Autumn Budget 2025: What Landlords Need to Know

The Chancellor’s Autumn Budget 2025 has landed, and while landlords avoided the feared extension of National Insurance to rental income, the measures announced still reshape the financial landscape for property owners. At Dwelling & Manor, we believe clarity and proactive support are essential in navigating these changes. Here’s what you need to know.

Key Budget Measures Affecting Landlords

• Property Income Tax Increase From April 2027, rental income will be taxed at new, higher rates:

  • Basic rate: 22% (up from 20%)

  • Higher rate: 42% (up from 40%)

  • Additional rate: 47% (up from 45%)

• No National Insurance on Rental Income Landlords narrowly avoided NI charges on rental profits, but the government has signaled ongoing scrutiny of fairness between earned and unearned income.

• Mansion Tax / High-Value Property Surcharge From April 2028, homes worth over £2 million will face an annual surcharge:

  • £2,500 for properties between £2–£2.5m

  • £7,500 for properties over £5m

• Regulatory Context - These tax changes arrive alongside the Renters’ Rights Act, ongoing restrictions on mortgage interest relief, and compliance costs that already squeeze landlord margins.

Dividend Tax Increases: Impact on Properties Held in LTD Companies

From April 2026, dividend tax rates will rise by two percentage points:

• Basic rate: 10.75% (up from 8.75%)

• Higher rate: 35.75% (up from 33.75%)

• Additional rate: unchanged at 39.35%

For landlords who hold properties through limited companies, this is significant. Company profits are already subject to Corporation Tax (up to 25%), and when those profits are distributed as dividends, the new higher rates will apply. This means:

• Double taxation pressure: Corporation Tax + higher dividend tax reduces net income.

• Reduced appeal of LTD structures: While companies still offer advantages (mortgage interest relief, inheritance planning), the dividend hike narrows the gap compared to personal ownership.

• Strategic review needed: Landlords may need to reconsider whether to extract profits via dividends, salaries, or pension contributions.

National Insurance Threshold Freeze: The Hidden Effect on Property

The Budget confirmed that National Insurance thresholds will remain frozen until 2031, extending fiscal drag. As wages rise, more people are pulled into higher tax bands, effectively raising contributions without headline rate increases.

Why this matters for landlords and the property market:

• Reduced disposable income: Tenants face higher effective tax burdens, leaving less room for rent increases.

• Pressure on affordability: Mortgage applicants may find affordability tests harder as net pay is squeezed.

• Knock-on demand effects: Slower wage growth in real terms could dampen demand for rental properties and home purchases, especially in mid-market segments.

• Investor caution: Fiscal drag may discourage new entrants into buy-to-let, tightening supply further.

What This Means for Landlords

• Shrinking Yields: Higher taxes and reduced reliefs mean net rental returns will tighten, especially for landlords holding property in their own names.

• Rising Rents Likely: Many landlords may raise rents to offset costs, potentially adding £20–£25/month to average rents.

• Portfolio Restructuring: Owning property via a limited company structure may become increasingly attractive to mitigate personal tax burdens.

• Prime Market Pressure: Landlords with high-value properties face new holding costs, which may dampen demand and trigger sales.

How Dwelling & Manor Can Help

While the Autumn Budget 2025 introduces new tax and regulatory pressures, landlords don’t have to face these challenges alone. At Dwelling & Manor, our role is not to provide financial advice, but to empower landlords with practical strategies that strengthen portfolios and safeguard long-term success. Here’s how we can help:

• Portfolio Optimisation We work with landlords to review property performance, identify underperforming assets, and explore opportunities to rebalance holdings. This ensures your portfolio remains resilient in a shifting fiscal landscape.

• Tenant Selection & Retention Choosing the right tenants is more critical than ever. Our rigorous vetting process balances reliability with fairness, helping landlords secure stable rental income while fostering positive tenant relationships.

• Property Presentation & Value Enhancement In tighter markets, presentation matters. From design-led staging to professional photography, we help landlords showcase properties at their best, maximising rental appeal and reducing void periods.

• Legislation Updates & Compliance Guidance With new laws such as the Renters’ Rights Act and evolving compliance requirements, staying informed is essential. We provide clear updates and practical workflows so landlords remain compliant without unnecessary stress.

• Market Insight & Rent Strategy Our local market expertise allows us to advise on realistic rent levels that balance tenant affordability with landlord sustainability, ensuring properties remain competitive and profitable.

• Long-Term Resilience Planning Beyond immediate pressures, we help landlords anticipate future trends — from affordability shifts to regulatory reforms — so portfolios are positioned for stability and growth.

Summary

In short: the Autumn Budget 2025 increases the tax burden on landlords, introduces a mansion tax, and tightens margins. Dwelling & Manor stands ready to guide landlords through these changes with clarity, strategy, and care.