Buy-to-let landlords in England are facing a new long-term cost calculation after wealth management group Rathbones quantified the impact of recent income tax rises on rental income, according to analysis reported by Property Wire. The firm's projections show that a London landlord could pay nearly £36,000 in additional tax over 25 years, with smaller but still material increases facing landlords across every English region.
The analysis follows Chancellor John Healey's Budget decision to raise income tax on rental earnings by 2 percentage points from April, lifting the basic rate to 24%, the higher rate to 44%, and the additional rate to 49%. Healey defended the move as targeting asset holders rather than wage earners, according to Property Wire's reporting. For landlords already navigating a tightening regulatory environment, the tax change adds a further, compounding cost to hold property over the long term.
What Rathbones Calculated
Rathbones based its projections on current average rents across English regions, assuming 2% annual rental income growth, Property Wire reported. For a London landlord, the firm calculated the additional tax burden at £1,122 in the first year, rising to £12,288 over a decade and to almost £36,000 across 25 years. These figures represent the incremental cost of the new rates compared with the previous tax regime, not the landlord's total tax liability.
The regional spread is wide. Using average private rents by region, Rathbones found the first-year increase ranges from approximately £380 in the North East to £1,122 in London. Over 25 years, additional tax payments range from more than £12,000 in the North East to almost £36,000 in the capital — a gap of roughly three times between the lowest and highest-rent regions.
Source: Rathbones analysis as reported by Property Wire.
Why the Figures Matter Beyond Headline Tax Rates
The 2-percentage-point rate rise sounds modest in isolation, but Rathbones' compounding model illustrates why landlords should evaluate cumulative exposure rather than annual cost alone. A London landlord absorbing just over £1,100 in year one sees that figure multiply more than tenfold by year 25, driven by the combination of a higher effective rate and rising rental income over time. WPF analysis suggests this compounding effect is likely to weigh most heavily on landlords who had planned to hold property as a long-term, buy-and-hold asset rather than those with shorter investment horizons.
Charlie Newsome, Senior Investment Director at Rathbones, said: "The landlord squeeze is tightening from all directions and, for some, the sums simply no longer stack up. With more than 150 pieces of lettings legislation estimated to navigate alongside rising tax and costs, being a landlord has become increasingly demanding." Newsome indicated that some clients are now considering reducing their portfolios or exiting the market entirely, according to Property Wire.
Implications for Overseas and International Landlords
Property Wire's reporting does not specify whether Rathbones' projections apply differently to UK resident versus overseas landlords, and the source does not break out figures by ownership structure or investor nationality. WPF analysis notes that international investors holding UK rental property through individual ownership are generally subject to the same income tax bands on UK rental income regardless of tax residency, though the source provided here does not confirm specific treatment for non-resident landlords under the new rates.
For investors who hold UK property as one part of a globally diversified portfolio, the tax change adds to an existing set of considerations around currency exposure and relative asset performance. Investors weighing UK buy-to-let against property or other assets abroad may find it useful to review how currency movements affect net returns, covered in WPF's guide to currency risk in international property investment, alongside a broader comparison of property against other asset classes at Global Property vs Other Asset Classes.
Due Diligence Questions for Current and Prospective Landlords
Landlords evaluating whether to hold, sell, or restructure a UK buy-to-let portfolio following this tax change should seek clarity on several points before acting. First, how does the new rate structure interact with existing mortgage interest relief rules and any allowable expense deductions specific to an individual's portfolio size and structure? Second, does holding property through a limited company rather than personal ownership change the effective tax exposure under the new rates, and what are the costs of restructuring at this stage? Third, what is the realistic timeline and cost of exiting a portfolio in the current market, including any capital gains tax implications on disposal?
Property Wire's reporting does not address these structural questions directly, and the Rathbones figures are projections based on average rents and an assumed 2% annual growth rate rather than a guarantee of actual future liability. Landlords should treat the £36,000 figure as an illustrative long-term scenario rather than a precise forecast for any individual portfolio, since actual rental growth, vacancy periods, and future tax policy changes could all move the real figure higher or lower.
Limitations of the Analysis and What to Watch Next
The Rathbones projections rest on an assumed 2% annual rental growth rate over 25 years, a long window over which actual market conditions, future government policy, and individual landlord circumstances could diverge substantially from the model. Property Wire's reporting does not disclose further methodological detail, such as whether the calculations account for inflation-adjusted figures or assume a constant property within a single ownership structure throughout the period.
The next developments worth tracking are the April implementation of the new rates, any further guidance from HM Revenue & Customs on how the changes interact with existing landlord tax reliefs, and whether Rathbones' warning of portfolio consolidation materialises in wider market data on landlord sales. Newsome also warned of knock-on effects for renters, saying: "If landlords sell up or feed higher costs through into rents, aspiring homeowners could find themselves paying more each month while having even less left over to save for a deposit." Whether that dynamic plays out will depend on how many landlords actually exit versus simply absorb the cost.
Alternative Strategies for Internationally Mobile Investors
For investors who hold UK rental property primarily as part of a residency or investment diversification strategy rather than for UK-specific reasons, the rising cost of UK buy-to-let ownership may prompt a broader review of where capital is allocated. Some globally mobile investors compare long-term rental property holding against residency or citizenship-linked investment routes in other jurisdictions, where the WPF encyclopedia's comparison of Caribbean vs European Golden Visa programmes outlines the trade-off between faster citizenship timelines and the longer path to EU access. This is a structural comparison rather than a direct response to the UK tax change, but it is a relevant reference point for investors reassessing a UK-weighted property allocation. Broader context on global property investment options is available via WPF's Golden Visa Programmes hub and Global Property Markets coverage.
WPF analysis emphasizes that any decision to exit UK buy-to-let in favour of an alternative jurisdiction should weigh tax treatment, currency risk, and liquidity differences carefully rather than reacting solely to a single tax announcement. The Rathbones figures quantify a real and growing cost for UK landlords, but they do not, on their own, establish that alternative markets offer superior net returns once local taxes, fees, and currency movements are factored in.