If any sector has endured a succession of unwelcome and challenging tax and regulatory changes, it is residential property. Healey’s recent Budget dealt another blow.

From April 2027, the basic, higher and additional rates of income tax on property income, as well as savings, rise to 24%, 44% and 49% respectively. That amounts to a four-percentage-point increase compared with the rates which applied before the changes announced across two successive Budgets; two percentage points in this Budget, but arriving next April, at the same time as the two-percentage-point increase announced at last year’s Budget is due to come into force.

Discussing this subject at a recent roundtable, we found that the investment market isn’t necessarily contracting, it is changing shape.

“It wouldn’t be a Budget, would it, without further tax on landlords”

Observed Douglas Lloyd, Associate Director and Head of Lettings at Finders Keepers in Oxford.

The direct cost is modest, however: four extra percentage points on £10,000 of taxable rental profit is £400 a year, assuming the income falls wholly within the relevant band. That stings, but it won’t make a profitable investment unviable on its own.

Nevertheless, landlords don’t view it in isolation. Higher borrowing costs, restricted mortgage interest relief, Making Tax Digital, changing energy efficiency expectations and the Renters’ Rights Act have changed what owning a rental property feels like.

Lloyd points out that for some established investors, another tax rise is just one more reason to reconsider. It isn’t really about whether this extra tax is enough to derail a landlord’s investment or hugely affect their return. It is about the prevailing sentiment around investing in and letting out properties.

Corporate landlords and build-to-rent schemes are becoming more common, but on that front, Lloyd offers some insight at a local level. Government policy may increasingly favour these large, institutional build-to-rent providers over traditional private landlords, but Oxfordshire offers few opportunities for this sort of large-scale institutional development to replace the number of smaller landlords leaving the market. The result is strong demand, too little supply and upward pressure on rents.

Mary West of The Money Consultancy highlighted the lending side of the coin. Buy-to-let lending has become increasingly restrictive, particularly for higher-rate taxpayers, whose expected rental income is now considered within lenders’ stress testing. Where investors might once have expected to borrow 75% of a property’s value, many now encounter limits nearer 50–60%. For landlords coming off a previous very low 5-year fixed-rate mortgage, refinancing on worse terms can be the deciding factor in whether they stay in the market or sell their interests.

On the other hand, Tara Minoli-Taylor, Sales Manager at Finders Keepers, offered an interesting counterpoint. She described a shifting but continuing market, especially for lower-value investment properties in Oxfordshire locations such as Banbury and Witney, and therefore not always in Oxford itself.

She has recently been involved in several transactions where younger investment buyers, most often buying through limited companies, had acquired properties below £200,000 with tenants already in place. For the buyer, that brings immediate and predictable rental income and avoids the uncertainty of finding a new tenant.

Established landlords may be reconsidering, but Minoli-Taylor points to a different generation of investors who appear to be not only entering the market, but doing so under a different guise than landlords in the past – in other words, under a more deliberately structured investment model, frequently using limited companies from the outset.

A wider discussion around incorporation naturally developed. Here at Shaw Gibbs, we have also seen a considerable jump in enquiries from landlords considering company ownership. Nevertheless, as I cautioned the room, we shouldn’t think of ownership restructuring as being an automatic fix.

Moving an established portfolio into a company can trigger significant Capital Gains Tax and Stamp Duty Land Tax, on top of financing costs and tax on extracted profits. For some landlords, the figures simply don’t stack up; for others, particularly those buying new with a long-term plan, purchasing and holding through a company may make sense.

That said, some investors are looking elsewhere altogether.

Jon Silversides of Carter Jonas reported more residential investors considering commercial assets as an alternative, which might be harder to find and manage but offer long-term capital growth.

Andy Wise of Wise Business Finance supported this view, offering examples of investors converting smaller, redundant commercial premises into mixed-use development, using the example of now-vacant former betting shops within local shopping parades; clients of his are converting these to office space on the ground floor, with flats above, sometimes even building into the eaves to maximise the return on investment.

On balance, this does not point to a simple exodus. Some landlords are selling, even as some others are incorporating; others – new and old – are buying with tenants in place, and yet others are turning to different assets.