Autumn Budget 2026: What Will It Mean for UK Landlords and HMO Investors?

September 25, 2026

The next UK Budget takes place on Wednesday 28 October 2026, when Chancellor John Healey will deliver his first Budget alongside the latest Office for Budget Responsibility forecasts.

As you would expect, the property industry is already full of predictions. Capital Gains Tax is apparently going up. A wealth tax might appear. The so-called mansion tax could be expanded. Stamp Duty might change. By the time Budget day actually arrives, landlords could be forgiven for expecting virtually every property tax in Britain to have been rewritten.

We prefer dealing with what we actually know.

For landlords looking ahead to 2027, some of the most significant changes are not Budget rumours at all. They have already been announced. In particular, individual landlords face higher rates of Income Tax on property income from April 2027, Making Tax Digital will capture considerably more landlords, and frozen tax thresholds will continue increasing the effect of fiscal drag.

There is then the separate question of what John Healey announces on 28 October. Capital Gains Tax, wealth taxation and changes to the existing High Value Council Tax Surcharge are being discussed publicly, but as of September 2026 they remain just that: possibilities rather than confirmed Budget policy.

For property investors, separating those two categories is far more useful than panicking over every newspaper headline.

The 2% Property Income Tax Increase Is Already Coming

This is the major confirmed change for personally owned rental property.

From 6 April 2027, separate Income Tax rates will apply to property income. The property basic rate will be 22%, the higher rate 42% and the additional rate 47%. That represents a two percentage point increase compared with the existing 20%, 40% and 45% rates applying to property income.

This applies to individuals receiving property income rather than companies paying Corporation Tax on their profits.

That does not mean every landlord should suddenly transfer property into a limited company. Incorporation can create its own tax consequences, finance considerations, Stamp Duty implications and costs, while taking money out of a company can create further personal tax liabilities.

We are property developers and managers, not tax advisers, and investors should take individual advice from a qualified accountant before choosing or changing an ownership structure.

What can be said with certainty is that the tax treatment of personally held property is changing again.

For a landlord already paying tax at the higher rate, property income falling within that rate will move from 40% to 42%. For additional-rate taxpayers, it moves from 45% to 47%.

For investors building meaningful property portfolios, that makes the difference between gross rent, actual operating profit and genuine NET return even more important.

We have said this for years with our HMO investments. Gross yield might look good on a sales brochure, but gross rent is not what ends up in an investor’s pocket.

Frozen Thresholds Add Another Layer

The headline rates are only part of the story.

The government has also committed to maintaining the Personal Allowance at £12,570 and the higher-rate threshold at £50,270 through to April 2031.

If incomes and rents increase while tax thresholds remain fixed, more income can gradually fall into higher tax bands. This is commonly referred to as fiscal drag.

For landlords who also have employment income, pensions, business income or other taxable income alongside their property portfolio, the interaction can become particularly important. A landlord does not need a dramatic change in their circumstances for a growing proportion of income to become subject to a higher marginal rate over time.

Again, this is why property investors should be modelling investments on sensible NET figures rather than headline rental income.

A property producing £30,000 in annual rent is not producing £30,000 for the investor.

There are management costs, utilities where applicable, repairs, maintenance, compliance, insurance, finance costs, voids, licensing and taxation to consider. Any investment company selling property almost exclusively on gross yield without explaining the costs underneath it is showing investors only half of the calculation.

At Foot Forward Property Investments, we have always led with NET yields on our fully managed HMO investments for exactly this reason.

Making Tax Digital Expands Again in April 2027

There is another confirmed change that will affect thousands more landlords.

Making Tax Digital for Income Tax begins from April 2026 for qualifying self-employed people and landlords whose combined qualifying trading and property income exceeds £50,000.

From 6 April 2027, that threshold falls to £30,000. Those brought into the system will be required to maintain digital records and provide quarterly updates using compatible software.

For somebody owning one modest rental property, that threshold may still be some distance away. For landlords building portfolios or operating higher-income HMOs, reaching £30,000 in gross qualifying property income is hardly difficult.

It forms part of a wider change we have watched happening across the private rented sector for years.

Being a landlord is becoming more professionalised.

The days of buying a cheap terraced house, collecting rent and dealing with the paperwork when somebody remembers are disappearing quickly. Tax administration is becoming more digital, property regulation is increasing, the Renters’ Rights reforms have changed tenancy management, and HMO licensing and compliance already require considerably more involvement than a standard single let.

It is one reason our model has always been completely end to end.

We develop the property and our own management operation handles the day-to-day running of the finished HMO. Our investors are not expected to suddenly become letting agents, maintenance coordinators, licensing specialists and compliance managers alongside their existing careers.

Portfolio Buyers Are Increasingly Getting the Better Deal

One of the clearest trends we are seeing is that investors who think in terms of a portfolio rather than a single isolated property are generally putting themselves in a much stronger position.

That does not mean buying as many properties as possible as quickly as possible. Quite the opposite.

A well-built portfolio allows an investor to spread income across several assets, avoid relying on one tenancy stream, use sensible leverage more effectively and plan around taxation, refinancing and long-term income with far more flexibility than somebody who owns one marginal property and hopes it performs perfectly every month.

This is one reason more investors are coming to us with the intention of building three, four, five or more HMO properties over time rather than simply buying one and stopping there.

The economics can also become more efficient.

Once an investor understands our process, knows the areas we operate in and has an established relationship with our development, management and professional teams, adding further properties becomes considerably easier. They are not starting from scratch each time with a new sourcing agent, builder, letting agent, licensing consultant and maintenance firm.

Everything sits under one roof.

That continuity matters when the tax and regulatory environment is getting more demanding.

A portfolio buyer can also make decisions based on the performance of the entire portfolio rather than becoming fixated on one property. If one property has a temporary void, income from the others continues. If one requires maintenance, the investor is not completely dependent on that single asset for cash flow. If refinancing opportunities arise, there is also more flexibility around how debt is structured across the portfolio.

We always build portfolios around sustainable leverage and realistic figures. We do not push the idea that every penny needs to be refinanced out before the next purchase, and we do not sell fantasy “all money out” strategies that depend on inflated valuations.

Boring and calculated is better.

For many of our long-term investors, the objective is simple: build a collection of properly developed, professionally managed HMO properties that generate meaningful NET income year after year.

Capital Gains Tax Is the Big Question for 28 October

The biggest unknown for property investors going into the October Budget is arguably Capital Gains Tax.

As things currently stand, the applicable CGT rates for individuals are 18% and 24%, depending on the individual’s taxable income and gains.

Nothing announced at this stage has changed those rates for landlords disposing of investment property.

There is, however, active discussion around CGT ahead of the Budget. Recent reporting has suggested ministers are considering options that could bring Capital Gains Tax rates closer to Income Tax rates, although no final measure has been announced.

That distinction is important when reading pre-Budget coverage.

18% and 24% are current rates. A future increase is speculation until the Chancellor announces otherwise.

If CGT were increased, the effect would naturally be most relevant to investors selling assets with substantial taxable gains. The precise impact would depend on what was changed, when it took effect, the investor’s circumstances, available allowances and the ownership structure.

From an investment strategy perspective, it would also place more attention on the difference between buying property predominantly to sell for capital appreciation and buying assets primarily for long-term income.

Our HMO strategy has never depended on constantly trading properties.

We develop substantial 5-bedroom/5-bathroom and 6-bedroom/6-bathroom professional HMOs, predominantly across South Yorkshire, where the investment is built around sustainable rental income, sensible leverage where used, tenant demand and long-term ownership.

We want an HMO to work because people actually want to live in it and because its operating numbers make sense. Not because somebody has put an aggressive future sales value into a spreadsheet.

Why Long-Term NET Income Matters More

There has been a strange habit within property investment marketing of treating the exit value as though it is guaranteed.

Buy for this. Refurbish for that. Apparently it will be worth a huge number afterwards. Refinance everything out. Repeat forever.

Property does not work like that.

A RICS valuer does not care what somebody’s investment brochure says the GDV should be. Banks do not lend based on an optimistic spreadsheet produced by a sourcing agent. Rental markets also have ceilings, which is why buying the cheapest possible house in an already saturated area and converting it into an HMO does not automatically make it a good investment.

Our approach is intentionally much more conservative.

We have spent more than 34 years developing property, have completed more than 450 HMO developments, and our management operation deals with around 600 tenants every month. We develop in areas where we understand actual rents, tenant demand, property values, management requirements and what professional tenants expect from their accommodation.

Every HMO investment we develop undergoes a substantial back-to-brick refurbishment. They are not cosmetic conversions.

Our team handles the acquisition, architectural work, planning where required, structural work, refurbishment, furnishing, licensing, compliance and ongoing management. All bedrooms are ensuite, rooms are designed considerably beyond simply chasing minimum standards, and properties are selected with factors such as gardens, parking and access to employment locations in mind.

The refurbishment is also protected by our Price Lock Promise, so an investor is not given one attractive development budget at the beginning and a very different bill halfway through construction.

That is the sort of detail that matters even more when taxation rises.

If the government takes another two percentage points from personally received property income, the answer is not to pretend tax does not exist. It is to make sure the underlying investment is strong enough in the first place.

Our Team Helps Investors Deal With the Practical Side of These Changes

One of the biggest problems with modern property investment is that investors are expected to coordinate far too many moving parts themselves.

Tax rules change. HMO licensing requirements need to be monitored. Management legislation evolves. Refinancing needs to be structured properly. Properties require maintenance, inspections and compliance work. Valuations need supporting evidence. Tenants need managing. Accounts need accurate records.

For somebody with a demanding career, a business or a family, that can become a second job very quickly.

Our fully managed property investment service is specifically designed to remove as much of that burden as possible.

We do not simply source a property and disappear once the investor has purchased it. Our in-house team remains involved throughout the entire lifecycle of the investment.

Our acquisition team identifies the property. Our architects, planning team, structural engineers, quantity surveyors and project managers handle the development stage. Our refurbishment teams carry out the back-to-brick conversion. Our lettings and management operation handles tenant finding, rent collection, inspections and day-to-day management. Our maintenance team deals with repairs, while our accounts and compliance teams keep the operational side of the property organised.

Where an issue falls outside our professional remit, such as an investor’s personal tax position, we help make sure they understand what needs to be considered and work alongside their solicitor, accountant or financial adviser rather than leaving them to work everything out alone.

The same applies to refinancing and portfolio planning.

We support investors with the information required for valuations, provide comparable evidence where appropriate and help them understand the practical implications of financing decisions. We will always encourage sensible leverage rather than pushing an investor into borrowing simply because a spreadsheet says they technically can.

That is what fully managed should actually mean.

Not just collecting the rent.

What About a Wealth Tax?

This belongs firmly in the unconfirmed category.

There has been public discussion around the possibility of additional wealth taxation ahead of the Budget, but that does not mean a new wealth tax is definitely coming on 28 October.

There are numerous possible structures such a tax could take, enormous practical questions around valuations and exemptions, and debate over how much revenue it could realistically raise. Until the Budget is delivered, landlords should treat claims that a particular wealth tax is definitely being introduced with caution.

There is enough confirmed legislation for investors to plan around without pretending speculation is policy.

The So-Called Mansion Tax Could Change

There is one existing property measure that is receiving more immediate attention.

The 2025 Budget introduced what is formally known as the High Value Council Tax Surcharge, applying from April 2028 to owners of residential properties in England worth £2 million or more.

Recent reports suggest the government is considering lowering that starting threshold to £1.5 million, although no final decision has been announced.

For most of the HMO properties we develop across South Yorkshire, this particular debate has very little direct relevance.

Our strategy does not involve buying £2 million houses in central London and hoping values continue rising.

A large part of the attraction of areas such as Doncaster and the wider South Yorkshire market has always been the relationship between acquisition cost and achievable professional rental income. Investors can own substantial income-producing property without requiring the extraordinary entry prices seen across many parts of London and the South East.

Stamp Duty Looks Less Likely to Be Rewritten in October

There has also been considerable discussion about replacing Stamp Duty and Council Tax with a completely different property taxation system.

As things stand, additional residential property purchases remain subject to the existing higher-rate Stamp Duty regime unless the Chancellor announces otherwise.

With our development model, one relevant point is that the investor purchases the original residential shell separately from the subsequent refurbishment contract. Stamp Duty is calculated on the property transaction itself rather than simply applying to an imagined finished development cost.

As always, investors should have their solicitor and tax adviser confirm the SDLT treatment applicable to their individual transaction.

Property Investment in 2027 Needs to Be Run Properly

The direction of travel is difficult to ignore.

Landlords face higher property Income Tax rates from April 2027. More landlords will enter Making Tax Digital. Income Tax thresholds remain frozen. Regulation and management requirements continue to increase. There is also the possibility of further taxation being announced at the October Budget.

Our response to that is not that property investment suddenly stops working.

It means poor property investment becomes even harder to justify.

A marginal single let producing a weak NET return does not become better because somebody bought it cheaply. An HMO in an oversaturated area does not suddenly gain tenants because its purchase price looked attractive. A development sold using an unrealistic future valuation does not become safer because the spreadsheet shows an enormous theoretical refinance figure.

When margins come under pressure, the quality of the underlying asset and management operation becomes more important.

That is why we continue to concentrate on professional HMOs in areas of South Yorkshire where we have decades of operating experience, rather than chasing whatever city happens to be fashionable among sourcing agents that year.

We do not develop HMOs in Manchester, Liverpool or the North East simply because everybody else appears to be selling them there. High competition and cheap housing stock do not automatically produce good investments.

We would rather be boring and calculated.

Limited Company or Personal Ownership?

The new property income rates will inevitably lead to more discussion about limited companies.

From April 2027, the separate 22%, 42% and 47% property Income Tax rates apply to individuals, rather than profits earned inside limited companies.

That makes ownership structure an increasingly relevant calculation, but there is no universal answer.

Corporation Tax, dividend taxation, mortgage pricing, existing capital gains, Stamp Duty, estate planning and whether income needs to be extracted from the company can all affect the calculation.

Anybody telling every landlord that they categorically “need a limited company” without examining those circumstances is oversimplifying the issue.

Many of our HMO investors do purchase through limited companies, while others have different ownership arrangements. We develop and manage the property. The investor’s accountant and solicitor should advise on how they should own it.

Our role is to make the property side as straightforward as possible while making sure investors are aware of the issues that need professional attention.

That means helping them understand the numbers, providing accurate development costs, explaining how the management model works, supplying information required by their advisers, supporting refinancing and maintaining the asset properly once it is operational.

It is a very different service from being handed a deal pack and being left to sort everything else out yourself.

The 28 October Budget Could Change Things. The Fundamentals Do Not.

We will know the Chancellor’s actual decisions on 28 October 2026.

Until then, landlords should distinguish between what is already law, what has been formally announced for future implementation and what somebody has speculated may appear in the Budget.

The property income changes are known. The Making Tax Digital expansion is known. Frozen thresholds are known.

A further Capital Gains Tax increase is not currently confirmed. A new wealth tax is not currently confirmed. A £1.5 million threshold for the High Value Council Tax Surcharge is being discussed, but it has not yet replaced the existing £2 million starting point.

Whatever happens in October, our approach to property investment remains the same as it has throughout more than 34 years of developing property.

Buy in locations supported by genuine demand. Use realistic valuations. Calculate returns using proper operating costs rather than inflated gross yields. Do not over-leverage. Develop the property properly in the first place, then manage it properly afterwards.

For investors building portfolios, that approach becomes even more valuable. A properly planned portfolio gives greater income diversification, more refinancing flexibility and less reliance on the performance of a single asset. When it is built using conservative figures and managed under one roof, it can also become far easier to operate than a collection of unrelated properties bought through different agents and managed by different companies.

Our fully managed HMO investments are developed completely in house, from the original residential shell through a substantial back-to-brick refurbishment and into licensing, tenant acquisition, compliance, inspections, maintenance and ongoing management.

We only manage the HMOs we develop because accountability should sit under one roof.

For investors looking for fully managed HMO investments with NET yields typically above 9%, rather than investments sold on attractive-looking gross figures, our current HMO opportunities can be viewed at:

www.footforwardproperties.co.uk/hmo-for-sale

Tax rules depend on individual circumstances and can change. Foot Forward Property Investments Ltd does not provide tax advice. Investors should obtain advice from an appropriately qualified accountant or tax adviser before making decisions about ownership structures, taxation or property disposals.