The Perfect Storm Facing UK Landlords: Are You Prepared?
The last few years have reshaped the UK property investment landscape. Landlords are facing mounting pressure from all sides – rising costs, tightening regulations, and tax changes that have transformed the way rental portfolios perform.
If you’re feeling the squeeze, you’re not alone. Here’s a breakdown of the challenges—and what you can do next.
Section 24: The Start of the Shift
One of the most impactful changes in recent years was Section 24, introduced in 2017 and fully rolled out by 2021. This legislation gradually removed the ability for landlords to deduct mortgage interest from their rental income before tax, dramatically increasing many landlords' tax bills.
In practice, it meant you were taxed on turnover, not profit. And for those with high borrowings, it pushed many into higher tax brackets, sometimes without a change in real earnings.
Rising Interest Rates and the Cost of Living
As if Section 24 wasn’t enough, the rapid rise in interest rates since 2022 has further tightened the screws. Fixed-rate mortgages are ending. Refinancing is more expensive. And variable-rate landlords have seen their payments skyrocket.
Meanwhile, the cost of living crisis is hitting landlords from both ends:
Maintenance and materials now cost more
Energy bills and service costs have risen
Tenants are stretched, which can impact rent collection and arrears
Limited Companies: A Strategic Move… with Trade-Offs
To offset tax burdens, many landlords are switching to Limited Companies, which pay corporation tax (currently lower than income tax).
While this structure can offer long-term tax efficiency, it’s not without cost:
Transferring property into a company may trigger Capital Gains Tax and Stamp Duty
Limited company mortgages often come with higher interest rates and bigger arrangement fees
Lending criteria is typically stricter, especially for new companies
The Renters’ Reform Bill: What’s Changing
Alongside financial challenges, the Renters Reform Bill is introducing significant regulatory change. Chief among them: the removal of Section 21 ‘no-fault’ evictions.
Going forward, landlords will need to rely on specific legal grounds, such as rent arrears or breach of contract, to regain possession.
If a landlord wants to sell and can’t move the tenants on amicably, then a months-long court process will ensue, where section 21 would have previously progressed an eviction.
This will increase the administrative and evidential burden on landlords, and make clear tenancy agreements and good record keeping even more essential.
The Holiday Let Pivot: Not Always a Silver Bullet
Some landlords have moved to short-term holiday lets, hoping to improve cash flow. While this can yield higher income, it’s not always the right move:
It requires more hands-on management
Running costs (cleaning, booking systems, guest issues) add up quickly
Seasonal and location-dependent demand can be unpredictable
So, What’s the Right Strategy?
There’s no universal solution—every landlord’s portfolio and position is different.
But the one thing all successful landlords have in common? They seek advice early.
✅ Speak to a financial advisor
✅ Revisit your mortgage terms
✅ Review your long-term goals
✅ Consider restructuring only when it aligns with your numbers
Final Word
It is a perfect storm—but you don’t have to weather it alone.
If you're unsure what the next step should be – selling, holding, or switching strategy – get in touch. Joanne at Essex Property Angel supports landlords across Essex and beyond to plan with clarity and confidence.