The Autumn Budget delivered by Chancellor Rachel Reeves brought a mix of relief and fresh concerns for landlords across the UK. While the Government stopped short of extending National Insurance to rental income—a measure widely feared in the sector—the Office for Budget Responsibility (OBR) has warned that landlords will still face higher tax burdens and reduced returns.

NI on Rental Income: Avoided, but at a Cost

Landlords had been bracing for an unprecedented levy on rental income, but Ms Reeves opted not to proceed. However, the Treasury is still targeting investment income more broadly. The Budget included:

• A 2 percentage point increase on tax rates applied to property, dividend, and savings income
• An estimated £500 million a year in additional tax revenue, much of it taken from landlords

The OBR noted that, despite the Chancellor’s decision on NI, these rises will leave landlords worse off overall.

OBR: “Successive Eroding of Private Landlord Returns”

In an embarrassing episode for the Government, the OBR accidentally published key Budget details early—a mistake described internally as a “technical error” and blamed by the Chancellor as a “serious error.”

The leaked document delivered a stark assessment:

“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 longer run, risking a steady, long-term rise in rents if demand outstrips supply.”

The OBR referenced past changes including:

• Mortgage interest relief restriction
• Stamp Duty surcharge
• Capital Gains Tax allowance reductions
• The introduction of the Renters’ Rights Act

Reeves: “Landlords Pay Less Tax Than Tenants”

Defending the new 2-point increase, Ms Reeves argued the tax system must treat income sources more fairly. She highlighted that a landlord earning £25,000 pays nearly £1,200 less tax than a tenant earning the same salary.

The new surcharge on investment income is framed as closing that perceived gap.

Industry bodies cautioned that further taxation risks destabilising an already fragile private rented sector. Some warn that landlords may continue exiting the market, adding upward pressure on rents.

Other Key Measures Affecting Landlords

Tax & Property

• Personal tax thresholds frozen for another three years (to 2028–29)
• New High Value Council Tax surcharge:
  • £2,500 per year for homes over £2m
  • £7,500 per year for homes over £5m

Welfare & Energy

• Two-child benefit cap abolished
• ECO scheme surcharge scrapped, saving households approx. £150 annually

Interest Rates & Inflation

The OBR cut next year’s inflation forecast by 0.4%, citing affordability measures. This may place additional pressure on the Bank of England to reduce the Bank Rate sooner than previously expected—welcome news for landlords facing high mortgage repayments.