Autumn Budget 2025 – Landlord Reactions
In somewhat good news for landlords, Chancellor Rachel Reeves decided against extending National Insurance to rental income in the Autumn Budget.
However, the Office for Budget Responsibility (OBR) warns that landlords will still be worse off under this Budget.
While National Insurance on rental income was not introduced, the Budget did raise tax rates on dividends, property, and savings income by 2 percentage points, which will increase the tax landlords pay on rental income and raise an estimated £500 million a year.
Successive eroding of private landlord returns will likely reduce the supply of rental property
In an embarrassing turn for the government, the OBR leaked key measures of the Budget, which it described as a “technical error,” while Ms Reeves blamed the OBR for the “serious error.”
The OBR document said: “The measures announced in this Budget reduce returns to private landlords, following various measures over the past 10 years that have also reduced returns.
“This successive eroding of private landlord returns will likely reduce the supply of rental property over the longer run, risking a steady, long-term rise in rents if demand outstrips supply.”
The OBR also mentioned changes to mortgage interest relief, the stamp duty land tax surcharge and capital gains tax allowances, as well as the introduction of the Renters’ Rights Act.
Rachel Reeves blames landlords
Industry experts have welcomed the Chancellor’s decision not to extend National Insurance on rental income.
Critics had warned that such a move could trigger property sell-offs and worsen the housing crisis for renters by pushing up rents.
While the Chancellor chose not to proceed with this change, the Autumn Budget still proved to be controversial for landlords.
Ms Reeves addressed fairness in the tax system, saying that a landlord with an income of £25,000 would pay nearly £1,200 less in tax than a tenant with the same salary because no National Insurance is charged on property, dividends, or savings income.
She said: “It’s not fair that the tax system treats different types of income so differently, and so I will increase the basic rate and higher rate on property, savings, and dividend income by 2 percentage points, and the additional rate on property and savings by 2 percentage points.”
Other measures in the Budget include:
The Freezing of personal tax thresholds for an additional three years from 2028-29
There will be a new High Value Council Tax surcharge of £2,500 on properties over £2m and a surcharge of £7,500 on properties valued over £5m
The two-child benefit cap will be abolished
The Conservatives’ ECO scheme surcharge on energy bills will be scrapped, saving the average household £150 per annum.
The OBR’s inflation forecast has reduced next year’s predicted inflation by 0.4% due to the affordability measures introduced in this Budget. This should increase pressure on the Bank of England to further bring down the Bank Base Rate.
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Industry reactions to the "Mansion Tax"
Member Since June 2013 - Comments: 3249 - Articles: 81
2:51 PM, 26th November 2025, About 5 months ago
Reply to the comment left by Mark Alexander – Founder of Property118 at 26/11/2025 – 13:49
Is it as straight forward as that then, an extra 2% tax on property rental income?
On all bands I presume.
And what about if properties in a Ltd?
Member Since January 2014 - Comments: 21
2:59 PM, 26th November 2025, About 5 months ago
“It’s not fair that the tax system treats different types of income so differently”
Did she really say that?
Member Since October 2013 - Comments: 1642 - Articles: 3
2:59 PM, 26th November 2025, About 5 months ago
Reply to the comment left by Crouchender at 26/11/2025 – 14:41
She leaked the NI threat, so we would thank her for not doing it!
£25K rental income, which includes the lost opportunity cost of investing elsewhere, finance, repairs & maintenance, insurance, regulatory compliance (unless you are Reeves!), voids, re-letting costs, ‘green’ sh*t, plus service charges & ground rents (leasehold). Plus an extra 2% on any interest earned in the bank. A disingenuous ideological argument playing to the left, because it will definitely not benefit tenants. I will ensure my next S13 includes the justification for the rent increase as including additional Labour government taxes and RRA compliance.
Member Since April 2018 - Comments: 374
3:02 PM, 26th November 2025, About 5 months ago
Reply to the comment left by Crouchender at 26/11/2025 – 14:41
I agree.If it had been on NI, it would not have affected the already penalised retirees. She congratulated herself on the awful RRB , knows she wont get landlord’s votes so slams them again with this feeble example.All I can see is rents on older 1 bed properties in particular falling so how can you increase rents.Also if you have decent tenants it’s something you don’t wish to do.In 5 years it may all look different.
Member Since April 2020 - Comments: 96
3:03 PM, 26th November 2025, About 5 months ago
Reply to the comment left by paul kaye at 26/11/2025 – 14:02
I am still attempting to come to terms with RR’s reason for increasing the income tax rate for non PLC LL’s to make it fairer for tenants who pay NI !! How can any intelligent person even make this analogy it just shows how bigoted they are with no acceptance of how hard we work to sell our product ie a warm safe legitimate place for people to live and all the stuff that goes with that including finance (yes RR we are not all filthy rich land barons). Most tenant’s in employment do not do anything like this let alone take the risks? The continuance of turning a blind eye to the realities of this job and to now segregate us as a group for higher taxation just speaks for itself.
Member Since January 2024 - Comments: 351
3:03 PM, 26th November 2025, About 5 months ago
Reply to the comment left by Valerie Hollylee at 26/11/2025 – 14:25
A 2% tax will raise more revenue than a 2% National Insurance contribution, as it is payable by all taxpayers regardless of age.
It is also a much easier measure to present politically. Charging National Insurance on rental income implies that the Government views property letting as a trade, which is something she would wish to avoid signalling.
The more significant issue is the interaction with the existing restriction on finance cost relief. If rental surpluses before interest push private landlords into a higher tax band, they will pay an additional two per cent tax on that surplus. However, finance costs would, I assume, still only attract basic rate relief. This means that private landlords would, once again, be paying proportionately more tax than other private investors or companies.
Member Since April 2018 - Comments: 374
3:03 PM, 26th November 2025, About 5 months ago
Reply to the comment left by NewYorkie at 26/11/2025 – 14:59
Spot on calculation but only landlord’s have sympathy for landlords.
Member Since March 2024 - Comments: 281
3:28 PM, 26th November 2025, About 5 months ago
Reeves chooses to ignore the contributory benefits associated with paying NI in her comparison between the worker and landlord on £25k – the biggest one of all being the £1,000 per month state pension that can be accrued after 35 years.
Disingenuous or plain thick?
Member Since July 2013 - Comments: 2002 - Articles: 21
3:39 PM, 26th November 2025, About 5 months ago
I wait to see if the 2% is added to corporation tax income derived from rents and dividends.
Another way of looking at the effect of s24 is that a 40% taxpayer pays an extra 20% of their mortgage interest in tax and a higher rate taxpayer pays 25%. These amounts will it seems go up to 22% and 27%.
Member Since January 2011 - Comments: 12212 - Articles: 1408
3:44 PM, 26th November 2025, About 5 months ago
I’ve just published a linked article to explain how the 2% extra tax reduces the spendable income of a typical 8 property portfolio landlord by a whopping 14%. All numbers have been crunched.
Article link below.
https://www.property118.com/budget-2025-the-real-impact-of-the-2-tax-rise-on-rental-income/
Don’t let your blood boil because there are always solutions.