The government has confirmed that 2.4 million landlords will face higher property taxation before the end of this Parliament, following Rachel Reeves’ decision to increase property tax rates from April 2027.

Under the new structure, property income will be taxed at 22% (basic rate), 42% (higher rate) and 47% (additional rate).

According to the Treasury’s own policy paper: “It is estimated that by 2029 to 2030, 2.4 million landlords (6% of taxpayers in 2029 to 2030) will face an increase in tax as a result of this measure.”

In other words, almost every landlord with taxable rental income will see a higher bill.

Who is affected?

The reform applies to England, Wales and Northern Ireland, while Scotland and Wales will gain powers to set devolved property income tax rates.

ONS estimates around 2.82 million landlords across the UK, meaning most landlords are within scope.

The Treasury acknowledges that:

• older investors will be hit hardest
• those from Asian, Asian British or Indian backgrounds are disproportionately represented
• people identifying as Hindu are more likely to pay more

This, it says, reflects demographic patterns in property ownership.

Why the change?

Reeves argues that the reform narrows the gap between tax on work and tax on investment income.

However, industry voices are warning of severe consequences for the private rented sector.

Simon Gammon, managing director at Knight Frank Finance, told The Independent that the measure will be the “last straw” for many landlords: “I think it will really only hit people when they get their tax bills – so that will be 2026 or 2027.”

Landlord organisations are already forecasting more sales, fewer rental homes, and higher rents over the next three years as a direct response.