Autumn Budget 2025: 3 key takeaways for letting agents and landlords

On Wednesday, November 26, Chancellor of the Exchequer Rachel Reeves delivered her second Autumn budget since Labour took power in July 2024. 

This year's statement comes after a troubling period for the Government, as it fends off falling popularity in the polls, attacks from the Conservatives and the rising popularity of Nigel Farage’s Reform Party. 

The Budget rollout itself has been marred by leaks and close media scrutiny. In our own recent Budget whispers blog, we concluded that change was coming to the Private Rented Sector, and it was coming quick. 

In this blog, we’ll be taking a look at the Budget and laying out what landlords and lettings need to know, including changes to new separate tax rates for rental income and a High Value Council Tax Surcharge for residential properties worth £2 million or more. 

• Takeaway 1: Separate tax rates for property income (from April 2027) 
• Takeaway 2: Dividend and savings income tax increases 
• Takeaway 3: High Value Council Tax Surcharge (HVCTS) in England (from April 2028) 
• What does the OBR say? 
• Quote from William Reeve
• Conclusion 

Takeaway 1: Separate tax rates for property income (from April 2027)

In one of the most relevant announcements for landlords, the government has announced that property income will be taxed separately from other income sources. From April 2026, the new, higher rates will be: 

• 22% - Property basic rate 
• 42% - Property higher rate 
• 47% - Property additional rate

What this means for landlords:

• Higher-rate and additional-rate landlords might see their net rental income fall as their tax bills increase.
• Landlords may choose to pause any planned portfolio expansion as they weigh up the pros and cons of the Budget.
• Some landlords may restructure their portfolios (e.g., by incorporating their properties) to limit their tax exposure.

What this means for letting agents:

• Potential slower growth in the rental market could blunt the flow of new landlords entering the Private Rented Sector. 
• Landlords may choose to lean more heavily on their agents, creating opportunities for expanded consultancy and portfolio management advice.
• Agents might see an influx of questions from landlords building a more tax-exposure-resistant portfolio.

Takeaway 2: Dividend and savings Income Tax increases

Video taken from Parliamentlive.tv.

The above wasn’t the only change to property-related taxes announced by Reeves. The Government also announced that it will raise the ordinary and upper rates of tax on dividend income by 2%. Savings income will also see a 2% rise from April 2027. The additional dividend rate will remain unchanged. 

This is part of a broader government effort to standardise taxation across different types of asset income.

What this means for landlords:

• Landlords who manage their properties through company structures will see their post-tax profits shrink as they’ll face higher taxes on dividends.
• This may encourage landlords to retain profits within their companies rather than extracting them, which could impact cash flow.
• Decisions on buying, selling, or holding properties may shift as landlords whether the return on their investments is 

What this means for letting agents:

• Landlords may knock on their agents’ door with more questions around the most tax-efficient ways to manage rental income.
• Some landlords could pause their expansion or delay adding new properties to their portfolios, slowing the demand for agent input. 
• Expert agents could find themselves in high demand as landlords look for guidance and advice in the new landscape. 

Takeaway 3: High Value Council Tax Surcharge (HVCTS) in England (from April 2028)

Video taken from Parliamentlive.tv.

As we discussed in our Budget rumours article, the Government was considering several potential changes to council tax. In the Budget itself, Reeves announced that, starting in April 2028, residential properties in England worth over £2 million will pay a “High Value Council Tax Surcharge”. 

Here’s what we know so far about HVCTS: 

• Rather than replacing the existing council tax, the surcharge will be an additional add-on.
• For properties worth over £2 million, the charges will start at £2,500 per year. This will rise to £7,500 per year for properties worth over £5 million. You can see the proposed charging structure here. 
• The property owners will be responsible for paying the tax, rather than the occupiers. Local authorities will collect it. 
• Revenue from the Tax will be reinvested in local services. The Government has planned for further consultation to finalise implementation details and potential support measures for those affected.

What this means for landlords:

• Landlords with high-value portfolios will see their rental income fall as they face high annual costs.
• Some owners could start selling or converting their luxury rental properties to minimise their exposure to new taxes.
• The supply of high-end properties in the Private Rented Sector could shrink, especially properties worth £2 million or more.

What this means for letting agents:

• Landlords may seek more advice on restructuring or selling their portfolio, or on the best ways to retain their properties. 
• Management fees could fall for luxury letting agents as the market sees a potential reduction in high-value rental stock.
• Agents have an opportunity to position themselves as sources of strategic guidance on how landlords can best approach their portfolios, investment options, or alternative rental arrangements for high-value properties.

What does the OBR say? 

In a statement, the Office for Budget Responsibility (OBR) had this to say: 

“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 long run. This risks a steady long-term rise in rents if demand outstrips supply.”

Analysis from Goodlord CEO, William Reeve 

"Previously, earnings from property, pensions, and savings were largely exempt from NI contributions - meaning this was always going to be one of the quirks of taxation policy that the Treasury had their eye on. And it's now confirmed that landlords will see a 2% tax rise on rental income. This will understandably be unpopular with landlords and the macro risk is that it will encourage more to sell up at a time when the market can least afford it.  According to our latest market research, a third of all landlords had already sold up or actively tried to sell in the 12 months to October - this could tip the balance even further.

"It also risks leaving renters facing the prospect of rent hikes as the landlords that remain aim to cover their losses. This was already something a large section of landlords were considering in response to the Renters' Rights Act, so this could compound the threat of rental cost rises for tenants.

"As the OBR points out in their analysis, this tax change could exacerbate the supply and demand issues already facing the PRS. I cannot stress enough how vitally we need to build new homes, boost market supply, and do whatever else we can to keep a healthy equilibrium between renters' rights and landlord incentives. However, with this latest policy shift, I fear the scales have become less balanced, rather than more." - William Reeve, CEO, Goodlord

Conclusion 

Chancellor Rachel Reeves’ 2025 Autumn Budget makes it clear that the Government is prioritising the taxation of asset income, including rental, dividend, and savings income. For landlords, the combined impact of separate property income tax rates, higher dividend and savings taxes, and the introduction of the High Value Council Tax Surcharge represents a significant rise in ongoing costs and a potential squeeze on profitability.

These changes may encourage some landlords to sell or restructure their portfolios at a time when the Private Rented Sector is already feeling squeezed by the newly minted Renters’ Rights Act, potentially reducing supply and contributing to rent increases. Letting agents will need to adapt by offering guidance on tax planning, portfolio management, and strategies to navigate these higher costs.

Ultimately, the Budget signals a clear shift in the landscape for landlords, agents, and the Private Rented Sector. Landlords, agents, and tenants alike will need to carefully monitor how these reforms play out in practice, as the Government continues to balance fiscal objectives with the need to maintain a healthy, functioning rental market.

This article is intended as a guide only and does not constitute legal advice. Visit gov.uk for more information.