Property Income Tax Rising to 24%, 44% and 49%: What Surrey, Berkshire and M25 Landlords and HMO Owners Should Do Before April 2027

💰 BUDGET WATCH · 4 November 2026 · 6 min read · Hiten Arya, Director

The Budget left stamp duty alone. It did not leave landlords alone.

When the Chancellor delivered the Budget on 28 October, much of the commentary focused on what did not change. Residential stamp duty rates and thresholds were left as they were, including the 5% surcharge on additional dwellings. Capital gains tax on residential property stays at 18% and 24%, with the £3,000 annual exempt amount.

The measure that matters most to anyone who lets property in Surrey, Berkshire or elsewhere around the M25 is a different one. The Government has raised the rates of income tax on property income to 24% for basic-rate taxpayers, 44% for higher-rate taxpayers and 49% for additional-rate taxpayers. They apply from 6 April 2027 in England, Wales and Northern Ireland; Scotland sets its own rates.

Those rates compare with 20%, 40% and 45% today. That is four percentage points on every band, and two points more than the 22%, 42% and 47% previously set out for April 2027. Income tax thresholds also stay frozen until April 2031, so more rental profit is pulled into the higher bands as rents rise.

What it means in pounds

Take a higher-rate landlord in, say, Guildford or Maidenhead who makes £20,000 of taxable rental profit. At 40% the income tax bill is £8,000. At 44% it is £8,800. That is £800 a year more, on one property, before any other change in costs.

For an HMO owner with several lets, or a portfolio held personally, the figure scales quickly. Commentary on the Budget indicates that landlords who hold property through a limited company are not affected by this change, because companies pay corporation tax rather than income tax on rental profits. Whether a company structure suits any individual owner is a question for their accountant, and moving existing properties into a company can itself trigger stamp duty and capital gains tax. It is not a quick fix.

The squeeze is cumulative

This tax rise does not land in isolation. HMO owners across the commuter belt are already dealing with licensing that is spreading council by council, tougher lender underwriting and the 2030 energy efficiency deadline of EPC C. Each of those adds cost or uncertainty, and a higher tax rate reduces the cash left after all of them.

That is why we are hearing from owners who are not forced sellers, but who are asking a sensible question: is this property still earning its place in the portfolio? Where the net yield, after the 2027 tax rate and the cost of compliance, no longer justifies the capital tied up, selling can be the more profitable decision.

Four questions to answer before April 2027

1. What is the real net yield after tax? Recalculate each property using the new rates, not the old ones. Include licensing fees, insurance, management, voids and the cost of any EPC work.

2. What is the exit cost today versus later? Capital gains tax rates have not moved in this Budget, so the cost of selling now is known. Rates can change in future Budgets, and the tax position on a sale depends entirely on your own circumstances, so take advice from your accountant before committing.

3. Which properties carry the most regulatory risk? An HMO in a council area with additional licensing, or an older property that would need significant retrofit work, carries more risk than a modern, compliant let.

4. Would a quieter sale protect value? Public listings give buyers a window to negotiate. Many investors are now approaching sellers directly, expecting discounts.

Selling an HMO or rental property in the commuter belt

Buyers in this market are cautious, and a property that is tenanted, licensed or awkward to value does not always suit a public portal campaign. That is where a principal-led, discreet approach helps.

At London Property Brokerage, I deal personally with owners who want to sell, and we have 40 years of experience behind how we advise. We specialise in off-market sales, where a property is introduced privately to a qualified network of investors and cash buyers, so there is no public price history, no board in the street and no tenant disruption caused by viewings from the general public. We are also the broker HMO owners come to when they want to sell and want it handled properly, including licensing paperwork, tenancy position and a realistic view of value.

An off-market sale will not always beat the open market. Where a property is in strong demand and presents well, a full public campaign may be the better route. Our job is to give you an honest, evidence-based view of both and let you choose. It is the principle I work by: I don’t make excuses. I make results.

What we would advise now

You do not have to decide this week. The new rates apply from April 2027, which leaves time to plan. But time passes quickly when a sale involves tenancy notices, licensing transfers and a buyer’s due diligence. If you own rental or HMO property in Surrey, Berkshire, Hertfordshire, Buckinghamshire, Essex, Kent or London and are weighing up your position, a confidential conversation costs nothing and commits you to nothing.

This article is general information, not tax or legal advice. Your tax position depends on your circumstances; please speak to a qualified tax adviser before acting.