Landlord Tax Changes in 2027: What Surrey Property Owners Should Consider

Wed 04 Nov 2026

Shirley Moralee, Lettings Manager

For many landlords, property has always been about more than an investment. It may provide a regular income in retirement, supplement a pension or represent an asset intended to support the family in later life. With further changes to the taxation of rental income approaching in April 2027, now is a sensible time to review how well that investment is working. Recent research highlighted by wealth manager Rathbones suggests that retired landlords, particularly those owning just one or two properties, could be among those most affected. However, whether you own a single buy-to-let property in East Horsley or a larger portfolio across Surrey, the important question is not simply how much more tax you might pay, but what you can do to protect the long-term performance of your investment.

What is changing for landlords in April 2027?

Following the October 2026 Budget, the Government announced a further increase in the tax rates applying to property income. From 6 April 2027, the proposed rates for individuals receiving taxable rental income in England will be:

• Basic rate: 24%, currently 20%

• Higher rate: 44%, currently 40%

• Additional rate: 49%, currently 45%

These increases reflect changes announced across two successive Budgets, bringing the total rise to four percentage points. The new rates apply to taxable property income rather than simply the total rent collected. Individual circumstances, allowable expenses and other sources of income will influence the amount of tax payable. Landlords who own property through limited companies are subject to different taxation arrangements.

Why retired landlords may feel the impact

According to research highlighted by Rathbones, 31% of private landlords surveyed in England are small-scale retired landlords, typically owning one or two rental properties. For some, the rental income provides an important supplement to their pension. Others may have inherited a property or retained a former family home as a long-term investment. In areas such as East Horsley, West Horsley, Ripley and the surrounding Surrey villages, residential property can represent a substantial asset. However, a property's capital value does not necessarily reflect the income available to its owner each month. Once maintenance, insurance, management costs, taxation and occasional periods without a tenant are taken into account, the actual return can be considerably different from the headline rental income. Rathbones has illustrated how higher taxation could accumulate over time, particularly for landlords who depend on rental income throughout retirement. While the figures will vary significantly between individual properties, they reinforce the importance of understanding the net income an investment produces.

Should landlords increase the rent to offset higher tax?

It is understandable that landlords facing additional costs may consider reviewing the rent. However, the Renters' Rights Act has changed how rent increases must be implemented. For most private assured periodic tenancies in England, landlords must use the statutory Section 13 procedure, generally giving at least two months' notice. Rent increases are normally limited to once every 12 months. Tenants also have the right to challenge a proposed increase through the First-tier Tribunal, which assesses the property's market rental value. An increase in a landlord's tax liability does not automatically justify a corresponding increase in rent. This makes accurate rental valuations, supported by evidence of comparable properties and recently achieved rents, particularly important.

 

Five practical steps Surrey landlords can take

Although landlords cannot avoid legitimate tax liabilities, there are sensible ways to review the performance of a rental investment.

1. Review your current rental income

When was your property's rental value last assessed? Long-standing tenancies can sometimes mean rents have fallen behind current market levels. Equally, some properties may already be achieving an appropriate rent. An evidence-based rental assessment can help establish whether an increase is reasonable and legally supportable.

2. Understand your actual return

Gross rental income is only part of the picture. Consider the annual cost of insurance, repairs, maintenance, management, finance and periods when the property is unoccupied. Your accountant can then help you understand the effect of taxation and any available allowances or reliefs. The objective is to establish what the property genuinely contributes to your finances.

3. Plan maintenance rather than postpone it

Reducing expenditure may seem an obvious response to higher taxation, but delaying essential maintenance can prove expensive. Regular property inspections and planned repairs can help prevent relatively minor issues developing into substantial costs. A well-maintained property is also more likely to attract and retain suitable tenants, supporting its long-term rental performance.

4. Minimise avoidable vacant periods

Even a short period without rental income can affect the annual return from a property. Good communication, appropriate marketing and careful planning when a tenancy is ending can help reduce unnecessary delays between tenancies. For landlords relying on rental income to supplement retirement, consistency can be just as important as achieving the highest possible monthly rent.

5. Review your longer-term property plans

Perhaps the most important consideration is whether your property still meets your financial and personal objectives. For some landlords, retaining a well-performing rental property may continue to provide valuable income and long-term capital growth potential. Others may wish to consider whether their investment remains suitable as retirement approaches or circumstances change. Selling is not necessarily the answer. Any decision should take account of the property's current value, rental performance, potential tax liabilities and future plans. Before making changes to ownership arrangements or deciding to sell, independent financial and tax advice is essential.

The value of experienced local property advice

Taxation is only one part of successful property investment. Understanding the local rental market, maintaining the property, managing tenancies effectively and keeping accurate records all contribute to its long-term performance. For landlords who have owned their properties for many years, it can be particularly useful to reassess rental values and market conditions rather than relying on historic expectations. At Wills & Smerdon, we have been advising property owners across Surrey since 1933. Our experienced sales and lettings teams understand both the local property market and the practical considerations involved in managing residential investments.

Looking ahead to April 2027

The forthcoming landlord tax changes will affect individual property owners differently. For some, the additional liability may be relatively modest. For others, particularly those relying on rental income in retirement, it could prompt a broader review of their financial arrangements. The important thing is not to make hasty decisions based on headlines. Understanding your property's current performance, reviewing its rental value and seeking appropriate professional advice will put you in a better position to make informed choices. If you would like to discuss the rental or sales value of your Surrey property, or explore your longer-term property plans, the Wills & Smerdon team would be pleased to help.

Call us on 01483 284 141.

This article provides general information and does not constitute individual tax, financial or legal advice. Landlords should consult an appropriately qualified adviser before making financial or taxation decisions.