From 6 April 2027 some landlords pay 4% more tax – but a bigger burden is the extra governmental red tape
Thought leadership by Olivier Jauniaux Founder of NestLink
There was a moment in the 2026 Budget speech when the Chancellor announced the rise in property income tax and was careful to add that there would be no change to tax on income from employment or dividends. It was the fiscal equivalent of a waiter putting down the bill and pointing out that the mints were free.
The labour government’s opinion on landlords appears simple enough. Last year’s 2025 Budget had already pushed tax on property income up by two percentage points from April 2027. Last week John Healey added two more on top, from the same date. From 6 April 2027 an individual landlord in England, Wales or Northern Ireland pays 24% at the basic rate, 44% at the higher rate and 49% at the additional rate.
A basic-rate landlord making £10,000 profit a year will hand over £2,400 rather than £2,000. Limited companies are untouched, which will make for some very busy accountants this winter.
The landlord bodies have reacted the way you would expect. The NRLA’s Ben Beadle said it would mean one thing: higher rents. Propertymark called it a further disincentive to anyone thinking of entering the market. Both may be right, and the Office for Budget Responsibility broadly agrees with them, which is not something you see every Budget day.
If you’re a small landlord, it’s hard to not take it personally. You’ve been effectively villainised in favour of institutional landlords. But the tax rate is the least interesting thing that happens to landlords in April 2027.
‘Three deadlines walk into the same bar’ – it could be a joke.
Look at the calendar rather than the rate. April 2027 is when the higher property income tax lands. It is also when Making Tax Digital for Income Tax drops its threshold from £50,000 to £30,000 of qualifying income.
That means digital records in recognised software and a quarterly update to HMRC, four times a year, every year. HMRC expects around 970,000 more sole traders and landlords to come into scope at that point, with the threshold falling again to £20,000 a year later.
The Budget did offer one small kindness: no penalty points for late quarterly updates during the first year for the April 2027 cohort. A grace period, in other words, for learning to do paperwork you did not used to have to do.
Meanwhile the new rental property register opens in the West Midlands on 15 December this year and rolls region by region through to November 2027, at £65 per property per year.
London gets its turn next summer. Add the Renters’ Rights Act, in force since May, and the government’s consultation on extending Awaab’s Law to private rented homes, which closes in December.
None of these measures were designed together. All of them arrive on the same desk, which, for 52% of landlords according to the English Private Landlord Survey, is their own kitchen table, because they do not use a letting agent at all. I don’t see anyone laughing.
Margins will soon now rely on record keeping
When a buy-to-let produced a comfortable yield, sloppy administration was a cost you could absorb. A repair request that sat in a text message for a week, a gas certificate in an email folder called “Misc.”, a rent increase agreed on the phone and never written down. Irritating, occasionally embarrassing… rarely fatal.
Take four percentage points off the return, add an annual register fee, a quarterly reporting obligation and an indefinite periodic tenancy with no natural end date, and that changes. The admin is no longer an overhead. It is the margin.
Consider what a single poorly evidenced dispute now costs. A deposit deduction that cannot be supported. A disrepair claim where the landlord knows the contractor attended but cannot prove when. A section 13 rent increase challenged because nobody can find what was agreed. Each one used to be a bad week. Landlords at least had the ability to remove a tenant. Now each dispute costs a year’s profit.
HMRC’s own impact assessment puts the average set-up cost of Making Tax Digital for the £30,000 to £50,000 group at around £350, then about £110 a year. That is the easy part.
Software can file a quarterly update. It cannot reconstruct a repair history from a WhatsApp thread and a vague memory.
The tenant will pay
Here is the part that should matter most, and the part the landlord lobby and the Treasury both underplay.
The OBR’s (Office of Budgetary Responsibility) assessment of the budget is pretty blunt. It describes the two rises together as a material reduction in returns to private landlords, following a decade of similar measures, and warns they risk a steady rise in rents over time, both because fewer people become landlords and because those who remain gain more power to set prices. It judges the supply effect more likely than not.
Rents are already rising. The ONS put the average private rent in England at £1,466 a month in September, up 4% on a year earlier. In London it is £2,338.
So, the renter is going to pay a share of this policy either way. The only question is whether they also pay for the inefficiency around it. A landlord who loses a week to a repair request nobody logged is a landlord with a damp flat, an annoyed tenant and, eventually, a reason to push the rent harder at review. Disorganisation is not a victimless cost. It gets passed down the chain, and the tenant sits at the bottom of it.
If the government wants the private rented sector to absorb higher tax without simply transferring it to tenants, the cheapest lever available is not a tax rate. It is making the sector far better at running itself.
Landlords are a small data business
This is the uncomfortable conclusion for an industry that still runs a remarkable amount of its operations on personal phones and good intentions. From April 2027, a landlord is effectively running a small, regulated data business whether they like it or not, and someone at ICO is rubbing their hands together.
Income has to be recorded digitally and reported quarterly. Properties have to be registered. Tenancies run indefinitely, which means every conversation, repair, notice and rent review accumulates into a record with no end date, holding sensitive personal information subject to GDPR. Under the forthcoming Awaab’s Law proposals, response times to hazards may also need to be evidenced, not just achieved.
For agents, this is a genuine opportunity rather than another compliance headache.
Propertymark has already said letting agents will be central to making the property register work in practice. The same logic applies to everything else. The English Private Landlord Survey says 45% of landlords only own one rented property. Most of these landlords do not want to become a records manager. They want someone who already is.
The tools that matter here are not the ones that draft nicer emails. They are the ones that capture what happened as it happens: the 9pm call about the boiler, the photo of the leak, the contractor’s attendance time, the tenant’s confirmation that it was fixed.
That is the problem we have been building NestLink’s property data and NestX around. NestX becomes a centralised, timestamped tenant communication that turns every report into a dated record rather than a recollection.
We will provide the data to back this, raising data backed property risks before they even happen. Others are working on the same gap, from property management CRMs to the accounting platforms preparing for Making Tax Digital, and the market will need all of them. What it cannot afford is to carry on treating the record as something you assemble after the dispute starts.
What to do before April 2027?
For agents and portfolio landlords, the to-do list is short and unglamorous. Work out which landlord clients cross £30,000 of qualifying income, remembering that jointly owned property only counts each owner’s share. Get the register timetable for your region into the diary. And move every tenant conversation off personal devices and into somewhere it can be found, dated, and shown to an adjudicator, a tribunal or HMRC.
