How the Autumn Budget May Drive Rental Prices Higher

If you are a landlord planning your rental strategy for 2026, then you will be looking at how to cope with the rising costs you face, both as a result of the Renters’ Rights Act – the first phase of which comes into force from May 1 next year  – and the longer-term impact of many of the measures announced in the Autumn Budget. 

For some of you it could be the last straw, providing further fuel to a decision to leave the market. Others will be factoring it into 2026 rental increases, particularly given the new controls that will be in place from May 1, which means that tenants will face increased rental bills next year. 

How property income tax rate increases will impact rents

The most direct impact on rental costs will be from the increase in levels of property income tax rates, which will now operate at bands of 22% at the basic rate, 42% at the higher rate and 47% for the additional rate. This will come into effect from April 2027. Meanwhile, a two percentage point rise in dividend income tax rates on the ordinary and upper rate will be applicable from April 2026 for landlords who take their income that way.

Such an increase in costs wasn’t a complete surprise, however. Before the budget, it had been widely speculated that National Insurance would be applied to rental income as one of Chancellor Rachel Reeves’ moneymaking tactics. Instead, she acknowledged in her budget speech that these changes reflected that income from such sources doesn’t face the equivalent of National Insurance paid by employees. The property income tax grab is also likely to cost landlords less than a National Insurance charge on their rental income would have. 

The impact of frozen income tax thresholds


A three-year extension to the freezing of income tax thresholds, due to have expired in 2028 but now frozen until 2031, will force further price rises as landlords face the catch-22 situation of rental income pulling them into higher income tax brackets and paying more. 

Mansion tax at the higher end of the market 

Meanwhile, if you are a landlord at the top of the market you will be hit by the new mansion tax, a surcharge to the council tax payment already due each year. This will cost an additional £2,500 for properties above £2 million, rising to £7,500 a year on homes worth more than £5 million from April 2028. 

Rent rises are inevitable 

Rent rises are inevitable as landlords look to absorb the added costs of both the budget and the Renters’ Rights Act but bear in mind that costs are increasing for tenants too. Affordability will remain key, especially as rental arrears limits increase as part of the new act. In addition, the tighter rent controls in force from May 1, will mean that setting a rent that is demonstrably comparable to the rest of your local market will also be vital since no rental bidding will be allowed and rents can only subsequently be increased once a year. Tenants will also have greater powers to object. 

With all this in mind reviewing your rental prices over the next few months and factoring in the increased costs you face will be essential. For additional help in setting a rent that suits the market speak to your local agent today. 

For more information on how we can assist you on your lettings journey, please contact one of our branches in Seaford, Peacehaven, and Newhaven areas. If you would like further guidance on any part of the sales process, get in touch with us today.