UK Landlords and Tax: how policymakers have tightened the screws since 2010

The United Kingdom’s private rented sector (PRS) has changed dramatically over the past 15–20 years. In the early 2010s, the system favoured small, individual landlords with generous allowances and minimal regulation. Today those same landlords face heavier taxation and stricter rules while the government promotes larger institutional operators. This article charts the policy changes since 2010, explains who introduced them and why, and examines how the reforms, coupled with the Renters’ Reform Bill and its successor, the Renters’ Rights Bill, are pushing small landlords out of the market. A case study illustrates how much more tax a landlord could pay today compared with 2014 and what could happen if National Insurance contributions are applied to rental income.

1. Timeline of major tax changes affecting landlords

Year	Chancellor	Key Measure	Summary	Impact on Landlords
2010–15	George Osborne	Corporation tax cuts	Rate reduced from 28 % to 20 %	Lower taxes for incorporated landlords
2015	George Osborne	Section 24 (mortgage interest relief)	Phased out interest deduction; introduced 20 % tax credit	Increased taxable profits
2016	George Osborne	Wear and tear allowance ended	Replaced the 10 % allowance with actual replacement cost relief	Loss of flat deduction
2016	George Osborne	SDLT surcharge	Added 3 % stamp duty on additional homes	Raised purchase costs
2016	George Osborne	CGT changes	Residential property gains taxed at 18 %/28 % while other assets at 10 %/20 %	Reduced attractiveness of property
2020	Rishi Sunak	Section 24 fully implemented	No interest deduction; full credit applies	Full effect on taxable income
2023	Jeremy Hunt	CGT rate cut	Reduced higher rate on residential property from 28 % to 24 %	Slightly lower capital gains tax
2025 (proposed)	Rachel Reeves	National Insurance on rental income	Possible 8 % levy on rental profits	Further tax burden if implemented

Before 2010 the tax environment was relatively benign. Mortgage interest was fully deductible, furnished landlords enjoyed a 10 % wear‑and‑tear allowance, and capital gains from the sale of former homes benefited from generous final‑period exemptions. Few major reforms targeted buy‑to‑let investors, although personal allowances and basic rate limits increased gradually. The financial crisis of 2008–09 depressed property prices, allowing some landlords to acquire homes cheaply and benefit from rising values in the 2010s.

2. The shrinking of the private landlord share

The UK private rented sector is dominated by individual landlords. Reports suggest private landlords make up around 84 % of the rental market. The English Private Landlord Survey 2024 shows that the sector housed 19 % of English households and that the number of households in the PRS increased by 52 % between 2008–09 and 2023–24, from 3.1 million to 4.7 million households.

Despite its size, the survey found that 31 % of landlords (representing 39 % of tenancies) planned to reduce the number of properties they let in the next two years, with 16 % intending to sell all their rental properties. Over half of those planning to reduce expected to exit completely. The most common reasons were recent tax and legislative changes, forthcoming legislative changes, and investment viability concerns such as rising interest rates. Many landlords also expressed high levels of concern about proposed future legislation.

Growth of institutional landlords

While small landlords are retreating, institutional investors are expanding through build‑to‑rent (BTR) developments. British Property Federation data shows that as of mid‑2025 there were about 132,000 completed BTR homes, more than 51,000 under construction and roughly 110,000 in planning, giving a total pipeline of nearly 293,000 units. Completions grew strongly while starts fell, so the number under construction declined. About 87 % of the pipeline consists of multifamily flats and 13 % single‑family homes. These numbers are tiny compared with the estimated 4.7 million households in the PRS, meaning institutional landlords still control only around 3 % of rented homes. However, the pipeline is growing fast, and government ministers have indicated that large, professionally managed blocks are easier to regulate and may offer greater security for tenants.

3. The Renters’ (Reform/Rights) Bills – beyond tax

Both the Renters’ Reform Bill (Conservative) and the Renters’ Rights Bill (Labour) promise to end so‑called “no‑fault” evictions (section 21) and replace fixed‑term tenancies with periodic ones. They introduce a private rented sector landlord ombudsman and a property portal to ensure all landlords meet minimum standards. The Labour bill goes further by including the commendable and vital Awaab’s law (requiring landlords to fix serious hazards quickly), prohibiting discrimination against tenants on benefits, ending rental bidding, and capping rent increases to once per year with a right to challenge.

For landlords, the shift to periodic tenancies removes the certainty of fixed terms and makes it harder to regain possession quickly. The threat of additional regulation is cited as a key reason many plan to exit the sector. Tenants benefit from improved security, but they also face a shrinking supply of homes and also lose the guarantee of a fixed term. This is often overlooked. It will also detrimentally affect students unless legislation addresses this.

4. Proposed National Insurance on rental income

In August 2025 news outlets reported that Labour Chancellor Rachel Reeves was considering levying National Insurance contributions on rental income. Officials suggested that an 8 % NI rate could raise about £2 billion. Landlord groups estimated that the measure could raise around £2.3 billion from roughly 2.2 million landlords who earned £27 billion in rental income in 2022/23. Currently landlords pay income tax on rent but no National Insurance. The proposal has not been formally adopted, but the mere suggestion caused uproar among landlord organisations, who warn it would drive rents higher and further accelerate landlord exits.

5. Case study: how much tax could a landlord pay then and now?

Consider a landlord in England who owns one property generating £4,000 per month in rent (£48,000 annually). They have £12,000 of mortgage interest, £5,000 of repairs and running costs, and pay £2,000 replacing furniture and appliances each year. We compare their tax position in 2014/15 (before Section 24) with 2025/26 (after Section 24 is fully phased in). We also show the effect if an 8 % National Insurance contribution is applied to rental profits above the personal allowance. For simplicity, we assume the landlord has no other income and stays within the basic rate band.

Year	Taxable Profit Calculation	Income Tax	Tax Credit	Potential NI (8 %)
2014/15	£48 k rent − £12 k interest − £5 k repairs − £4.8 k wear and tear = £26.2 k taxable	20 % of £16.2 k (after allowance) = £3,240	Not applicable	Not applicable
2025/26	£48 k rent − £5 k repairs − £2 k replacements = £41 k taxable	20 % of £28.43 k = £5,686	20 % of £12 k interest = £2,400 credit	£2,274 extra if NI applies

Observations

• Higher taxable profit: Because mortgage interest is no longer deductible, the taxable profit rises from £26,200 to £41,000 even though actual profit (after finance costs) barely changes. This pushes some landlords into the higher‑rate tax band.

• Section 24 “tax credit” only helps basic‑rate taxpayers: The 20 % tax credit exactly offsets the basic rate for interest, but high‑rate taxpayers suffer because they pay 40 % tax and still only receive a 20 % credit.

• Potential National Insurance would materially increase the tax burden: In this case the landlord would pay an additional £2,274 of NI, raising their tax liability by almost 70 %. For a higher‑rate taxpayer with other income, the combined income tax, Section 24 restriction and NI could push their effective tax rate on rental profits above 60 %.

• Wear and tear vs replacement relief: The shift from a flat 10 % allowance to actual replacement relief means the landlord in 2025 must show receipts (in this example £2,000). If their furnishing replacement costs are lower than 10 % of rent, they lose relief compared with 2014.

6. Discussion: Is government pushing out private landlords?

From 2010 onwards, successive chancellors, primarily George Osborne and Rishi Sunak, and now potentially Rachel Reeves, have steadily increased the tax burden on individual landlords. The removal of mortgage interest relief (Section 24), higher stamp duty on second homes, restrictions on capital gains tax reliefs and looming energy‑efficiency costs all make buy‑to‑let less profitable. Surveys suggest tax and legislative changes are the primary reasons landlords plan to sell. Meanwhile, the government encourages build‑to‑rent developments, where big investors can absorb compliance costs more easily and deliver thousands of homes at scale.

Politically, there is an undercurrent of “demonisation” of private landlords. Ministers often portray them as speculators pushing up house prices, while renters struggle with affordability. The Renters’ Reform and Rights Bills respond to legitimate problems, such as insecurity of tenure and poor property standards, but they also increase the obligations on landlords and remove key flexibilities like fixed‑term tenancies. If the proposed National Insurance levy is adopted, it would cement the message that rental income should be taxed like employment income. Landlords argue that such measures ignore the risks they take and the capital they tie up in housing. The fact that private landlords still dominate the market suggests that disincentivising them could create a housing supply crunch long before institutional investors can fill the gap.

The consequence of all this has been a reduction in the number of private landlords and a growing build‑to‑rent sector, which the state views as easier to regulate. Yet with private landlords still dominating the market, any further tax hikes risk reducing supply, pushing up rents and harming the very tenants the reforms aim to protect.