UK property market changes 2026: what landlords need to know

19 Mar

Introduction

The UK property market continues to dominate the news cycle. Mortgage rates, strong rental demand and increasing regulation are all shaping the outlook for landlords and property investors.

For many London and UK landlords, the market is becoming more complex rather than less attractive. Property remains a long term investment for many individuals and business owners, but the financial and tax considerations surrounding it have changed significantly in recent years.

The key challenge today is not simply whether to invest in property, but how to manage a property portfolio efficiently from both a financial and tax perspective.

For landlords and portfolio owners, careful planning is becoming increasingly important.

Higher borrowing costs are changing the numbers

Mortgage rates remain significantly higher than they were a few years ago. For landlords with borrowing, this has had a direct impact on profitability and cash flow.

Many investors are now reviewing:

refinancing options
the profitability of individual properties
whether their borrowing structure still makes sense.

For larger portfolio owners in particular, debt structure and long term financial planning are becoming more important than ever.

Rental demand remains strong

Despite pressure on landlords, rental demand across much of the UK remains extremely strong. Limited housing supply and higher mortgage costs for buyers mean many people are renting for longer.

For landlords this can mean:

rising rents in many areas
lower vacancy rates
strong long term yields.

However, higher rental income can also increase tax exposure, particularly where income moves investors into higher tax bands.

The Renters’ Rights Act and what it means for landlords

Rental reforms expected to take effect from May 2026 are set to introduce further complexity for landlords and portfolio owners. Under the proposed changes, all tenancies will move to rolling assured periodic agreements, continuing on a month-to-month basis until ended by either the tenant (with two months’ notice) or the landlord (via a Section 8 notice with appropriate grounds). Notice periods are also expected to change, for example extending to four months where a property is being sold, or reducing to four weeks in cases of rental arrears.

Additional measures will affect day-to-day management. Landlords will be restricted to collecting only one month’s rent in advance, rents can be increased only once per year with two months’ notice, and tenants will have the right to challenge increases at tribunal. There are also changes to tenant selection and requests, including a ban on refusing applicants based on children or benefit status, and a requirement to respond to statutory pet requests within 28 days with reasonable grounds if refusing.

Taken together, these changes are likely to reduce flexibility and increase administrative requirements for landlords. For many, this reinforces the importance of reviewing tenancy arrangements, processes and overall portfolio strategy ahead of implementation.

Tax changes are continuing to affect landlords

Over the past few years several tax changes have reshaped the economics of property investment.

These include:

restrictions on mortgage interest relief
reduced Capital Gains Tax allowances
frozen Income Tax thresholds.

For some landlords this means paying significantly more tax than expected, particularly where rental income sits alongside other income sources such as employment income, dividends or business profits.

It also raises important questions around:

whether property should be held personally or through a company
how and when to realise capital gains
whether portfolio restructuring may be beneficial

Further tax changes on the horizon

Looking ahead, further changes to the taxation of property income are expected. From 2027, Income Tax rates on property income are due to increase by 2%, which will directly affect how much landlords retain from their rental income.

For example:

A basic rate taxpayer currently paying 20% tax on rental profits could see this increase to 22%. On £20,000 of rental profit, this would mean an additional £400 in tax.
A higher rate taxpayer (currently 40%) could see their rate rise to 42%. On £50,000 of rental profit, this would result in an additional £1,000 in tax.
An additional rate taxpayer (currently 45%) could see this increase to 47%, further reducing net returns on larger portfolios.

While the exact impact will depend on total income levels and allowances, the direction of travel is clear: property income is becoming more heavily taxed over time. For landlords and portfolio owners, this makes it increasingly important to review how property is held, how income is structured and whether current arrangements remain efficient. Planning ahead before these changes take effect can help mitigate the impact and avoid unexpected tax liabilities.

Why proactive financial advice matters

In a changing market, landlords benefit from having advisors who understand the full financial picture. Changes to rental legislation, energy efficiency standards and tenant protections are all impacting landlord decision making.

For many investors the key is not simply reacting to change, but planning ahead so that portfolios remain both compliant and financially sustainable.

At Sampson Fielding we work with a wide range of property owners, from individuals with one or two investment properties through to established portfolio landlords and business owners with property interests alongside their companies.

Our approach is simple. Every client works with a dedicated accountant who understands their finances properly, keeps things moving and steps in early when planning or restructuring may help.

Often the most valuable conversations happen before a financial decision is made.

What landlords should consider now

In the current environment it may be worth reviewing:

the profitability of each property
your overall tax position
how your portfolio is structured
refinancing opportunities
your longer term investment plans.

Property remains a valuable long term investment for many people, but the financial strategy behind it matters more than ever.

If you would like to review your property portfolio or discuss the tax implications of your rental income, the Sampson Fielding team would be happy to help.

Frequently asked questions about property tax for landlords

Do landlords pay tax on rental income in the UK?

Yes. Rental income is generally subject to Income Tax. The amount of tax payable depends on your total income and your personal tax band.

Should landlords hold property personally or through a company?

This depends on several factors including mortgage costs, income tax position and long term investment plans. For some investors, holding property through a company can offer tax advantages, but the structure should be reviewed carefully. Transferring property from individual ownership to a Limited Company can also be quite expensive due to the amount paid in Capital Gains Tax and Stamp Duty.

Do landlords pay Capital Gains Tax when selling a property?

Yes. Capital Gains Tax may apply when individuals sell an investment property, although allowances and reliefs may reduce the amount payable. Properties held within a Limited Company structure are subject to Corporation Tax, not Capital Gains Tax.

When should landlords review their property portfolio?

Many landlords review their portfolios annually, particularly before the end of the tax year or when refinancing or selling property.

Giordan Boston

Giordan qualified as a Chartered Accountant in December 2017 at a medium-sized firm where he worked largely with owner-managed businesses, advising on a range of accounting and tax matters for clients in the financial services, retail and insurance sectors. Before joining the Sampson Fielding team, Giordan was a manager in the Financial Services audit team at Grant Thornton where he gained deeper insights into the financial services world.