Property Tax Changes: What They Mean for Property Investors in 2026

Table of Contents

• Property Tax Changes and the Incoming Prime Minister
• The Proposed Capital Gains Tax Increase
• Why This Creates an Opportunity for Investors
• Scrapping Council Tax and Stamp Duty
• What It Could Mean for Rents and Tenants
• Landlords Are Already Selling
• Frequently Asked Questions

The UK is heading for a change of Prime Minister, and with it a wave of possible property tax changes. Andy Burnham is the frontrunner to succeed Keir Starmer as the next Prime Minister. Several tax ideas are already on the table, and some could affect your portfolio directly. The most important for investors is a proposed rise in capital gains tax. There is also a plan to scrap council tax and stamp duty in favour of a proportional property tax. In this article, Simon Zutshi explains what these property tax changes could mean for your buy-to-let investments. He also explains why the months ahead may hand prepared investors a rare chance to buy from motivated sellers.

Property Tax Changes and the Incoming Prime Minister

Andy Burnham is on course to become the UK's next Prime Minister. He recently returned to Parliament and is the frontrunner to replace Keir Starmer as Labour leader. A change at the top usually brings a change in policy, and tax is high on the agenda.

Simon has invested in property for over 31 years and has taught investors for 23 years. In that time he has seen the market boom, crash and correct. He has also watched governments of both colours intervene in the housing market again and again. His view is that this constant intervention distorts the market. Some of the proposed tax changes now on the table could have a real impact, but they also create opportunities.

Key takeaway: A new government means new tax proposals. Several property tax changes are on the table, and prepared investors can turn the uncertainty to their advantage.

The Proposed Capital Gains Tax Increase

You pay capital gains tax when you sell an asset that is not your main home. That includes shares, a business, or an investment property. You pay tax on the gain, not the whole sale price. If you buy for £200,000 and sell for £400,000, you pay tax on the £200,000 gain, less any allowable costs and improvements. Your own home is currently exempt.

What Could Change

Right now, capital gains tax on property runs at 18% and 24%, depending on your income tax band. There has been discussion about raising these rates to match income tax, so 20%, 40% and 45%. This idea was first floated by Rachel Reeves in her 2024 budget, and it caused many landlords to worry. The next budget is due in October 2026. A government can change tax rates quickly, sometimes overnight. To stop people rushing to sell, the government could bring a rise in with little warning.

The Idea of a Higher Income Tax Rate

Another idea on the table is raising the top rate of income tax from 45% to 50%. The government tried a 50p rate once before, in the early 2010s. It raised less than hoped and was later reversed, so it may not return. If it did, some high earners might choose to leave the UK. That would reduce the tax the country collects, because top earners contribute a large share of the total.

Key takeaway: Capital gains tax on property currently sits at 18% and 24%. A proposed rise to income tax levels could arrive at the next budget, possibly overnight.

Why This Creates an Opportunity for Investors

Here is where the opportunity lies. The worry about a higher capital gains tax bill is already prompting some landlords to think about selling. Many would rather sell now than risk paying more tax later. Some may even accept a discount, because that discount could be smaller than the extra tax they would face.

The Catch Is Timing

To beat a possible budget change, the sale needs to complete before the budget, expected in October 2026. That is a tight window. A standard mortgage purchase can be slow, which makes it hard to move in time. But there are faster routes:

• Vendor finance, where the seller helps fund the purchase, so you may not need a conventional mortgage
• Creative strategies that let a deal complete in weeks rather than months
• Being ready to act fast, with your finance and power team already in place

Simon believes strategies like vendor finance will be powerful in the run-up to the budget. They let you secure a discounted property from a motivated seller without the delay of a standard mortgage.

Key takeaway: A possible capital gains tax rise is creating motivated sellers. Buyers who can complete quickly, often using vendor finance, may secure real discounts before the budget.

Join Simon's Live Webinar on the Tax Changes

Simon is running a live webinar on the proposed tax changes, what they could mean for the property market, and how to benefit by buying from motivated landlords before the next budget. There is not enough time to cover it all in a short video, so join him live to get the full picture and see how to act while the window is open.

Register for the Webinar

Scrapping Council Tax and Stamp Duty

The second big idea is to scrap council tax and stamp duty, and replace them with a proportional property tax. This comes from a campaign called Fairer Share, which argues the current system is unfair. Simon agrees the present system is not ideal, but he is not convinced this is the right fix.

How the Proposal Works

Under the proposal, the charge would depend on the value of the property each year:

• Homeowners would pay 0.48% of their property's value every year
• Second homeowners and property investors would pay 0.98%
• The plan removes council tax, and stamp duty for homeowners

There is also a question mark over stamp duty for investors. The proposal suggests homeowners would not pay it. It is unclear whether investors would still pay. Simon's view is that the government may well ask investors to keep paying, on the principle that those with more should contribute more. This is not confirmed, and he is still looking into the detail.

This Is a Long-Term Idea

Unlike a capital gains tax change, this cannot happen overnight. New legislation would need to pass through Parliament and the House of Lords. Someone would also need to value every property in the UK, which is a huge and costly task. So this is a long-term idea, not an immediate one.

Key takeaway: The proportional property tax would charge homeowners 0.48% and investors 0.98% of value each year. It could stimulate the market, but it would take years to introduce.

What It Could Mean for Rents and Tenants

At first glance, tenants might welcome the proportional property tax. Simon points out there are around 14 million tenants in the UK. Many would no longer face a council tax bill, which could leave more money in their pocket.

Why Tenants May Not Benefit

The cost would not disappear, though. A landlord facing a new annual charge would pass it on through the rent. So tenants could end up paying it anyway. Under the Renters' Rights Act, rents can only rise once a year, in line with inflation or the market rate. In the past, good landlords often left the rent unchanged for years. Rents have only risen sharply in recent years, driven by higher mortgage costs after the pandemic. Simon's concern is that a new property tax would push more landlords to raise rents to the maximum each year. So a change designed to help tenants could end up costing them more.

Key takeaway: Tenants might expect to gain from scrapping council tax. In practice, landlords would likely pass the new charge on, so rents could rise instead.

Landlords Are Already Selling

Landlords are already leaving the market, and two things have pushed them. The first is the Renters' Rights Act 2025. The second is Section 24.

The Section 24 Effect

Section 24 affects landlords who own property in their own name, hold a mortgage, and pay higher-rate tax. They cannot offset all of their mortgage interest against their rental income. Many now hold properties that make little or no money. A possible capital gains tax rise gives them another reason to sell, and to sell before the budget.

The numbers back this up. Simon points to a Savills report estimating that around 247,000 rental properties came to the market in the year to March 2026. That was up 9% on the year before, and 26% on the year before that. More landlords selling means less rental stock. Less stock, with the same demand, tends to push rents up. These are the unintended consequences of heavy intervention in what should be a free market.

Key takeaway: Section 24 and the Renters' Rights Act are already driving landlords to sell. That means motivated sellers now, and likely higher rents later as stock shrinks.

Frequently Asked Questions

What Is Capital Gains Tax on Property?

Capital gains tax is a tax on the profit you make when you sell an asset that is not your main home. For an investment property, you pay tax on the gain between what you bought it for and what you sell it for, less allowable costs. It currently runs at 18% and 24%, depending on your income tax band.

Is Capital Gains Tax Going Up in 2026?

Nothing is confirmed. There has been discussion about raising capital gains tax to match income tax rates of 20%, 40% and 45%. The idea was first floated in the 2024 budget. The government could announce a change at the next budget, due in October 2026, and it could take effect quickly.

What Is the Proportional Property Tax?

It is a proposal from the Fairer Share campaign to scrap council tax and stamp duty. In their place, owners would pay a yearly charge based on the value of the property. The suggested rates are 0.48% for homeowners and 0.98% for second homes and investment properties.

Will Scrapping Council Tax Help Tenants?

It might not. Although tenants would no longer pay council tax, landlords would likely pass the new annual charge on through higher rents. So the saving for tenants could disappear over time, especially as more landlords sell and rental stock shrinks.

How Can I Buy a Property Quickly Before the Budget?

A standard mortgage purchase can be too slow to beat a budget deadline. Creative strategies such as vendor finance, where the seller helps fund the purchase, can complete far more quickly. Having your finance and power team ready in advance also helps you move fast when a motivated seller appears.

Final Thoughts: Invest with Knowledge, Invest with Skill

A change of Prime Minister brings uncertainty, and with it a set of property tax changes that every investor should understand. The most immediate is a possible rise in capital gains tax at the next budget. That single worry is already creating motivated sellers, and it hands prepared buyers a short window to secure discounted deals. The proportional property tax is a bigger, longer-term idea that would reshape how we tax property, though it would take years to arrive.

Simon's message is simple. Do not panic, but do prepare. Understand the changes, get your finance ready, and learn the creative strategies that let you act quickly. The investors who move with knowledge and skill are the ones who turn change into opportunity.

To go deeper on the tax changes and how to benefit before the budget, join Simon on his live webinar. As Simon always says, invest with knowledge, invest with skill.

Listen to the full discussion on the Property Magic Podcast. Subscribe to the channel and hit the bell icon so you never miss a new episode.