The Budget 2026: What landlords, property investors and homeowners need to know.

This insight explains the key property-related measures announced in Budget 2026 and what they mean for Cambridge landlords, property investors, homeowners and first-time buyers. Topics include higher rental income tax rates, Making Tax Digital, landlord registration, first-time buyer support, inheritance tax changes and new charges for high-value homes.

The Budget strapline is “breathing space” and a £100 payment for households in council tax bands A-D certainly grabbed the headlines, so much so that the Gov.uk website to check your tax band crashed.

Technically, this is a one-off “household energy payment” rather than a council tax refund, and it is due to reach eligible households in England from January 2027. The other constituent nations of the UK have also been given the funding to follow suit.

However, for the Cambridge property market, the longer-term impact of Budget 2026 is likely to come from elsewhere. Higher rental income tax rates, expanding Making Tax Digital requirements, landlord registration obligations, changes affecting first-time buyers and further reforms to property taxation could have a significant effect on landlords, developers, investors and homeowners across Cambridgeshire.

Annual energy bills are also expected to rise by 16% from January 2027 when the energy price cap next increases, meaning the one-off payment may be outweighed by higher household costs.

Beyond the headline announcement, the Budget continues a trend of increasing taxation and compliance requirements for property owners, alongside the administrative reforms already being introduced.

Here is what landlords, investors, developers and homeowners need to consider.

How the Budget changes rental income tax for landlords

For landlords holding property in their personal names, Budget 2026 introduces a significant increase in rental income tax rates from April 2027.

Before the Budget we already knew that savings and property rental income tax rates were set to increase by 2%. However, the Government has doubled this increase to 4%.

Property income tax rates from April 2027 will therefore be:

• Basic rate: 24%
• Higher rate: 44%
• Additional rate: 49%

These rates apply to rental properties held personally rather than through a company structure.

A landlord with £20,000 of taxable rental profit falling wholly within the higher-rate band would pay £800 more annually than at the current 40% rate, before considering finance-cost relief implications. More on this to follow.

In Cambridge, where strong rental demand continues to be driven by the University of Cambridge, Addenbrooke’s Hospital, The Biomedical Campus, research institutions and a growing technology sector, landlords may seek to offset some of these additional costs through rent increases. Or indeed we may see more property put on the market. Nevertheless, profitability and cash flow will come under increased pressure for many investors.

Making Tax Digital (MTD): more reporting

Making Tax Digital (MTD) for income tax was announced many years ago. Despite some delays and inevitable teething issues, this is now operational, having started for some landlords from April 2026. Its ever-expanding reach deserves attention and a recap. As above, the following applies to landlords owning property in their personal names. There are currently no changes to corporation tax reporting for companies holding rental properties. 

The reach of MTD is being phased in and will apply if qualifying income is over:

• From April 2026 – £50,000 per annum
• From April 2027 – £30,000 per annum
• From April 2026 – £20,000 per annum

The above thresholds are based on combined gross property and self-employment income. This is income before expenses, rather than profit. Those affected need to submit quarterly updates to HMRC, along with a year-end final declaration, which replaces the traditional self-assessment tax return. MTD reporting requires digital records, needing to be submitted from compatible software. Landlords will therefore likely need to start using accounting software to record their property income & expenses throughout the year.

The Budget also provides greater clarity on penalties for non-compliance.

Those entering MTD from April 2026 benefit from a temporary “soft landing” period, meaning late quarterly submissions during 2026/27 do not trigger penalty points.

However, this concession will not continue beyond the current tax year.

From April 2027, a points-based penalty system will apply, with repeated late submissions resulting in a £200 financial penalty once the relevant threshold is reached.

A similar one-year soft landing will be available to landlords joining the regime from April 2027.

New Landlord Registration Rules in England

Landlords will face another compliance requirement through England’s rental property registration scheme.

The rollout begins in December 2026, with registration for landlords in the East of England running between 15 January and 14 April 2027.

Private landlords must register themselves and their rental properties, paying a £65 annual fee per property.

While letting agents may assist with administration, legal responsibility for compliance remains with the landlord.

For landlords with larger portfolios across Cambridge and the surrounding region, these additional costs and administrative requirements should be factored into future profitability calculations.

As rental income tax rates increase, many landlords are asking whether a company structure is now more tax efficient. In addition, greater administration costs for landlords make reviewing rental cash flow increasingly important.

These pressures, alongside tightening of regulations, are making landlords reconsider their position and whether even if it continues to be worthwhile. There are concerns too that this will pass onto renters by way of increased rent rates.

For newly acquired rental properties, company ownership has become increasingly common.

. There are many landlords considering whether they can move existing property investments into companies too. A company pays corporation tax rather than the new personal property rates and can generally deduct qualifying borrowing costs, subject to relevant restrictions.

Retaining profits for reinvestment can therefore be attractive. However moving existing properties into a company can trigger:

• Capital gains tax
• Stamp Duty Land Tax (SDLT)
• Mortgage refinancing costs
• Additional legal and administrative expenses

Companies also have their own reporting obligations, with annual accounts and corporation tax returns.
Given the combination of tax increases and growing regulation, many landlords are reassessing whether property investment remains worthwhile and, if so, what ownership structure best supports their long-term objectives.

What the Budget 2026 means for first-time buyers: Support returns

The Budget 2026 includes measures designed to support first-time buyers back into the housing market.

The new Your First Home scheme will support eligible first-time buyers purchasing new-build homes in England, combining a deposit of at least 2.5% with a 20% government equity loan, interest-free for five years. Applications are expected from February 2027, subject to income and local price caps. It could help buyers and new-build sales, although the equity loan must be repaid and is not a grant.

Separately, a new First Time Buyer ISA is expected to launch from April 2029, replacing the Lifetime ISA for new savers.

The new ISA is proposed to offer:

• Annual contributions of up to £4,000
• A 25% government bonus
• A maximum bonus of £20,000
• A £450,000 property purchase limit

Existing Lifetime ISA holders can continue with their arrangements.

In addition, from 29 October 2026, the Lifetime ISA withdrawal charge for otherwise eligible first-home purchases above £450,000 reduces from 25% to 20%, removing the effective penalty on personal savings while still recovering the government bonus.

These changes may be particularly relevant in Cambridge, where property prices frequently exceed national averages and existing support thresholds have often limited the usefulness of first-time buyer incentives.

High-value homes: An additional ownership cost

Owners of higher-value homes will face an additional annual charge from April 2028.

The previously announced High Value Council Tax Surcharge will apply to residential properties in England valued at £2 million or more using 2026 valuations.

Annual charges will range from:

• £2,500
• Up to £7,500 depending on value

The surcharge will be payable in addition to standard council tax.

The Budget provides further detail around deferral provisions and introduces a 100% premium for substantially unfurnished properties that remain unoccupied for at least twelve months.

The measure may have a greater impact in Cambridge and South Cambridgeshire than in many other parts of the UK, given the concentration of high-value residential properties in certain areas.

Property owners should review valuations, eligibility for reliefs and future holding costs.

Inheritance Tax changes for property held in pensions

Another previously announced measure remains highly relevant for commercial property owners.

From 6 April 2027, most unused pension funds and death benefits will form part of the inheritance tax calculation.

This has particular implications for SIPPs and SSASs that hold commercial property.

A key concern is liquidity. Property assets may have substantial value but often generate insufficient cash to settle an inheritance tax liability without a sale or other funding arrangements.

The changes do not automatically mean inheritance tax applies to every pension arrangement. Exemptions, beneficiary circumstances and the broader estate position all remain important.

Nevertheless, pension holders should review valuations, cash reserves and succession arrangements with their advisers.

SDLT group relief: Review reorganisations now

Property groups planning restructures should review SDLT arrangements carefully.

For transactions effective from 29 October 2026, changes to SDLT group relief narrow the winding-up exception to clawback provisions.

Where the exception applies, a subsequent change in control of the purchasing company within three years of the original transfer may result in relief being withdrawn.

Property groups considering reorganisations, liquidations or future disposals should seek specialist advice before proceeding.

What you should do next

Whether you’re a landlord, property investor, developer or homeowner in Cambridge and the surrounding region, now is the time to review your position. Contact PEM’s property tax team to understand how Budget 2026 could affect your finances and help you plan ahead with confidence

The Budget 2026 Property FAQs

Yes. Rental income tax rates for property held in personal ownership will increase from April 2027, rising to 44% for higher-rate taxpayers and 49% for additional-rate taxpayers.

Yes. MTD for Income Tax is being phased in for landlords whose combined gross property and self-employment income exceeds the relevant thresholds, starting from £50,000 and eventually extending to £20,000.

Not necessarily. Company ownership can offer tax advantages and broader finance-cost relief, but transferring existing properties may trigger capital gains tax, SDLT and refinancing costs.

The Government plans to introduce the Your First Home equity loan scheme and a new First Time Buyer ISA. Existing Lifetime ISA holders will also benefit from changes to withdrawal charge rules in certain circumstances.

Potentially. The surcharge applies to residential properties valued at £2 million or more and may affect a number of property owners in Cambridge and South Cambridgeshire.