Landlord Property Income Tax 24%, 44% and 49% From April 2027: Should London Landlords Sell, Hold or Revalue in November 2026?

Last updated: November 10, 2026

Quick Answer

The Autumn Budget (28 October 2026) confirmed that from April 2027, income tax rates on property income rise to 24%, 44% and 49% across the three bands, a further 2 percentage points on top of a 2-point rise already announced earlier. Capital gains tax and stamp duty (including the 2% non-resident surcharge) were left unchanged, and a new mansion tax starts April 2028 for homes worth £2 million or more. London landlords facing higher rental income tax should weigh selling into a soft market, holding and refinancing, or getting a RICS valuation before deciding, this is general information, not tax or financial advice.

Key Takeaways

• From April 2027, property income is taxed at 24%, 44% or 49% depending on which band it falls into.
• That is a combined 4-point rise once you add the 2 points already legislated by the previous Chancellor.
• Capital gains tax rates and stamp duty land tax, including the non-resident surcharge, were not touched in this Budget.
• A High Value Council Tax Surcharge ("mansion tax") starts April 2028 on English homes worth £2 million-plus, from £2,500 to £7,500 a year.
• Landbay data shows a third of landlords are already selling or considering it because of the Renters' Rights Act, before this tax change even lands.
• UK average asking rents fell year-on-year to £1,804 in October 2026, and house prices dipped 1.2% annually per Lloyds.
• A RICS Red Book valuation in November 2026 can lock in a defensible base cost for CGT, probate, spousal transfers or incorporation.
• No single answer fits every landlord, portfolio size, mortgage position, and personal tax band all change the maths.

What Are the New Landlord Property Income Tax Rates From April 2027

From April 2027, rental income will be taxed at 24%, 44% or 49%, replacing the current structure with rates roughly 4 points higher once both rounds of increases are combined. The Autumn Budget, delivered 28 October 2026, confirmed this as part of wider revenue-raising measures, as summarised by Setfords Solicitors on 29 October 2026.

These three rates map onto the existing income tax bands, meaning landlords with rental profits pushing them into a higher band will feel the increase more sharply. The change applies to income from letting property, not to gains made on selling it, which sit under separate capital gains tax rules that were untouched in this Budget.

Example: A landlord with rental profits taxed in the middle band under the current system would, from April 2027, see that portion of income taxed at 44% instead of the current rate, a direct cut to net rental yield, before any mortgage interest or allowable costs are factored in.

How Much Higher Are These Tax Rates Compared With Current Rates

The April 2027 rates are roughly 4 percentage points higher than the pre-announcement baseline, made up of a 2-point rise confirmed in this Budget stacked on top of a 2-point rise the previous Chancellor had already legislated. For a higher-rate landlord, that is a meaningful bite out of annual rental profit, not a rounding error.

• First increase: 2 points, announced under the previous Chancellor, already scheduled.
• Second increase: a further 2 points, confirmed in the 28 October 2026 Budget.
• Combined effect: landlords in the top band will pay 49% on property income, up from a lower starting point before either change.

Common mistake: landlords assume only "the rich" are affected because 49% sounds like an additional-rate band. In practice, rental profits stack on top of other income (salary, pension, dividends), so a landlord with a modest day job and several properties can tip into the 44% or 49% bands purely through rental profit.

Should I Sell My London Rental Property Before April 2027

There is no universal answer, it depends on mortgage gearing, how much of the profit sits in higher tax bands, and whether the property has capital growth potential that outweighs the extra income tax drag. Selling now avoids the higher rates on future rental income but crystallises a sale into a market where prices have already softened.

Consider selling if:

• The property is heavily mortgaged and interest costs already squeeze net income close to zero.
• Rental profit pushes the landlord well into the 44% or 49% band and will do so for years to come.
• The landlord is nearing retirement and wants to simplify a portfolio rather than manage compliance under the Renters' Rights Act.

Consider holding if:

• The mortgage is low or cleared, so rental profit after the tax rise still clears a reasonable return.
• Long-term capital growth in the area is expected to outpace the extra tax drag.
• The landlord can absorb short-term rent softness and refinance at better terms later.

Lloyds' house price index (6 November 2026) put the UK average at £296,285, down 0.6% in October and 1.2% annually, a reminder that selling into November 2026 conditions means accepting a buyer's market, not a seller's one.

What Happens If I Revalue My Property in November 2026

Getting a RICS Red Book valuation in November 2026 creates a dated, defensible record of market value ahead of the April 2027 tax change, which can matter for several future scenarios even though it does not reduce income tax directly. A formal valuation is not a tax-saving device on its own, it is evidence.

A Red Book valuation is useful for:

• Capital gains tax base cost, establishing value at a specific point, useful if ownership structure or use of the property changes later.
• Probate and estate planning, a dated valuation supports inheritance tax calculations if ownership passes to the next generation.
• Transfers between spouses or civil partners, useful evidence when restructuring who holds the asset.
• Incorporation, if a landlord later considers moving a property into a limited company, a contemporaneous valuation supports the figures used in that transaction.

Edge case: landlords who already incorporated years ago and are deciding whether to pull a property back out, or add new stock, still benefit from a fresh valuation to reflect the November 2026 soft market rather than relying on stale figures from the last valuation cycle.

Which Landlords Are Affected by These New Tax Rate Changes

Any individual landlord paying income tax on rental profit is affected, but the practical impact scales with how much of that profit sits in the 44% and 49% bands. Landlords holding property through a limited company pay corporation tax on rental profit instead, so this specific change does not apply to them in the same way.

• Most affected: individual landlords with multiple properties, high rental yields relative to mortgage cost, or significant non-rental income pushing them into higher bands.
• Less affected: landlords with one lightly-geared property generating modest profit that stays in the lower band.
• Not directly affected by this measure: landlords operating through a limited company structure, though company-level tax rules and personal tax on extracting profit still apply.

Do London Landlords Pay Different Rates Than Other Parts of the UK

No, the 24%, 44% and 49% rates confirmed in the Budget apply UK-wide to property income under the main income tax framework, with Scotland operating its own income tax bands separately. London landlords are not singled out by rate, but they are more exposed in practice because London rents and property values are higher, so more landlords sit in the upper bands.

London's higher asking rents (£1,804 average in October 2026, per PropertyWire, 6 November 2026, down from £1,880 a year earlier) mean rental profits in the capital are more likely to tip an individual landlord into the 44% or 49% band than in regions with lower rents, even though the rate itself is identical nationwide.

Is It Better to Hold or Sell Rental Property Before the Deadline

Neither choice is automatically correct; the right call depends on gearing, personal tax position, and how long the landlord intends to stay in the market. A landlord with a clear exit plan within two to three years may prefer to sell now, before competing with other landlords doing the same thing closer to April 2027.

Factor	Favours Selling	Favours Holding
Mortgage gearing	High, tight margins	Low or no mortgage
Tax band	Already in 44%/49%	Mostly in 24% band
Market timing	Need cash now	Can wait for recovery
Portfolio size	Large, hard to manage under Renters' Rights Act	Small, manageable
Growth outlook	Weak local growth	Strong long-term growth area

Landbay's survey of roughly 2,000 landlords (reported by Landlord Today, 2 November 2026) found 33% have decided to sell or are considering it in response to the Renters' Rights Act alone, before this tax change is even added to the calculation. That suggests the April 2027 rates could push more landlords toward selling, adding supply to an already softening market.

Can You Spread Rental Income Across Years to Avoid Higher Tax Brackets

There is limited scope to do this for simple buy-to-let income, since rent is generally taxed in the year it is earned, but timing of larger one-off items, such as repairs, capital allowances where applicable, or the timing of a sale, can shift which tax year certain amounts fall into. This is a specialist area and landlords should take advice from a qualified accountant before acting.

• Bringing forward or delaying deductible repairs can shift which year's profit figure they reduce.
• Timing a sale either side of a tax year boundary can affect which year any gain or final rental income lands in.
• This is not blanket advice to defer income, rules on allowable timing are specific and mistakes can trigger HMRC scrutiny.

What Tax Reliefs and Deductions Can I Claim on Rental Income

Landlords can still claim allowable expenses against rental income, including letting agent fees, insurance, repairs (not improvements), and a portion of mortgage interest relief, though the rules on finance cost relief have not reverted to the old system. None of these reliefs were changed in the 28 October 2026 Budget, meaning the same deduction rules apply, just against higher headline rates.

• Allowable running costs: agent fees, insurance, ground rent, general maintenance.
• Finance costs: mortgage interest relief rules remain as previously restricted, not reinstated to full deductibility.
• Wear and tear or furnishing costs where furnished lettings qualify.
• Professional fees, including valuation and survey costs tied to managing or restructuring the asset.

How Much Extra Tax Will I Actually Pay With These New Rates

The exact extra amount depends entirely on individual profit and band, so any specific figure quoted without those details is just an estimate. As a general principle, a landlord whose rental profit crosses from the current rate into the new 44% or 49% band will see a noticeably larger slice of that profit taken in tax from April 2027 onward.

This is not tax advice. Landlords should run their own numbers with an accountant using their actual rental profit, other income, and allowable deductions, since the 24%/44%/49% structure interacts with personal allowances and existing finance cost restrictions in ways that vary case by case.

What Does It Cost to Sell a Rental Property in London

Selling costs in London typically include estate agency fees, conveyancing, an Energy Performance Certificate if the current one has lapsed, and often a condition survey to address issues before marketing. Landlords selling an ex-rental should budget time and money for bringing the property up to a sellable standard, since tenanted or recently-vacated properties often show wear that affects buyer perception and valuation.

• A pre-sale condition survey flags disrepair, damp, or compliance issues (electrical safety, gas certificates) before buyers' own surveys do.
• Addressing cosmetic and structural issues before listing tends to support asking price in a market where buyers already have the upper hand.
• Buyers of ex-rentals should specifically check for deferred maintenance, outstanding compliance certificates, and whether any licensing (HMO or selective licensing) obligations transfer with the sale.

Are There Ways to Restructure Property Ownership to Pay Less Tax

Some landlords consider moving properties into a limited company structure, since company rental profit is taxed under corporation tax rather than the new 24%/44%/49% personal rates, but incorporation carries its own costs and tax consequences, including potential CGT and stamp duty on transfer. This is a decision that needs individual tax advice, not a general assumption that incorporation always helps.

• Incorporation can involve a disposal for CGT purposes and a purchase for stamp duty purposes, even though no cash changes hands with the landlord personally.
• A RICS Red Book valuation at the point of transfer supports the figures used in any incorporation.
• Mortgage lenders may require refinancing onto limited company buy-to-let terms, often at different rates.

This article does not constitute tax or financial advice. Anyone considering restructuring ownership should speak to a qualified accountant and solicitor before acting.

What Mistakes Are Landlords Making About These Tax Changes

The most common mistake is confusing this income tax change with capital gains tax or stamp duty, both of which were left unchanged in the 28 October 2026 Budget. Landlords are also underestimating how the Renters' Rights Act and softer rents compound the effect of higher tax.

• Assuming CGT went up too, it did not.
• Assuming stamp duty or the non-resident surcharge changed, neither did.
• Ignoring that average rents are already falling (£1,804 in October 2026 versus £1,880 a year earlier, PropertyWire) while tax rises, squeezing margins from both directions.
• Forgetting the mansion tax is a separate 2028 measure tied to council tax bands, not this income tax change.

Do These New Rates Apply If I Own London Property as a Foreigner

Yes, the 24%, 44% and 49% rates apply to property income regardless of the landlord's residency status, since UK rental income is taxed in the UK whether the owner lives locally or overseas. Non-resident landlords already pay the 2% stamp duty surcharge on purchase, which was not changed in this Budget, and that surcharge sits separately from the new income tax rates.

Non-resident landlords should also note the mansion tax starting April 2028 applies to English homes worth £2 million or more regardless of where the owner lives, with charges from £2,500 to £7,500 a year depending on value band.

FAQ

Do the new 24%, 44% and 49% rates replace capital gains tax on property sales?
No. These are income tax rates on rental profit, effective April 2027. Capital gains tax rates on property sales were not changed in the 28 October 2026 Budget.

Did stamp duty change for landlords in this Budget?
No. Stamp duty land tax, including the 2% surcharge for non-UK residents, was left unchanged.

What is the mansion tax and when does it start?
A High Value Council Tax Surcharge starts April 2028 for English homes valued at £2 million or more at 2026 values, ranging from £2,500 a year up to £7,500 a year for homes worth £5 million-plus.

Should I get a valuation now or wait until closer to April 2027?
A valuation dated November 2026 captures current market conditions and gives a clear, defensible record for CGT, probate, or restructuring purposes, which is useful regardless of when the tax change takes effect.

Is incorporating my rental portfolio a good idea because of this tax rise?
It depends on individual circumstances, including CGT and stamp duty consequences of transferring ownership. This is a decision for a qualified accountant, not a general rule.

Are London landlords taxed more heavily than landlords elsewhere in the UK?
The rates themselves are the same nationwide. London landlords are more exposed in practice because higher rents push more of them into the 44% and 49% bands.

Conclusion

The confirmation of 24%, 44% and 49% property income tax rates from April 2027 adds a real cost to holding rental property, on top of softer rents and a cooling sales market across London. Capital gains tax and stamp duty remain unchanged for now, and the mansion tax is a separate, later measure starting April 2028. There is no single right move, selling, holding, or restructuring ownership all carry trade-offs that depend on gearing, tax band, and timeframe.

Next steps for London landlords: get a RICS Red Book valuation now to establish a clear November 2026 baseline, review mortgage and profit figures with an accountant before April 2027, and get a condition survey done early if a sale is on the table, since ex-rental properties often need work before they show well to buyers. This article is general information only and does not constitute tax or financial advice, speak to a qualified accountant or solicitor about your specific position.

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