This article is less than a year old
From 6 April 2027, landlords in England, Wales and Northern Ireland will pay more income tax on their rental profits: 24%, 44% or 49%, depending on their tax band. That is 4 percentage points more than today. It comes six months after the Renters' Rights Act changed the way a rented home can be sold. If you are thinking of selling, here is what has changed, what has not, and how to avoid being left with an empty property you cannot re-let.
What the Budget changed for landlords
The Budget on 28 October 2026 set separate income tax rates for rental income. They apply in England, Wales and Northern Ireland from the 2027 to 2028 tax year, which starts on 6 April 2027. Scotland will set its own rates. Landlords who own through a limited company pay corporation tax instead, so the new rates do not apply to them. The previous Budget had already planned a rise of 2 percentage points. This one doubles it.
| Tax band | Tax rate on rental income now | Tax rate from 6 April 2027 |
|---|---|---|
| Basic rate | 20% | 24% |
| Higher rate | 40% | 44% |
| Additional rate | 45% | 49% |
Source: HMRC, Income Tax: changes to tax rates for property and savings income, published 29 October 2026.
In plain numbers, £10,000 of taxable rental profit costs a basic rate landlord £2,400 a year in tax instead of £2,000. A higher rate landlord pays £4,400 instead of £4,000. Tax relief on mortgage interest is given at the basic rate for property income, so it is expected to rise to 24% as well. That softens the change for landlords with a mortgage, but higher rate landlords still pay 44% while getting relief at only 24%. Ask your accountant to run your own figures.
More paperwork arrives at the same time. Making Tax Digital for Income Tax means keeping digital records and sending HMRC an update every quarter. Since April 2026 it has applied to landlords with income over £50,000 (rent plus any self-employed income, before expenses). From April 2027 that figure drops to £30,000, and from April 2028 to £20,000, so many more landlords will have to do it.
What the Budget did not change matters just as much. Capital gains tax on residential property stays at 18% and 24%, and stamp duty rates are unchanged. So there is no tax deadline that forces a sale before April 2027: the rise is on the rent you receive, not on the sale itself. The real question is whether the rent will still be worth it once the new rates apply.
Selling a rented home under the Renters' Rights Act
In England, the Renters' Rights Act came into force on 1 May 2026. Section 21 "no fault" notices have gone, and tenancies now roll on with no fixed end date. A landlord who wants the property empty to sell it has to use a new ground for possession, known as Ground 1A.
- Four months' notice. You must give the tenant four months' notice that you intend to sell.
- Not in the first year. The date in the notice cannot fall within the first 12 months of the tenancy.
- A court order if the tenant stays. If the tenant has not left when the notice ends, you have to apply to the court for possession, which takes more time.
- No re-letting for a year. Once you have used Ground 1A, you cannot re-let the property, or advertise it to let, until 12 months after the date in the notice. Counted from the day you serve notice, that is around 16 months. Breaking the rule can lead to a fine of up to £40,000.
Our guide to selling a tenanted property explains Ground 1A in more detail.
The new risk: an empty property that does not sell
In July 2026, the estate agent Hamptons looked at what happened to the homes landlords put up for sale in 2025. More than half of them (51%) failed to sell, rising to 60% for flats. Under the old rules, a landlord whose sale fell through could simply find a new tenant. A landlord who has used Ground 1A cannot.
Hamptons estimated that, had the re-letting ban applied in 2025, between 80,000 and 100,000 unsold rental homes would have been barred from the rental market for a year. Its head of research, Aneisha Beveridge, said selling "has become a more complicated proposition for landlords". She pointed to "the prospect of being left with an empty property that can't easily return to the rental market".
An empty property still costs money. The mortgage, council tax, insurance and upkeep all carry on, with no rent coming in. That is why how you sell now matters as much as whether you sell.
Two ways to sell at auction
There are two ways to sell a rented property, and auction suits both.
1. Sell with the tenant in place
You do not need to serve notice. The tenancy carries on, the rent keeps coming in, and the buyer takes over as landlord on completion. The property is never left empty.
Your buyers are investors, and they are still buying. In June 2026, Hamptons found that, for the first time since 2019, landlords bought a bigger share of homes than they put up for sale. They bought 10.2% of the homes sold that month, while 9.2% of the homes listed for sale had previously been let.
Investors price on rental yield, so a tenanted home usually sells for less than it would empty. How much less depends on the property. A flat in a strong rental area with a good tenant may sell for close to its empty value. A family house in an area where most buyers want a home to live in is likely to sell for noticeably less. Our guide explains how tenanted property is priced.
Auction suits a tenanted sale. Investors already follow the auction catalogues. The legal pack, including the tenancy agreement and rent details, is published before the sale. And an unconditional sale is binding when the hammer falls.
2. Sell with vacant possession
An empty home can be sold to people buying a home to live in (owner-occupiers) as well as to investors, which usually means a higher price. The risk is the gap: four months' notice, sometimes a court order, and then a sale that might not happen.
If you go this way, use the notice period to get ready, so the sale happens soon after the property is empty.
- Get an auction appraisal before you serve notice. Then you know the likely price both ways.
- Ask a solicitor to prepare the legal pack during the notice period. A pack that is ready means no time lost later.
- Book an auction date for after the tenant is due to leave. Auctioneers usually need a freehold house entered about four weeks before auction day, and a leasehold flat about five to eight weeks before.
- Choose an unconditional auction. The buyer exchanges contracts and pays a deposit on the day (usually 10%, or 5% at an extended auction), and completion follows about 28 days later.
Leave some margin. If the tenant needs longer to move out, or you need a court order, an auction date set for the day the notice ends will be too early.
Once the hammer falls at an unconditional auction, the sale is legally binding. There is no chain to collapse and no mortgage offer to fall through. A realistic reserve price gives the property its best chance of selling on the day.
If an estate agent has suggested the modern method of auction, be aware of its limitations. It is a conditional auction, so it does not give you the same certainty as an unconditional auction. The buyer pays a reservation fee and can still walk away before exchange, which brings back the risk of an empty property that has not sold. Our guide to unconditional and conditional auctions explains the difference.
Five questions to answer before you decide
- Will the rent still cover your costs after April 2027? Work out your profit after tax at the new rate, including your mortgage costs.
- How long has the tenancy been running? Ground 1A cannot be used in the first 12 months, which affects when the property could be empty.
- Would an investor buy it with the tenant in place? A good tenant paying a fair market rent makes a property easier to sell as an investment.
- Is it a flat? Hamptons found that 60% of the flats landlords listed in 2025 failed to sell, so the way you sell matters even more.
- How much capital gains tax will you owe? Gains on residential property are taxed at 18% or 24%, after a £3,000 annual allowance. The tax must be reported and paid within 60 days of completion.
An accountant can answer the tax questions. We can help with the property ones, including what the property is likely to fetch with the tenant in place and empty.
Next steps
Thinking of selling a rented property? Our free auction appraisal tells you what it is likely to fetch, both with the tenant in place and empty. Then you can compare the two before you serve any notice. Or call us on 0800 862 0206.
