The Chancellor’s latest Budget brings several important changes for landlords operating in the City of Westminster. While many of the headline rumours regarding property taxation have not materialised, the measures that have been confirmed will have a meaningful impact on those with rental portfolios in Pimlico, Old Westminster and the wider SW1 market.
Drawing on our analysis of the Budget and on long term data from LonRes, this briefing sets out the core changes, explains how they affect your rental portfolio and outlines the practical steps landlords may wish to consider over the coming year.
1. No Annual Property Tax Above £500,000
One of the most significant concerns for landlords was the possibility of a new annual tax on properties valued above £500,000. For Westminster landlords, where most rental stock sits comfortably above this level, this rumour created understandable uncertainty.
The Government has confirmed that this tax is not being introduced. This is an immediate boost for landlord confidence and removes a major potential barrier to the long term rental viability of central London assets.
2. The New High Value Supplement for Homes Above £2m
The Government has introduced a High Value Council Tax Supplement for properties valued above £2,000,000. For landlords, the key points to understand are as follows:
• The charge is modest. Around £2,500 per year for a £2m home.
• The supplement increases gradually with value, but remains a small proportion of total running costs.
• It is not comparable in scale to stamp duty or changes in borrowing costs.
• It should not materially affect long term values across Westminster.
Our analysis of recent Westminster transaction data suggests there are between 12,000 and 15,000 properties in the borough valued above £2m. This means the measure is relevant to a large number of investors, especially those holding larger houses, mansion block flats and long term assets in Pimlico and Old Westminster.
However, the actual cost is unlikely to affect rental yields or asset viability in a meaningful way. Most landlords will simply absorb this into normal annual running costs.
Further information will be available on the government website - Here - over the coming months as they begin their consultations.
3. Increase to Property Income Tax Rates From April 2027
The most meaningful change for landlords in the Budget is the planned rise in property income tax rates, effective from April 2027.
The basic, higher and additional rates will each rise by 2%:
• Basic rate property income tax will rise to 22%
• Higher rate to 42%
• Additional rate to 47%
While the adjustments are modest in isolation, they come at a time when landlords are already absorbing:
• Higher stamp duty on additional properties
• The demands of the Renters Rights Act
• Continued energy efficiency requirements
• Rising maintenance and insurance costs
• Greater scrutiny and compliance obligations
For many landlords, the cumulative effect is becoming increasingly noticeable.
4. Westminster Remains One of the Most Reliable Rental Markets in London
Despite these changes, landlords in Westminster and Pimlico continue to benefit from one of the strongest rental markets in the United Kingdom. LonRes data shows that demand from both domestic and international tenants remains exceptionally deep, particularly for:
• One and two bedroom flats in period mansion blocks
• Larger family apartments in Pimlico garden squares
• Houses around Vincent Square and Horseferry Road
• Well presented modern flats close to Victoria and Westminster stations
Annual rental growth has remained steady in recent years as tenant demand continues to outstrip supply. This demand remains a powerful counterbalance to the rising tax and compliance obligations landlords now face.
5. What Westminster Landlords Should Consider Next
In light of the Budget changes, we advise landlords to review their portfolios with the following considerations in mind.
A. Focus on net yield rather than headline rent
With property income tax rates rising, safeguarding net return becomes even more important. That means:
• Reducing void periods through proactive tenant retention
• Avoiding unnecessary turnover
• Ensuring timely repairs to sustain rental value
• Using professional management to minimise risk and cost
B. Review the long term structure of your portfolio
Landlords with several properties may wish to assess:
• Whether their existing mix of property types remains optimal
• Opportunities to consolidate, release equity or rebalance
• Tax efficient ownership structures and succession planning
We can assist with valuations, disposal strategy and acquisition planning.
C. Ensure full compliance with new and upcoming regulations
Compliance demands are increasing. These include:
• Energy performance requirements
• Building and fire safety obligations
• Right to rent checks
• Changes under the Renters Rights Act
A failure to meet any of these can significantly affect both yield and risk. Professional oversight can remove uncertainty.
D. Use the strength of tenant demand to your advantage
Well presented properties continue to command strong rents in SW1. Thoughtful upgrades, improved presentation and energy efficiency improvements can raise rent levels and minimise voids.
6. Our View for Westminster and Pimlico Landlords
The Budget introduces new considerations for landlords but does not alter the core fundamentals of the Westminster rental market. Deep tenant demand, constrained supply and the global appeal of SW1 properties continue to support long term performance.
We believe:
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The removal of the proposed annual property tax above £500,000 is a significant positive for landlords.
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The new High Value Supplement is modest and will not materially affect yields or asset values.
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The rise in property income tax rates requires careful planning but remains manageable.
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Landlords who focus on yield, compliance and quality management will continue to perform strongly.
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Westminster remains one of the most robust and dependable rental markets in the capital.
How We Can Support You
At Tuckerman Residential we manage rental properties across Pimlico, Old Westminster and the wider SW1 area. We can offer:
• Portfolio reviews
• Refined rental valuations
• Advice on upgrades and presentation
• Compliance oversight
• Full management services
• Support for landlords considering acquisitions or disposals
If you would like a confidential review of your rental property or a discussion about the implications of the Budget on your specific portfolio, we would be delighted to assist.
