The Autumn Budget brought a number of announcements that will directly affect the private rented sector over the next two years. Some changes take effect immediately, while others are planned for 2026 and 2027. Below is a simple breakdown of what landlords and tenants need to be aware of and how these changes are likely to impact the rental market.

1. Tax on Rental Income is Increasing (April 2027)

From April 2027 the tax rates applied to property income will increase by two percentage points. This means:

• Basic rate on rental income will rise from 20% to 22%
• Higher rate from 40% to 42%
• Additional rate from 45% to 47%

The Government has positioned this as a “fairness” measure because rental income does not attract National Insurance, while employment income does.

What this means in practice:

• Landlords will pay more tax on rental profits
• Those already affected by the mortgage interest restrictions may feel additional pressure
• Some may choose to increase rents where legally permitted to offset higher tax bills
• Others may exit the market, reducing supply and putting more pressure on demand

2. Renters’ Rights Act: Stronger Protections for Tenants and Stricter Rules for Rent Increases

Although not new in this Budget, the Government reiterated that the Renters’ Rights Act remains its central housing reform and will start to take effect from May 2026.

Key changes include:

• Longer Section 13 notice periods for rent increases
• Rent rises must reflect evidence of the local market, not arbitrary figures
• Tenants will have stronger rights to challenge unfair increases at the First-tier Tribunal
• New enforcement pathways for local authorities
• No cap on rent rises, but the fairness test will be applied more strictly

This is one of the most significant shifts in rent regulation we have seen in years.

3. Local Housing Allowance (LHA): No Further Budget Uplift

LHA will remain aligned to the 30th percentile of local rents, with no additional uplift announced.

Impact:

• Many tenants claiming housing support may continue to face shortfalls
• Councils will likely see further pressure on homelessness services
• Landlords may continue to experience delays or difficulties where tenants rely on benefits to meet full rent

4. More Funding for Council Enforcement

The Budget included additional money for local authorities, which will directly influence how private rented homes are monitored and enforced.

Councils are expected to increase:

• Damp and mould inspections
• Enforcement under Awaab’s Law
• Checks carried out under the Housing Health and Safety Rating System (HHSRS)
• Proactive investigations into poor-quality accommodation

For compliant landlords this will mean more accountability across the sector. For non-compliant landlords it means greater risks of notices, enforcement action and fines.

5. Planning Reform and New Housing Supply

The Government also confirmed fresh investment in planning departments to speed up approvals for new housing. This includes:

• Hiring additional planning officers
• Funding to reduce backlogs
• A commitment to accelerate the delivery of new homes

While this will not provide immediate relief, increasing supply is essential if we are to improve availability and stabilise rents in the longer term.

6. Investment in Social Housing

Further funding was confirmed for repairing and building social housing. This is intended to reduce reliance on the private rented sector for households with low incomes or high support needs.

In time, this may ease pressure on the bottom end of the private market, though the impact will be gradual.

Summary

The Budget confirms tighter regulation, higher tax burdens and more council intervention in the private rented sector. Tenants will see stronger rights when it comes to rent increases and property standards. Landlords will be operating under closer scrutiny and increased costs, particularly from 2027 onwards.

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