Landlords: Do recent tax and legal changes mean I should sell my property?
Which tax changes affect residential landlords?
Over the last decade, changes to tax rules have affected landlords significantly. From the 3% stamp duty land tax (SDLT) surcharge applied to individuals who own two or more ‘dwellings’, which began in 2016 (which has now risen to 5%), to the start of Making Tax Digital (MTD) for income tax landlords on 6th April 2026, landlords have had to deal with a lot of change.
Are there any differences for the devolved nations?
SDLT applies only to England and Northern Ireland. In Wales, Land Transaction Tax replaced SDLT from 1st April 2018 and includes higher rates for second and subsequent homes, and in Scotland, Land and Buildings Transaction Tax replaced SDLT from 2015. with the Additional Dwelling Supplement (ADS) also payable when buying an additional ‘dwelling’ if you are not also selling your current home e.g. second homes or rental properties.
In Wales, Multiple Dwelling Relief (MDR for LTT) is available for those buying a dwelling containing multiple homes.
| Tax changes affecting landlords | |||
| Tax affected | Nation | The change | Date |
| Income Tax | All (with different rates in Scotland) | Relief on mortgage interest replaced with 20% tax reducer | April 2020 |
| CGT | All | Top rate for property gains reduced to 24% | 6th April 2024 |
| SDLT | England, Northern Ireland | Multiple Dwelling Relief abolished | 1st June |
| SDLT | England, Northern Ireland | 5% surcharge if two or more properties owned | 30th October 2024 |
| ADS | Scotland | Increase to 8% | 5th December 2024 |
| LTT | Wales | 1% rise | 11th December 2024 |
| MDR for LTT | Wales | Cannot claim MDR for LTT if paying LTT at the homebuyer rate | 7th February 2025 |
| FHL | All | FHL scheme abolished | April 2025 |
| Income Tax | All | Making Tax Digital for income tax begins | From 6th April 2026, income dependent |
What changes to the law will affect residential landlords?
The Renters Rights Act (RRA) was passed in October 2025 and is Government legislation primarily affecting England. It is one of the biggest changes to the law surrounding the landlord-tenant relationship in England for decades. The changes brought in by the RRA have started to take effect, with more changes due to begin on 1st May 2026. The rental discrimination sections of the RRA will also apply in Wales and Scotland. Northern Ireland passed its own legislation, the Private Tenancies Act (NI) 2022 which applies from April 2023, and includes similar provisions to the RRA.
The table below sets out the key changes brought in by the RRA:
| Renters Rights Bill summary | ||
| Area affected | The change | Start date |
| No fault (Section 21) evictions | Abolished | 1st May 2026 |
| Rent increases | Tenant can appeal over-market rate rent increases | 1st May 2026 |
| Ombudsman | Role and powers created | Due 2028 |
| Private rental database | Mandatory registration for landlords | Due late 2026 |
| Pets | Landlord must give good reason to refuse | 1st May 2026 |
| Decent Homes Standard | Applied to private rental homes | From 2035 |
| ‘Awaab’s Law’ | Obligation to fix hazards quickly |
Social landlords from 27th October 2025; private landlords TBC |
| Benefits | Landlords cannot discriminate against tenants who receive housing benefit | 1st May 2026 |
| Children | Landlords cannot discriminate against tenants with children | 1st May 2026 |
| Enforcement | Local authority enforcement strengthened | 1st May 2026 |
| Rent repayment orders | Higher penalties | 1st May 2026 |
What do these tax and legal changes mean for me?
These changes affect landlords differently depending on several factors:
- Geography – where are your properties located? The buying and rental markets show regional differences. House price trends are negative in East Anglia and the South West but positive in the North West and Northern Ireland. Rental demand is rising and supply falling nationally to create a significant mismatch, pushing up rents. The RICS survey for May 2025 is here.
- Lifestyle needs – are you nearing retirement? Do you need capital appreciation or regular income from your investments at present? The admin and regulatory burden of MTD for income tax and the RRA obligations may be less palatable if you are only planning to run your business for a few more years.
- Other business interests – do you have a diversified investment portfolio or is residential property your sole interest? You may wish to sell some property to diversify your investments if the tax and legal changes for landlords put a dent in your profits.
- Effect of interest rates – landlords who cash-buy new properties are less at the mercy of fluctuating interest rates. Interest rates are falling after a period of increases, so the cost of mortgage borrowing should reduce over the short to medium term. Bank of England data is found here.
Is now a good time to sell my properties?
Pros
- CGT – the top rate has gone down to 24%, but this may not be for long, as the Chancellor looks for ways to raise revenue and keep within her fiscal rules
- RRA – avoid the potential time and cost of implementing the extra landlord obligations by selling up before it becomes law.
- MTD for income tax – streamlining your portfolio could reduce the time spent on MTD admin.
Cons
- Rental demand high – as more landlords exit the market, rental demand and rents are up, meaning you could miss out on a lucrative period for landlords
- Interest rates falling – if you typically mortgage each new property, falling interest rates should mean reduced cost of borrowing and increased profits
- Loss of income stream – few other investments give the steady income stream of rental properties
- House prices falling - you may not receive the best price for your property
Could I run my property business in a more tax efficient way?
Incorporating your rental property portfolio to form a private limited company may make it more tax efficient. For more details, please click here.
Pros
- Increased loan interest relief – corporate landlord businesses can deduct all their loan interest when calculating corporation tax (unlike sole traders who can only claim a 20% tax reducer).
- Potentially lower capital gains tax – gains made from selling property are taxed to corporation tax rather than CGT. If your property business has profits of less than £250,000 annually, corporation tax on gains may be lower than the CGT equivalent.
Cons
- More admin and reporting – the burdens are far higher for limited companies than sole traders, such as drawing up and filing financial statements, and the recent changes to Companies House requirements.
- Annual Tax on Enveloped Dwellings (ATED) – for properties not currently rented out on a commercial basis or let to family members or other people connected to you or another director only, dwellings worth more than £500,000 are taxed under ATED annually on their value, starting at an annual charge of £4,600 and must be revalued every five years.
- 17% SDLT rate – unless exemptions apply, companies may have to pay the 17% of SDLT on properties costing more than £500,000.
Are there any alternatives to selling my properties or incorporating my business?
If moving away from property or forming a private limited company are not right for you, there are other options. Streamlining your portfolio to keep only your best performing properties could free up capital to invest in more profitable units.
Alternatively, you may wish to retain some of your portfolio and begin to invest in other types of assets to diversify your portfolio.
How can TaxAssist Accountants help?
TaxAssist Accountants has a wealth of experience dealing with landlords. Contact us today on 020 3859 0575 or use our online form to arrange a free, initial consultation.
Last updated: 8th April 2026