So what does this all mean for landlords and property investors from 2026 onwards?

Returns from rental income, dividends and savings will be taxed more heavily, which will again narrow the gap between passive and earned income.

High Value Properties

One of the most talked about subjects this budget has been the new charge for ‘high value homes’. From the Budget, any properties valued over £2 million will attract a new ‘Council Tax Surcharge’ which they claim is to ensure that expensive properties contribute more fairly. However, the government hasn’t taken into account that a £2 million dream home the chances are the owner will not pay less tax than a family home, and it adds real cost for owners of luxury properties.

However, the good news in Scotland is that it won’t apply because council tax is a devolved matter in Scotland. This means that ‘local’ tax and government charges on residential properties are determined by the Scottish government and not by the UK government to be clear. Scotland sets its own rules for council tax, and for a Scottish home to be liable under an equivalent surcharge would require a separate decision by the Scottish government.

Other Implications For Landlords (Rental Market)

• The property income tax increase (scheduled in just now for April 2027) is expected to raise around £500 million per year for the government (data from ‘Inside Housing’)
• Landlords will see their yields being squeezed and the ‘after tax’ rental income will decline for many landlords, especially those in higher tax bands. Reducing returns from buy-to-let, which makes it less attractive to investors.
• There might have to be a ‘knock on effect’ for tenants because landlords might have to pass some of the increased costs via higher rental prices, which might again reduce rental supply, which is already in high demand.
• For standard first time buyers or normal mainstream buyers it is possible that reduced investor demand could ease competition for them when obtaining properties.

Next Steps – What Should You Consider As A Property Investor or Landlord

• It would be a good idea to look over your current yield and cashflow projections for all your rental properties (assuming the higher tax regime)
• Maybe consider ‘ownership structure’ whether holding your properties as ‘personal’ or via a ‘company’ for improved tax efficiency.
• Review your financing strategy and mortgage affordability. While mortgage lenders assess your affordability on gross income, rather than net, the reduced net income may affect long term sustainability for your properties. 
• Stay updated: Keep abreast of any changes whether this is licensing, holiday lets, etc.
• Seek professional advice to remain compliant and optimised.

At Murray Property Holdings, we remain committed to guiding our clients through a changing property market, if you would like to discuss strategic planning, or asset backed investment with a member of our team – please reach out.