13/08/2026
From 2027, you'll be able to lose money on a rental property and still get a tax bill saying you made a profit.
That's not a glitch. That's the system. And the people who pay for it aren't landlords. They're tenants.
Here's how we got here, because almost nobody paying for it knows.
First, Section 24. A landlord takes ÂŁ1,000 in rent, ÂŁ500 goes straight out on mortgage interest. Their real income is the ÂŁ500 left.
Every business is taxed on what's left after costs. A shop deducts its rent. A haulier deducts his diesel. Profit, not turnover.
Not landlords. Since 2017, Section 24 says they can't count the mortgage interest as a cost. They're taxed on the full ÂŁ1,000, including the ÂŁ500 that paid the bank it's interest and never reached them. Tax on money they never had.
Now add 2027. Property income gets its own tax rates, 2% higher than other income.
The government's reason?
Rental income is "passive." Not earned. Not work.
Tell that to any landlord who manages their own properties. The repairs, the contractor-chasing, the gas certificates, the licensing, the EPCs, the deposit protection, the ombudsman scheme, the landlord database, the Renters' Rights Act compliance.
A blizzard of paperwork, most of it added by the same government now calling the income "passive."
That's not passive. It's a second job. One the state makes harder every year, right until it decides the income isn't really earned.
Stack the two together. Taxed on money that went to the bank, at a higher rate, because the work supposedly isn't work.
In a high-interest year, a landlord can be genuinely out of pocket and still owe HMRC a bill on it.
Tax on a loss. No other line of work in this country lets the state do that.
And step back, because it's bigger than one bill. We're told to tax wealth, not work. But the real engine of inequality is capital sitting idle, hoarded, waiting to be worth more.
Housing a person in a building you actively run is the opposite of idle. That's capital doing a job.
Owning an asset and running it isn't hoarding. Leaving it empty and betting on the price is. Yet we tax the productive kind until it quits, and leave the idle money alone.
So every landlord eventually asks: why bother? Or sell up and put the money somewhere truly passive. An index fund. A savings account.
Something that houses nobody, needs no 11pm phone call, and gets taxed more kindly than the "passive" income that was actually a second job.
That's the con. A tax sold as fairness to workers does the opposite. It drives money out of useful work and into genuine idleness. And every landlord who makes that switch takes a home off the market.
Supply drops, rents rise, and the tenant this was meant to protect pays again.
This is why Point 3 of my Build Don't Blame manifesto exists. Tax the work of housing people as the real work it is, on real profit, not invented profit.
Get incentives flowing toward homes, not away from them.
Tax it like work, and homes stay in the market. Tax it as if it were idle, and it becomes idle, sitting in a savings account, with the tenant left looking for somewhere to live.
