Autumn Budget: Industry experts warn Chancellor against landlord tax hikes

Industry experts have warned the Chancellor against piling further pressure on landlords ahead of the Autumn Budget next week.

With speculation mounting over potential capital gains tax rises and an annual property tax, fears are growing over what the Budget could mean for landlords.

However, industry experts warn that if the government wants to boost housing supply, it must give landlords a reason to invest in homes, not drive them away.

Previous Labour Budgets have squeezed landlords

The National Residential Landlords Association (NRLA) has warned that previous Labour Budgets have squeezed landlords and damaged the private rented sector, urging Chancellor John Healey to scrap the stamp duty surcharge on additional properties.

The industry body is calling on the government to reverse the increase introduced in the 2024 Autumn Budget, which raised the stamp duty surcharge on additional homes from 3% to 5%.

The NRLA is also urging the government to scrap plans to raise tax rates on property, savings and dividend income by two percentage points

Chris Norris, chief policy officer at the NRLA, told Property118: “The Budget is a prime opportunity for Chancellor John Healey to distinguish himself from his immediate predecessors by focussing on measures which foster investment and grow the housing sector, rather than squeezing landlords and the lettings industry with additional taxes and burdens.

“It’s not rocket science. The government wants to grow housing supply, and landlords want to invest in homes. However, successive governments have made it increasingly difficult to invest with a reasonable expectation of returns. To get landlords investing, the Treasury should reduce barriers in three areas: acquisition, management, and disposal of properties.

“On acquisition, the surcharge on additional properties stymies investment from landlords in the homes renters desperately need. Scrapping it would go a long way towards revitalising investment and giving tenants more choice.

“On management, the forthcoming additional 2p income tax on rental income is an unnecessary cost which will be borne by households, and Section 24 has driven viability down and rents up. Both should be consigned to history to get investment moving.”

Renters’ Rights Act causes uncertainty

Mr Norris added: “Far from cutting tax revenue, all of these changes would drive activity and therefore boost the Exchequer’s coffers.

“The system of income and property taxation which has been developed and added to over the last twenty years is little more than sand in the gears of the housing market. It prevents landlords from investing where there is a need for homes and is slowly wearing down the sector’s ability to function.”

Industry experts have also pointed to legislation such as the Renters’ Rights Act as a source of uncertainty, with some investment properties remaining on the market as landlords look to exit the sector.

Lisa Wilson, partner at law firm Spencer West LLP, said: “The introduction of the Renters Rights Act, and abolition of ‘No Fault’ evictions from 1 May 2026 has impacted upon market activity. Leading up to the 1 May deadline, Agents and landlords worked hard to serve Section 21 Notices whilst they still could.

“The evictions meant lots of investment properties were up for sale, but with increasing mortgage rates and Buyer uncertainty, buyer appetite was perhaps not what landlords were expecting. Many of those properties are still sitting on the market without tenants or buyers.”

Increase in capital gains tax

Speculation is mounting over whether the Chancellor could increase Capital Gains Tax (CGT) to 45%, raising concerns about the impact on landlords.

CGT is paid on the profit made when an asset, such as a property, is sold. For residential property, the current rates are 18% for basic-rate taxpayers and 24% for higher and additional-rate taxpayers.

Research by The Letting Partnership reveals that the average UK property increased in value by £74,442 over the past decade, rising from £198,169 in July 2016 to £272,611 in July 2026.

Based on the current 24% rate, this increase in value would result in an illustrative CGT bill of £17,866. If the rate rose to 40%, the bill could climb to £29,777 – an additional £11,911.

Rather than simply increasing the tax burden, the NRLA is urging the Chancellor to reform Capital Gains Tax.

Its proposals include adjusting a property’s purchase price and qualifying capital expenditure for inflation before calculating the taxable gain, as well as introducing relief based on how long a property has been owned and used to provide rental accommodation.

Properties bought and sold speculatively over short periods would not qualify for relief.

Drive landlords out of the market

Industry experts have also warned that increasing CGT could discourage investment in and drive more landlords out of the private rented sector.

Nick Statman, CEO of Bettermove, said: “We’re already seeing landlords reassess their portfolios because of higher costs and regulation. Increasing CGT could discourage some from selling, while others may decide to exit the sector altogether.

“Neither outcome necessarily helps the housing market, particularly if rental properties are lost from the private rented sector.”

It appears the Chancellor may have listened to industry concerns, with The Times reporting that an increase in Capital Gains Tax has been ruled out. However, this has yet to be officially confirmed.

Letting agents face increased costs

Propertymark has warned that letting agents across the country are struggling with rising costs following changes to National Insurance contributions, introduced by Labour in its 2024 Autumn Budget.

The changes increased the rate of employer National Insurance contributions from 13.8% to 15% from April 2025 and lowered the threshold at which employers start paying.

The industry body is urging the government to ease the financial pressure on property agencies by reducing employment costs, while also supporting landlords and renters by unfreezing Local Housing Allowance (LHA) rates.

Timothy Douglas, head of policy and campaigns at Propertymark, told Property118: “Property agencies, like many businesses across the economy, face increased costs following changes to National Insurance contributions. The Chancellor should address this by removing additional costs for businesses employing and taking on young people, helping to support employment opportunities and reduce the financial burden on employers.

“The housing market can play a vital role in supporting economic growth. While we await further details about the Your First Home scheme, the UK Government must recognise that not all first-time buyers want to purchase a new-build property. Extending reliefs to the second-hand homes market would help more buyers onto the property ladder, stimulate activity across the wider housing market, and deliver greater economic benefits.

“With UK government borrowing costs remaining high and limited scope for further tax changes, the Chancellor can still support landlords and renters with the cost of renting. Targeted support in the hardest-hit areas, through an uplift to Local Housing Allowance (LHA) rates, alongside a commitment to no further tax rises for housing providers, would help ease financial pressures.”

VAT relief on energy-efficiency measures

Mr Douglas adds VAT relief on energy-efficiency measures would help landlords and tenants.

He added: “Maintaining VAT relief on energy-efficiency measures would also encourage investment in warmer, more energy-efficient homes, supporting growth while helping to manage costs for landlords and tenants.

“We have also written to the Chancellor of the Exchequer to raise our concerns about the ending of the 0% VAT rate, and these concerns have been acknowledged. We urge the Treasury to give this issue further consideration and recognise the potential impact on landlords and agents, as well as their ability to support the UK government’s aims to decarbonise the housing stock.”

Treating holiday lets as second homes

It’s not just the private rented sector in the firing line ahead of the upcoming Budget, with holiday lets also facing potential changes.

Media speculation suggests the Chancellor is considering treating holiday lets as second homes rather than businesses, potentially increasing the tax burden on owners.

The Professional Association of Self-Caterers (PASC) has told Property118 that the holiday let sector has faced a “tsunami” of tax and regulatory changes since Covid, driving many operators out of the sector.

PASC data reveals a 14.1% fall in registered self-catering businesses in England, from 77,400 in 2023 to 66,500 in 2025.

Alistair Handyside MBE, executive chair of PASC, has urged the Chancellor to avoid imposing further tax burdens on the sector, warning that businesses are already struggling with rising costs.

He told Property118: “We have seen a tsunami of tax and regulatory change since Covid, driving so many operators out of the sector. These have had an enormous impact on the viability and profitability of the sector.

“The removal of Furnished Holiday Let (FHL) tax allowances from April 2025 is a recent example. Updated fire regulations, which we fully support, have also cost compliant businesses thousands of pounds in necessary safety improvements.

“Meanwhile, increases in National Insurance contributions, Business Rates and wages have been difficult to pass on through higher prices, given consumer confidence and the rising cost of living.

“On top of this, there is a further two-percentage-point increase in tax on property income due from April 2027. Not to forget our owners pay the Council Tax or Business Rates and have to factor that into business costs.”

Mr Handyside added that self-catering businesses paying Business Rates have seen significant bill increases, with one example rising by 58% from £4,491 to £7,105 following the removal of hospitality relief.

All eyes on the Chancellor

With the Autumn Budget just a week away, landlords will be hoping for no further tax surprises, as concerns continue to grow across both the private rented and holiday let sectors.

All eyes will be on the Chancellor to see whether the Budget offers some much-needed relief or adds to the pressures landlords are already facing.