What Rachel Reeves’ 2025 Budget Means for Somerset Landlords & Property Investors
Weekly blog from Andrew Lees Lettings & Gibbins Richards Lettings & Management
The 2025 Budget from Chancellor Rachel Reeves has confirmed what many landlords and investors suspected: taxes are tightening, especially on property and investment income. But while some headlines feel worrying, there are ways for Somerset landlords to stay ahead, protect their returns and even see opportunities in a market that’s still fundamentally supported by strong rental demand.
In this week’s blog, we’ve picked out the key Budget announcements that affect landlords and property investors – and how we can help you navigate the changes across Bridgwater, Taunton, Wellington, Burnham-on-Sea and Weston-super-Mare.
Key Tax Changes for Landlords & Property Investors
1. Higher Income Tax on Rental Income
From April 2027, income tax rates applied to rental income will increase by 2 percentage points across the basic, higher and additional rate bands.
In practical terms, this means that:
- If you’re a basic-rate taxpayer, more of your rental profit will now be taxed at a slightly higher rate.
- Higher and additional-rate landlords will also see their effective tax bill on rental income rise.
For portfolio landlords or those with leveraged buy-to-let, this makes good record keeping, efficient structuring and strong yields even more important.
2. No National Insurance on Rental Income (A Bullet Dodged)
There had been serious concern in the sector that the Chancellor might introduce National Insurance on rental income. The Budget has not done this – which is a genuine positive.
So while the 2% extra tax on rental income is unwelcome, many landlords will still feel relieved that NI has not been added on top.
3. Higher Taxes on Savings & Dividends
The Budget also increases tax on savings interest, rental income and share dividends, with an emphasis on targeting “unearned” or passive income.
This matters if:
- You hold cash for future property purchases
- You own property via a company and draw dividends
- You’re planning to sell assets and reinvest in property over the coming years
It reinforces the need to make sure your overall investment strategy still works after tax, not just before.
4. Mansion Tax & High-Value Property Measures
A new so-called “mansion tax” will apply to homes worth over £2m from April 2028, alongside additional council tax on high-value properties.
For most Somerset landlords – particularly in Bridgwater, Taunton, Wellington and the surrounding villages – this will only affect a minority of very high-value homes. But it does signal a clear direction of travel: the government expects higher-value property to contribute more to the tax take.
5. No Change to Stamp Duty
Despite heavy speculation, the Budget did not change Stamp Duty Land Tax (SDLT).
For investors, that means:
- No extra surcharge beyond existing additional home rates
- No new SDLT reliefs, but also no sudden shock to acquisition costs
In other words, if you were already planning a purchase in Somerset, your SDLT calculations remain the same – useful stability in an otherwise changing tax landscape.
Wider Housing & Planning Measures
Beyond direct landlord taxation, the Budget also included:
- More funding for the planning system – including extra money to recruit additional planners and improve capacity, which should, over time, help speed up housing delivery and regeneration in many areas.
- Ongoing work linked to the Renters’ Rights Act and private rented sector reforms, focusing on better standards, clearer processes and stronger tenant protections.
For professional landlords who already maintain good-quality homes and proper compliance, this environment can actually strengthen your position relative to non-compliant or casual operators.
Finding the Positives for Somerset Landlords
On the face of it, a 2% tax rise on rental income doesn’t feel like good news. But there are some positives and practical ways to respond:
1. Strong Underlying Rental Demand
Across Somerset – particularly around Hinkley Point C, Musgrove Park Hospital, and the corridor towards the Gravity site near Bridgwater – demand for good quality rental homes remains robust.
In markets like Bridgwater, Taunton, Wellington and Burnham-on-Sea, well-presented properties in good locations continue to let quickly, with strong demand from professionals, key workers and families. That demand can help absorb a modest increase in tax if your property is priced correctly and managed efficiently.
2. Stability Helps Long-Term Planning
The Budget has avoided some of the harsher measures that were rumoured (for example, NI on rental income or sweeping stamp duty changes). This gives landlords a clearer runway to:
- Review portfolio performance
- Reassess yields after tax
- Plan mortgage refinancing or restructuring
- Decide whether to hold, sell or reinvest
A stable rulebook – even with higher rates – is easier to plan around than a constantly shifting one.
3. Professional Management Can Protect Net Returns
In a world of higher tax on rental profits, your net position becomes more important than ever. Reducing voids, minimising arrears, staying compliant and keeping maintenance under control all directly support your bottom line.
That’s where a proactive, locally-focused management service can genuinely help offset some of the impact of higher tax.
Practical Steps Landlords Can Take Now
Here are some sensible next steps for Somerset landlords and investors in light of the Budget:
- Review your numbers
Look at your rental income, mortgage costs, maintenance and tax position – not just today, but also after the additional 2% tax kicks in. - Check that your rents are at a fair market level
With strong rental demand across the region, some properties may be under-rented relative to current market conditions. - Consider structure and planning
Speak to your accountant or tax adviser about whether your current ownership structure (personal vs company, joint vs single ownership) remains optimal. - Tighten up compliance and documentation
As the Renters’ Rights Act and related reforms bed in, landlords with clear paperwork, strong processes and documented inspections will be much better protected. - Lean on local expertise
National headlines rarely tell the full story. The real question is what this means for your property in your part of Somerset.
How Andrew Lees & Gibbins Richards Can Help
As local, specialist letting agents and property managers, we work every day with landlords across:
- Bridgwater, Burnham-on-Sea & surrounding villages (Andrew Lees Lettings)
- Taunton, Wellington, Wiveliscombe & wider areas (Gibbins Richards Lettings & Management)
In light of the Budget, we can help you:
- Sense-check your current rent levels against the local market
- Reduce avoidable void periods and arrears
- Put in place robust documentation and inspection routines
- Manage repairs and maintenance efficiently
- Navigate changes linked to the Renters’ Rights Act and wider PRS reforms
- Discuss how local demand – from major employers and infrastructure projects – supports your long-term investment strategy
If you’d like an informal chat about how the Budget might affect your portfolio, we’re always happy to talk.
📘 Learn More About Our Landlord Services
For full details on our management packages, fees and support for landlords, view our brochures below:
Andrew Lees Lettings – Landlord Brochure
👉 Click here
Gibbins Richards Lettings – Landlord Brochure
👉 Click here
Disclaimer
The information in this blog has been researched and created by Andrew Lees Lettings & Gibbins Richards Lettings and is accurate at the time of publication. It is intended for general informational purposes only and should not be relied upon as legal, financial or tax advice. Landlords and investors should seek independent professional advice on their specific circumstances.
