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 January 2024 - Comments: 351
3:50 PM, 26th November 2025, About 5 months ago
Reply to the comment left by Ian Narbeth at 26/11/2025 – 15:39
There is no corporation tax on UK dividends. Only individuals and trusts, etc pay tax on UK dividend income.
For the interest analogy, it always makes sense to pay 2% more tax on an expense, whereas companies pay no tax on the same expense!
Didn’t Rachel use something about things not being fair between taxpayers as an excuse for hammering landlords for another 2%?
Member Since December 2022 - Comments: 30
4:10 PM, 26th November 2025, About 5 months ago
Reply to the comment left by Con Papapetrou at 26/11/2025 – 14:43
Can you please provide more information about these?
Member Since October 2013 - Comments: 1642 - Articles: 3
4:23 PM, 26th November 2025, About 5 months ago
Reply to the comment left by David at 26/11/2025 – 15:02
Decent tenants or not, unless you increase rents year on year, you will quickly find yourself way below the market rate which, if you are mortgaged, may cause remortgage difficulties. Also, your costs will increase at least by inflation, and your profitability will suffer. I didn’t increase rents for 5 years, but have done so (at 9%) for the past 3, and am only now at the market rate. My remaining tenant complained, after I had subsidised her for 5 years, so I offered to let her leave without notice. Tenants are your friends only when you are helping them!
Member Since October 2013 - Comments: 1642 - Articles: 3
4:24 PM, 26th November 2025, About 5 months ago
Reply to the comment left by DP at 26/11/2025 – 15:03
s24 started it.
Member Since January 2024 - Comments: 351
4:32 PM, 26th November 2025, About 5 months ago
Reply to the comment left by NewYorkie at 26/11/2025 – 16:23
Under the RRA you may not be able to increase rents annually. If the tenant appeals then it will probably take more than a year to get a decision and the new rent will only apply from the decision date, so it could take 13+ months to get a new rate agreed.
Member Since October 2013 - Comments: 1642 - Articles: 3
5:01 PM, 26th November 2025, About 5 months ago
Reply to the comment left by Ryan Stevens at 26/11/2025 – 16:32
If you keep to the market rent, you shouldn’t have a problem. But it could be a problem if you have to raise it £200pm just to get you there. S13 increases, every year.
Member Since January 2024 - Comments: 351
5:06 PM, 26th November 2025, About 5 months ago
Reply to the comment left by NewYorkie at 26/11/2025 – 17:01
You’re very optimistic.
Clever tenants will just appeal at no cost, pay the existing rent until the appeal is heard – possibly a year+, then just give 2 months’ notice and leave.
Member Since March 2024 - Comments: 281
5:19 PM, 26th November 2025, About 5 months ago
What Reeves pathetic and juvenile analogy misses is that cash / shares can be sheltered in ISAs each year, the first £1000 of interest outside an ISA is tax free for a basic rate tax payer and £50k can be put in Premium Bonds usually giving a fair tax free return over the year (especially attractive for higher rate tax payers).
There is nothing similar available for investing in property – surcharging the tax on rental profit only brings this more into focus.
Member Since January 2024 - Comments: 3
5:20 PM, 26th November 2025, About 5 months ago
Reply to the comment left by Karen Dodd at 26/11/2025 – 16:10
They are 3 diversified US ETF’s . S&P500 is the foundational (CSP1 is the BlackRock equivalent in the UK which mirrors the S&P500), DGRO is a dividend ETF and QQQM is a growth ETF (Nasdaq 100 tech stocks). They all provide balanced exposure to counter downturns and full exposure to capture bull markets / growth periods. It’s a no brainer in my opinion Vs UK property. The latter will continue to be taxed to oblivion. I still invest in property but in Australia for capital growth.
Member Since July 2023 - Comments: 71
5:28 PM, 26th November 2025, About 5 months ago
There is currently a much bigger demand for rental property than residential purchases. Any measure that reduces supply of rentals will likely exasperate this situation. More people chasing fewer properties.
Many people who rent are people not trusted by banks to borrow. The banks discriminate against these people on affordability grounds yet there will likely now be fewer homes for these people because of policy from a labour government that could be expected to help.
I am baffled by the reasons behind much policy and can’t see the beneficial basis.