Landlord tax rise 2027: rental yields in England & Wales as property income rates go to 24%, 44% and 49%
Budget 2026 raises the income tax rates on rental profits from April 2027. Before costs and tax, the median estimated gross rental yield across 316 local authorities in England & Wales is 4.36%. Where yields sit, and what the change does and does not alter.
By GableIndex team · 2026-10-29 · Data as of ONS Price Index of Private Rents, July 2026, and HM Land Registry Price Paid Data, Aug 2025–Jul 2026; tax rates as published with Budget 2026 on 28 Oct 2026
The short version: from 6 April 2027, property income in England, Wales and Northern Ireland will be taxed at its own rates: 24% basic, 44% higher and 49% additional. In the 2026 to 2027 tax year, rental profits are taxed at the main rates of 20%, 40% and 45%, so the new rates are 4 percentage points higher. On our data, the median estimated gross rental yield across 316 local authorities in England & Wales is 4.36%, ranging from 2.99% in Powys to 7.07% in Newcastle upon Tyne. The tax applies to profit, not to gross rent, so these yields do not change on the day; what changes is how much of each pound of profit is left after income tax.
Estimated gross rental yield, GableIndex calculation from ONS private rents and HM Land Registry prices paid; before costs, taxes and vacancy.
What the Budget changed
Budget 2025 created separate property rates of income tax for 2027 to 2028. Finance Act 2026 set them at 22%, 42% and 47% (section 7). Budget 2026 adds a further 2 points: the government's overview of tax legislation and rates says the property basic, higher and additional rates will be 24%, 44% and 49%, legislated in Finance Bill 2026-27. The rates apply in England, Wales and Northern Ireland; the devolved governments of Scotland and Wales can set property income rates in line with their existing income tax powers.
The arithmetic on £1,000 of taxable property profit, at each rate:
| Band | 2026 to 2027 (main rates) | 2027 to 2028, as legislated in Finance Act 2026 | 2027 to 2028, after Budget 2026 |
|---|---|---|---|
| Basic | £200 | £220 | £240 |
| Higher | £400 | £420 | £440 |
| Additional | £450 | £470 | £490 |
Rate × £1,000. Simplified: ignores allowances, band boundaries, relief for finance costs and individual circumstances. Rates from Annex A: rates and allowances.
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Where gross yields sit before the change
Our estimates divide a year of the ONS average private rent for each local authority (July 2026) by the median price paid there in the 12 months to July 2026. Eight of the 316 local authorities are at 6% or above; 15 are below 3.5%.
| Local authority | Rent, £/month | Median price, £ | Est. gross yield |
|---|---|---|---|
| Newcastle upon Tyne | 1,207 | 205,000 | 7.07% |
| Bristol | 1,880 | 352,000 | 6.41% |
| Portsmouth | 1,367 | 260,000 | 6.31% |
| Manchester | 1,365 | 260,000 | 6.30% |
| Liverpool | 909 | 190,000 | 5.74% |
| Birmingham | 1,093 | 240,000 | 5.47% |
| Leeds | 1,140 | 250,000 | 5.47% |
| Cardiff | 1,169 | 270,000 | 5.20% |
| Westminster | 3,179 | 800,000 | 4.77% |
| Median, 316 local authorities | 4.36% | ||
| Mole Valley | 1,548 | 580,000 | 3.20% |
| Derbyshire Dales | 810 | 320,000 | 3.04% |
| Powys | 622 | 250,000 | 2.99% |
Source: ONS Price Index of Private Rents, July 2026 (OGL v3.0); HM Land Registry Price Paid Data, Aug 2025–Jul 2026 (OGL v3.0); GableIndex calculation. Full ranking: rental yields in England & Wales.
Across the 32 London boroughs on our table, the median estimate is 4.61%, slightly above the England & Wales median: London rents are high, but so are prices.
Worked example
Birmingham: £1,093 × 12 = £13,116 of rent a year. £13,116 ÷ £240,000 ≈ 5.47%. Letting and management fees, repairs, insurance, mortgage costs, empty months and then income tax on the remaining profit all come out of that. For a basic-rate taxpayer, each £1,000 of that taxable profit carries £200 of income tax in 2026 to 2027 and £240 from April 2027.
Context
The Office for Budget Responsibility's Economic and fiscal outlook, October 2026 says the 2-point increase comes on top of the 2-point increase announced at Budget 2025, that both take effect from April 2027 and that together they "represent a material reduction in returns to private landlords". It adds that the measures "risk leading to a steady rise in rents", through fewer new landlords and through costs passed on to renters over the long run. That is the OBR's assessment; our figures cannot test it yet.
On X, reaction since the Budget has been largely negative from landlords and property commentators, with many posts expecting higher rents, and some posts pointing out that the main rates of income tax, National Insurance and VAT did not rise.
What the numbers don't tell you
- Gross, not net. A gross yield is rent over price. It leaves out every cost and all tax, which is exactly where the Budget change lands.
- Who pays which rate. The new rates apply to individuals' property income. Landlords who hold property through a company pay corporation tax instead, and each person's band depends on their total income.
- Different measures. ONS rents are averages across private rents in the area, not just new lets; HM Land Registry prices are medians of all recorded sales. They don't describe the same homes.
- Timing. Our rents are for July 2026 and our prices for the 12 months to July 2026. Any effect of the Budget on rents or prices is not in these figures.
- Coverage. Scotland and Northern Ireland are not on our England & Wales table.
Sources: Office for National Statistics licensed under the Open Government Licence v.3.0 (Price Index of Private Rents, July 2026). Contains HM Land Registry data © Crown copyright and database right 2021. This data is licensed under the Open Government Licence v3.0 (Price Paid Data, Aug 2025–Jul 2026); modified by GableIndex. HM Treasury, Budget 2026 overview of tax legislation and rates (28 Oct 2026). Finance Act 2026, section 7 (legislation.gov.uk). OBR, Economic and fiscal outlook, October 2026.
See also: Rental yields in England & Wales · Cheapest and most expensive places to rent · England & Wales house prices by district · Highest rental yields in Europe · Methodology · All articles
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Figures are a snapshot and will change. Information only. Not financial, investment, tax or legal advice.