Rents across Great Britain have reached new highs this autumn, yet many landlords are feeling squeezed. Higher mortgage rates, a confirmed tax rise and new compliance obligations are all arriving at once. Here’s a clear look at the numbers and what they mean for your portfolio.
Rents are at record levels
Rightmove’s latest rental report shows average advertised rents outside London have passed £1,400 a month for the first time, reaching £1,418. In London, the average has hit a record £2,825, with annual growth accelerating to 3.2%.
The driver is supply. Nationally, available rental homes are down 2% on a year ago, while tenant demand has dipped by a similar amount, creating a more balanced market than in recent years. London is the exception: available stock in the capital has fallen 9% and new listings are down 7%, while tenant demand has risen 6%.
Rightmove also found that the share of rental homes that were previously listed for sale has fallen from 17% to 15%, a sign that fewer new landlords are entering the market. Meanwhile, the share of homes for sale that were previously rented has stayed stable at around 13%. In short, landlords aren’t leaving in a rush, but fewer are arriving. For existing landlords with well-presented homes, that means demand from good tenants remains strong.
Yields are improving
There is good news for investors. With rents rising and house prices broadly flat, rental yields have improved. Savills reports that landlord caution has constrained supply, especially at the lower end of the market, where competition between tenants has supported rental growth. For landlords looking to buy, a sales market with more stock and fewer buyers also means more room to negotiate on price.
The cost side of the equation
Mortgages. Buy-to-let borrowers have been caught up in the same rate rises as homeowners, driven by the conflict in the Middle East. There are some encouraging signs: lenders including HSBC, Santander and Shawbrook have trimmed selected buy-to-let rates this month. If your fixed rate ends within the next six months, speak to a mortgage broker now, as many lenders let you secure a deal well in advance.
Tax. From 6 April 2027, landlords who own property in their own name will pay income tax on rental profits at 22%, 42% and 47%, two percentage points above the standard rates, in England, Wales and Northern Ireland. This is already law under the Finance Act 2026 and doesn’t depend on next week’s Budget.
Landlords who own through a limited company aren’t affected by this particular change.
To put that in context, on £10,000 of annual rental profit the extra two percentage points add £200 a year to your tax bill. Relief for mortgage interest will also be given at the new 22% rate, so the real impact depends on how your portfolio is financed. It’s well worth modelling now, while there is still time to plan.
Making Tax Digital. Landlords with qualifying income above £50,000 have been keeping digital records and filing quarterly updates since April 2026. The threshold falls to £30,000 from April 2027 and £20,000 from April 2028. If your gross rental income is above £30,000, now is the time to choose compatible software.
Compliance. The new PRS Database will add £65 per property per year for landlords in England, rolling out region by region from 15 December 2026.
What to watch at the Budget
The Autumn Budget on 28 October may bring further changes. Commentators have highlighted capital gains tax, the ‘mansion tax’ threshold and National Insurance on rental income as areas to watch, though none have been confirmed. The sensible approach is to plan around what is already law and treat everything else as speculation until the Chancellor sets it out.
Sell, hold or grow?
For most landlords, the answer won’t be dramatic. A recent Property118 landlord survey found a clear divide: almost 40% of landlords planning to leave the sector said repealing the Renters’ Rights Act would be the main thing to tempt them back, compared with just 14% of landlords who are still buying. That split reflects a wider trend. The rental market is professionalising, and landlords who run their property like a business, with up-to-date compliance, realistic rents and good tenant relationships, are well placed to benefit from strong demand.
A useful next step is a property-by-property review. Compare your current rent with today’s local market rent, note when each mortgage deal ends, check your compliance status and model the impact of the 2027 tax change on your net return. Some properties will be worth keeping, some worth improving, and some may make more sense to sell.
Speak to your local branch for a free rental valuation and portfolio review, and we’ll help you work out the right strategy for each property. For tax planning, we always recommend taking advice from a qualified accountant.
