended to sit with the leaseholder. Where property is held in a trust, the trustees will be liable.

The Government acknowledges concerns about particular leasehold interests and will consider these further. Owners should therefore avoid assuming that the freeholder will meet the charge or that a trust arrangement takes the property outside its scope.

Exemptions and discounts will also be introduced. These include an exemption for purpose-built student halls and discounts for qualifying social housing and certain unsold new homes held by developers. The precise conditions will matter, so eligibility will need to be checked against the eventual regulations.

For anyone buying a property around or above the threshold, the surcharge should become part of the assessment of its ongoing ownership costs.

A welcome correction to SDLT on assured tenancies

The Government has also confirmed that legislation will remove SDLT on rent payable under assured tenancies in England, with effect from 1 May 2026.

This addresses an unintended consequence of the tenancy reforms. As periodic tenancies continue, the existing SDLT rules could otherwise bring tenants into a tax charge on their rent. The change will also remove the requirement to submit an SDLT return solely because rent is payable under an assured tenancy. It concerns the rent element; it does not abolish SDLT on property purchases.

For landlords and homeowners, there is time to plan, but these changes should now feature in decisions about retaining, buying or selling property. I would suggest reviewing the figures with your accountant and taking advice on the ownership and conveyancing implications before committing to a transaction.

Mark Vinall, Partner, Ashley Wilson Solicitors LLP