In recent weeks, rumours around Rachel Reeves’ second Autumn Budget have been swirling around Westminster. Given that the Labour Government has been struggling to improve the economy’s poor performance, these rumours have increasingly pointed towards tax rises.
While this may cause some concern for Reeves (breaking a manifesto promise is never ideal), we’re focused on how the Budget may affect the Private Rented Sector (PRS). In this blog, we’ll lay out what we’ve heard and how it can affect agents, landlords, and tenants across the PRS. We’ll also take a look at counter-proposals from the Conservatives.
Before we get started, it’s important to remember that a rumour is just a rumour. None of the items we raise in this blog are guaranteed to happen. Whether it’s sweeping council tax reform or new levies on landlords, we’ll be here to help unpack these rumours and support you through whatever stormy weather may come.
One of the most persistent whispers ahead of the 2025 budget is a proposal to double council tax on the top two property bands, a move first floated by the Institute for Fiscal Studies (IFS). According to their estimates, this could raise around $4.4 billion in additional revenue for the Treasury.
This policy would mainly target owners of high-value homes, particularly in London and the South East. This policy could be positioned as a “fairness” measure from the Government, ensuring that wealthier households pay their fair share of the country’s fiscal burden. There have been rumblings from critics that council tax is already outdated and unbalanced, as houses in lower-value northern areas have often paid proportionally more than those in the capital and the South East.
For landlords, the implications would depend on how the tax was structured. If the increase applies to properties held within portfolios or passed through to tenants, it could feed into higher operating costs, which would in turn lead to rent rises. Tax Policy Associates’ council tax calculator can help work out what the costs may look like in higher-value tax bands.
“Doubling council tax on top-tier properties will be painful for wealthy tenants and landlords alike. Affluent landlords won’t want to keep properties sitting empty; every pied-à-terre in London will suddenly cost a fortune if they’re unoccupied. For well-off tenants, the cost of living will climb sharply.
“This could hammer the London property market but may give a lift to short-term lets, as landlords look to keep homes occupied. It’s a simple and politically tidy way of increasing tax on second homes, and there’s a high chance we’ll see it happen.” - William Reeve, CEO of Goodlord
One of the big rumours gaining traction amongst Labour’s own ranks is the idea of completely scrapping council tax. More than a dozen Labour backbench MPs have written to Chancellor of the Exchequer Rachel Reeves, urging her to abolish what is seen in some circles as an outdated and regressive system.
The argument behind the proposal is that council tax, first introduced in 1993, no longer reflects the actual value of homes. They say this is especially true in areas where property prices have surged in the last 30 years.
While options for a replacement system have been floated by several prominent think tanks and action groups, there is still no definitive answer on how the Government would make up the lost income.
For those in the PRS, this massive change would represent both uncertainty and opportunity. While some higher-value properties would be subject to high annual charges, lower-value homes might benefit from reduced tax liabilities.
“Most other countries tax the property owner directly, so scrapping council tax and moving to that model makes sense, though it would almost certainly mean higher overall charges.
“The textbooks will warn that such a move could hammer property values, which would be politically toxic, but look at the U.S. States with property taxes still have some of the world’s most valuable homes, and the sky hasn’t fallen.
“In practice, landlords would likely push up rents to offset the new tax burden, though tenants might be able to absorb some of that if they’re no longer paying council tax themselves. Still, this is politically explosive territory; changing property taxes helped undo Margaret Thatcher, and it would likely do the same to this government. There’s a low chance of it happening; they’re simply not brave enough.” - William Reeve, CEO of Goodlord
Of significant interest to our customers is the rumour that the Government may move to apply National Insurance (NI) to rental income. Some in the Treasury believe that this would close what they consider an “unearned income gap”.
Currently, earnings from property, pensions, and savings are largely exempt from NI contributions, which employees pay at a rate of around 8%. The Treasury is said to be exploring extending this levy to landlords’ rental income, which could raise around £2 billion in new revenue.
This idea builds on a proposal from the Resolution Foundation, which suggested a 2% tax rise on rental and savings income, both of which currently fall outside the NI system. A related “balancing-act” proposal would see a 2p rise in income tax offset by a 2p cut in NI, effectively shifting the burden onto pensioners and landlords while still generating around £6 billion overall.
If all of this were to be enacted, landlords would see their effective tax rate rise by 8%. Smaller landlords, especially those with mortgaged properties, would feel the greatest squeeze, while those with larger portfolios could absorb the additional costs much more easily.
“Having lived in Ireland, I’ve seen this model in action, and it would be relatively easy to replicate here. The logical next step would be to scrap the upper earnings limit on National Insurance.
“Right now, NI hits average earners harder than high earners. If landlords, most of whom sit in higher tax brackets, are to be charged NI on rental income, it makes little sense to keep a system in which they pay only 2% while most people pay 8%.
“But if the Chancellor abolishes the upper earnings limit, many middle-class professionals would suddenly face effective tax rates above 50%. That’s been a political lightning rod before, and most people who get hit by lightning don’t survive. Still, compared to other reforms being floated, this one feels more likely to happen.” - William Reeve, CEO of Goodlord
Another rumour currently circulating around the Budget is that Capital Gains Tax (CGT) could be extended to cover primary residences worth more than £1.5 million. Traditionally, homeowners have been exempt from CGT when selling their primary residence. Still, reports suggest this long-standing rule could come under review as the Treasury seeks to plug budget holes.
Some believe that this proposal could cause the government more problems than it solves. Charging CGT on primary residences would go against the long-standing belief that homeowners should not be taxed on where they live. Homeowners could also choose to delay the sale of their main residence to avoid the tax, distorting the natural flow of the property market.
For landlords and investors, the ripple effects could still be significant. If high-end homeowners become more reluctant to sell, it could constrain stock in certain areas, indirectly pushing up demand and rents in the PRS. On the other hand, the measure could soften prices at the top of the market, particularly for properties close to the proposed threshold.
“Extending Capital Gains Tax to main homes sounds simple, but politically it’s dynamite. You won’t just hit wealthy Londoners—you’ll snare long-time owners who bought modestly decades ago and suddenly find themselves ‘asset rich’ on paper.
“Even then, the revenue raised would likely be tiny. Most people would simply sit tight and refuse to sell, which means fewer transactions, less mobility, and a stickier property market.
“It’s the kind of idea that causes a huge amount of noise but delivers very little money. High risk, low reward — so while the rumour is strong, the likelihood feels pretty low.” - William Reeve, CEO of Goodlord
The final rumour we’re covering in this blog could represent one of the biggest structural changes to property taxes in decades.
Reports in The Guardian and Financial Times have suggested that Rachel Reeves is considering a levy based on the value of a home at the time of purchase, with the charge applying to properties worth more than £500,000. It has been proposed that the tax would be paid annually by owner-occupiers, collected directly by HMRC. It would replace or sit alongside existing property taxes like stamp duty and council tax.
A more targeted alternative reported by the press suggests a 1% annual charge on the portion of any property’s value above £2 million. This version would clearly focus on high-end homes and could be framed as a “wealth fairness” measure rather than a wholesale overhaul of the system.
For homeowners and landlords alike, the implications would be far-reaching. A nationwide annual levy would create an ongoing cost for holding property, changing the economics of both ownership and investment. For the PRS, it could push landlords to reassess their yields, particularly in high-value areas where annual charges might significantly erode returns.
“An annual property tax would be one of the most radical changes we’ve seen in decades. It sounds fair on paper, but in practice, it hits two very different groups: wealthy homeowners with multimillion-pound properties, and middle-class families in areas like London where prices have surged beyond their control.
“For landlords, this is the one rumour that genuinely changes the maths. A recurring annual charge eats straight into yields, especially in London and the South East. You’d see landlords reassessing portfolios overnight, with some exiting and others raising rents to compensate.
“If the Chancellor wants a long-term shift towards taxing wealth rather than work, this will be a tempting first step - and it’d be taxing the one type of wealth you can’t take offshore. But it would be yet more complexity in the tax system, and it wouldn’t actually raise that much money. And most importantly, it would be difficult to set up - because no system of annual valuations exists, and we haven’t managed to update Council Tax house values since 1991. While it would be a big change to the system, it would be popular with the left wing (apart from in left-leaning North London!) - so it’s one to watch out for” - William Reeve, CEO of Goodlord
While much of the pre-Budget focus has been on Labour’s potential tax rises, the Conservative Party has been positioning itself with a series of contrasting measures aimed at supporting homeowners and young buyers. Together, these form the core of its housing-related counter-narrative.
Key pledges include:
The Conservatives argue that these policies would stimulate housing market activity, encourage home ownership, and support aspiration.
Whatever form Rachel Reeves’ Budget ultimately takes, the Private Rented Sector is bracing for change. From sweeping overhauls like scrapping council tax to more targeted measures such as NI on rental income or annual property levies, each rumoured reform carries real implications for agents, landlords, and tenants alike. Some proposals feel politically unlikely, others look increasingly plausible, but all reflect a government under pressure to find revenue and rebalance the tax system.
For the PRS, the challenge will be navigating a landscape in which operating costs may rise, yields may tighten, and policy direction becomes more structurally focused on “fairness” and taxing wealth over work. At the same time, the Conservatives are setting out a contrasting stance, sharpening the political divide and signalling that housing will remain at the heart of the national debate.
Amid all the uncertainty, our message is simple: stay informed, stay prepared, and don’t panic. These are still only rumours, and history shows that many high-profile tax ideas never make it past the drafting stage. Whatever the Chancellor announces in the Autumn Budget, we’ll be here to break it down, explain what it really means for the sector, and support you through whatever changes lie ahead.