The October 2026 Budget: what it means for UK property investors (and what you can do about it)

The Budget landed on Wednesday 28 October.

And if you own buy to lets in your own name... it wasn't a good day.

Last year's Budget had already put up the tax on rental profit from April 2027. This one put it up AGAIN, on top of that. Two rises, one start date.

The headlines will tell you buy to let is finished. I've been in UK property for 23 years. I watched Section 24 come in, and I watched the stamp duty surcharge go from 3% to 5%. Both times the headlines said the same thing.

So let's do what most of the headlines won't. Look at the actual numbers. Work out what this really costs you. And look at what you can legally do about it.

The changes that matter to property investors

1. Tax on rental profit goes up again

This is the big one.

Right now, rental profit is taxed at the same rates as your salary: 20%, 40% and 45%. From 6 April 2027 it gets its own rates. Last year's Budget set them at 22%, 42% and 47%. This Budget added a further 2 points.

A few things the headlines skipped:

• It doesn't touch limited companies. It only hits property you own personally.
• The mortgage interest credit goes up too. The Treasury says finance cost relief stays aligned to the property basic rate, so it rises to 24%.
• It isn't law yet. It goes into the Finance Bill 2026-27.
• Scotland and Wales can set their own rates. The Welsh draft Budget is due on 17 November 2026 and the Scottish Budget in December. Until then, nobody can tell you what Scottish or Welsh landlords will pay.

What it actually costs you

Take a landlord in England with a £40,000 salary, £20,000 of rental profit and £8,000 of mortgage interest.

• 2026/27: £10,270 at 20% plus £9,730 at 40%, minus 20% of the interest. Tax on the rental profit: £4,346.
• 2027/28: £10,270 at 24% plus £9,730 at 44%, minus 24% of the interest. Tax on the rental profit: £4,826.

That's £480 a year more. About 11% more tax on the same rent.

Annoying? Yes. The end of buy to let? No. But it's money straight off your cashflow, every year, so you need to know your number.

The Treasury's costing has it raising £575m in 2028-29, then £435m to £455m a year after that. The Office for Budget Responsibility (OBR) puts it at around £0.4bn a year on average, after allowing for landlords moving property into companies. The OBR also thinks it is "more likely than not" that the rises push rents up in the long run.

What you can do about it

Run your numbers at the new rates now. You have until April 2027. Every deal you look at between now and then should be stress-tested at 24%, 44% or 49%, not today's rates.

Think about a limited company for new purchases. Companies don't pay the property rates. They pay corporation tax, which stays at 19% on profits up to £50,000 and 25% over £250,000. And they deduct mortgage interest in full. BUT, the money isn't yours until you take it out. Dividends are taxed at 10.75%, 35.75% and 39.35% (no change in this Budget). Whether a company works for you depends on your income and your plans, so get advice.

Be very careful moving properties you already own into a company. It's usually expensive:

• The company pays stamp duty on the market value, at the higher rates. On a £250,000 property that's £15,000.
• Capital gains tax can be due on the transfer. Incorporation relief can defer it, but only if your letting is a genuine business, and since 6 April 2026 you have to claim it.
• You'll usually need new mortgages, and you may face early repayment charges.

Do NOT do this off the back of a YouTube video. Speak to a specialist.

Look at who owns what. Transfers between spouses and civil partners don't trigger capital gains tax. If one of you pays a lower rate, more of the rental income could be taxed in their band. Watch out though: if they take on part of the mortgage, HMRC treats that debt as payment, so stamp duty can be due.

2. No cut to the stamp duty surcharge

The 5% surcharge on additional homes stays.

So a £250,000 buy to let still costs you £15,000 in stamp duty in England and Northern Ireland. Someone selling their home and buying the same house to live in pays £2,500.

What you can do about it

• Build it into your offer. The surcharge isn't going anywhere, so if a deal doesn't work with the stamp duty in, it doesn't work.
• Six or more dwellings in one transaction. In England and Northern Ireland they're automatically taxed at the lower non-residential rates. Six flats for £900,000 in one transaction: £34,500 instead of £80,000.
• Mixed-use buildings. A shop with a flat above is taxed at non-residential rates, with no 5% surcharge. A £400,000 mixed-use building: £9,500.

And don't let anyone sell you Multiple Dwellings Relief in England. It was abolished on 1 June 2024. Scotland and Wales have their own taxes (LBTT and LTT) with different rules.

3. No new incentives for landlords

Nothing to encourage buy to let. Nothing to grow the private rental sector. And the freeze on Local Housing Allowance wasn't reversed, so if you let to tenants on housing benefit, check your rents against the current rates before you buy.

One more thing to know. The government will consult on expanding third-party reporting of property income. In plain English, HMRC wants more data on rental income from people other than you. If your tax return isn't right, get it right.

What you can do about it

This is where it gets interesting.

Every landlord who looks at their 2027 numbers and decides they don't work any more is a potential seller. Sellers who want out are exactly where off-market deals come from.

If you're a sourcer, or an investor with your numbers sorted, a squeeze on other landlords can be your opportunity. Just make sure YOUR deals work at the new rates first.

4. 0% VAT on land sold to social housing providers

From 1 April 2027, land sold to registered social housing providers will be zero-rated for VAT, at any stage of development. The Treasury puts the cost at £15m a year.

How to use it

If you own land or a site, housing providers become a more attractive buyer. Who counts as a qualifying provider hasn't been defined yet, and draft legislation is expected in early 2027. So don't price a deal on it until that's published.

5. More money for social and affordable housing

An extra £1.5bn goes into the Social and Affordable Homes Programme, for around 10,000 homes in England, with Social Rent prioritised. The government says total investment in the programme is more than £40bn over 10 years.

6. Cheaper borrowing for councils

Councils building new council homes keep a borrowing rate 40 basis points (0.4%) below the normal rate for another year.

How to use points 5 and 6

Councils and housing associations have more money to build and buy homes. If you develop or convert, they're potential buyers for finished units. Start building those relationships now.

7. Biodiversity rules dropped for small brownfield sites

Residential developments on brownfield sites up to 1.5 hectares will be exempt from Biodiversity Net Gain requirements in England.

Here's the catch... it isn't in force and there's no start date. Until it is, you still need an approved biodiversity gain plan before you start work.

What to do

Keep the biodiversity cost in your appraisals until the rules actually change. Don't buy a site on the assumption it's gone.

8. No major building regulation changes

The government says it won't make major changes to building regulations for the rest of this Parliament, except for building safety (including the Grenfell Inquiry recommendations). That makes refurb specs and budgets more predictable.

BUT, don't confuse that with energy rules. Every private tenancy in England and Wales still needs to reach EPC C by 1 October 2030, with landlords required to spend up to £10,000 per property to get there.

What to do

If you're refurbing a rental now, do the energy work at the same time. Doing it twice costs more.

The smaller changes worth knowing

• Trading allowance triples to £3,000 from 6 April 2027. If you earn sourcing fees or other self-employed income on the side, the first £3,000 can be tax-free (if you use it, you can't deduct your expenses as well).
• Business Asset Disposal Relief lifetime limit halves to £500,000 from 6 April 2027. It doesn't normally apply to buy to let anyway.
• Company profit extraction rules will be "modernised" from 6 April 2028. No detail yet. If you own property through a company, watch this one.
• No change to capital gains tax rates (18% and 24%), dividend tax rates or inheritance tax thresholds.

So what now?

Landlords have been hit by tax rises in two Budgets in a row. That's a FACT.

But the deals that work are still out there. They just need tighter numbers, the right structure and a plan that fits YOUR situation, not somebody else's.

Run your numbers at the new rates. Speak to a property tax specialist before you move anything. And if you want a second opinion on what this means for your portfolio or your next deal, that's exactly what my pay as you go mentoring is for.

Onwards and upwards.

Paul

Sources

All checked on 29 October 2026.

1. HM Treasury, Budget 2026 document: property income rates up 2 points from 6 April 2027, VAT zero rate on land for social housing, £1.5bn Social and Affordable Homes Programme, council borrowing rate, Biodiversity Net Gain exemption, building regulations, trading allowance, BADR, distributions, third-party reporting, yields of £575m in 2028-29 then £435m to £455m a year.
2. HM Treasury, Budget 2026 Annex A: rates and allowances: 24%, 44% and 49% property rates for 2027-28, corporation tax, dividend, capital gains and inheritance tax rates, stamp duty rates.
3. HMRC, Changes to tax rates for property, savings and dividend income (Budget 2025): the original 22%, 42% and 47% rates and the Scotland and Wales powers.
4. Tax Policy Associates, Budget 2026: what it means: finance cost relief aligned to the property basic rate, the OBR's £0.4bn estimate and rent comments.
5. NRLA, Budget 2026 announcements: Local Housing Allowance freeze not reversed.
6. HMRC Capital Gains Manual CG65735: incorporation relief must be claimed from 6 April 2026.
7. GOV.UK, Stamp Duty Land Tax residential rates and non-residential and mixed-use rates.
8. Finance Act 2003 section 116: six or more dwellings in one transaction treated as non-residential.
9. HMRC Stamp Duty Land Tax Manual SDLTM29901: Multiple Dwellings Relief abolished from 1 June 2024.
10. Travers Smith, Autumn Budget 2026: Property and Infrastructure: VAT zero rating at any stage of development, draft legislation expected early 2027.
11. PlanningGeek, BNG exemption for brownfield housing up to 1.5 hectares: no start date yet.
12. GOV.UK, Improving the energy performance of privately rented homes: government response: EPC C by 1 October 2030, up to £10,000 per property.
13. GOV.UK, Capital Gains Tax on gifts: no capital gains tax on assets given or sold to a spouse or civil partner.
14. HMRC Stamp Duty Land Tax Manual SDLTM04040: taking on an existing debt counts as payment for stamp duty.
15. GOV.UK, Tax-free allowances on property and trading income: how the trading allowance works.