THE PROPERTY FILTER TAKE
UK average private rents rose 3.3% to £1,388 per month in the 12 months to June 2026, with England up 3.4% to £1,446, according to the ONS.
Section 24 costs a higher-rate taxpayer on England's average rent approximately £1,680 more per year than the pre-2017 rules - and higher rents widen that gap further.
Speak to your accountant about modelling your rental income against current Section 24 rules, and consider whether incorporation or a portfolio restructure is worth exploring.
UK private rents rose 3.3% in the 12 months to June 2026 to an average of £1,388 per month, according to the ONS (Office for National Statistics). For landlords, the headline figure carries a direct tax consequence worth calculating.
What the ONS figures show
The number that matters to your tax position is gross rental income - because under current rules, that is where your liability begins.
England averaged £1,446 per month, up 3.4% year-on-year, according to the ONS. Wales recorded the strongest rise at 4.9%, taking average rents to £843. Scotland saw 1.3% growth to £1,012. Northern Ireland data runs to April 2026, showing a 2.9% rise to £877.
Within England, the North East recorded the highest annual increase at 6.3%. London saw the lowest growth in England at 2.2%, according to the ONS.
Nathan Emerson, chief executive of Propertymark, noted that roughly seven prospective tenants are chasing each available property at member agents. Supply remains the binding constraint on any easing of rental costs.
Rising income, rising liability
Since April 2020, Section 24 of the Finance (No. 2) Act 2015 (which restricts mortgage interest relief for individual landlords) has changed the tax arithmetic considerably. You can no longer deduct mortgage interest from rental income before calculating tax. Instead, you receive a 20% tax credit on finance costs. For basic-rate taxpayers, the impact is broadly neutral. For higher-rate taxpayers, the rate differential is material.
Take a landlord on England's average rent: £1,446 per month (£17,352 per year). They pay, for example, £700 per month in mortgage interest (£8,400 per year) and have £2,000 in other allowable expenses.
Under Section 24, their taxable profit is £17,352 minus £2,000 - that is £15,352. Tax at 40% comes to £6,141. The 20% credit on mortgage interest (20% of £8,400) reduces that by £1,680. Net liability: £4,461.
Before Section 24, the same landlord would have deducted the full £8,400 in interest. Taxable profit: £6,952. Tax at 40%: £2,781. The gap is £1,680 per year, solely a result of the relief restriction.
A 3.4% rent rise on the England average adds roughly £570 to annual gross income. For a higher-rate taxpayer, that translates to approximately £228 more in tax. Use the stress test calculator to model your yield against your mortgage terms. Speak to your accountant to confirm your specific position.
The stay-or-sell decision
Jeremy Leaf, north London estate agent and a former RICS residential chairman, noted that a fair number of existing landlords are waiting to see whether rents rise sufficiently to justify remaining in the sector. That is a real financial calculation.
Staying means ongoing income tax on rising rental receipts. Selling triggers capital gains tax (CGT) on any gain above the annual exempt amount - the rate is currently 24% for higher-rate taxpayers on residential property disposals. Our property investment strategies hub covers the hold-or-sell framework in detail.
Some landlords are exploring incorporation - holding property in a limited company, which is not subject to Section 24 and can deduct finance costs fully. That route has costs and complexities of its own. Our business and systems hub covers the trade-offs. Speak to your accountant before changing how you hold property.
Key takeaways
UK average private rents rose 3.3% to £1,388 per month in June 2026, according to the ONS.
England averaged £1,446 per month; the North East saw the highest regional increase at 6.3% and London the lowest at 2.2%.
A higher-rate taxpayer on England's average rent with £8,400 in annual mortgage interest pays approximately £1,680 more per year under Section 24 than under pre-2017 rules.
Around 7 prospective tenants are chasing each available rental property at Propertymark member agents, according to Nathan Emerson.
UK private rents rose 3.3% in the 12 months to June 2026 to an average of £1,388 per month, according to the ONS (Office for National Statistics). For landlords, the headline figure carries a direct tax consequence worth calculating.
What the ONS figures show
The number that matters to your tax position is gross rental income - because under current rules, that is where your liability begins.
England averaged £1,446 per month, up 3.4% year-on-year, according to the ONS. Wales recorded the strongest rise at 4.9%, taking average rents to £843. Scotland saw 1.3% growth to £1,012. Northern Ireland data runs to April 2026, showing a 2.9% rise to £877.
Within England, the North East recorded the highest annual increase at 6.3%. London saw the lowest growth in England at 2.2%, according to the ONS.
Nathan Emerson, chief executive of Propertymark, noted that roughly seven prospective tenants are chasing each available property at member agents. Supply remains the binding constraint on any easing of rental costs.
Rising income, rising liability
Since April 2020, Section 24 of the Finance (No. 2) Act 2015 (which restricts mortgage interest relief for individual landlords) has changed the tax arithmetic considerably. You can no longer deduct mortgage interest from rental income before calculating tax. Instead, you receive a 20% tax credit on finance costs. For basic-rate taxpayers, the impact is broadly neutral. For higher-rate taxpayers, the rate differential is material.
Take a landlord on England's average rent: £1,446 per month (£17,352 per year). They pay, for example, £700 per month in mortgage interest (£8,400 per year) and have £2,000 in other allowable expenses.
Under Section 24, their taxable profit is £17,352 minus £2,000 - that is £15,352. Tax at 40% comes to £6,141. The 20% credit on mortgage interest (20% of £8,400) reduces that by £1,680. Net liability: £4,461.
Before Section 24, the same landlord would have deducted the full £8,400 in interest. Taxable profit: £6,952. Tax at 40%: £2,781. The gap is £1,680 per year, solely a result of the relief restriction.
A 3.4% rent rise on the England average adds roughly £570 to annual gross income. For a higher-rate taxpayer, that translates to approximately £228 more in tax. Use the stress test calculator to model your yield against your mortgage terms. Speak to your accountant to confirm your specific position.
The stay-or-sell decision
Jeremy Leaf, north London estate agent and a former RICS residential chairman, noted that a fair number of existing landlords are waiting to see whether rents rise sufficiently to justify remaining in the sector. That is a real financial calculation.
Staying means ongoing income tax on rising rental receipts. Selling triggers capital gains tax (CGT) on any gain above the annual exempt amount - the rate is currently 24% for higher-rate taxpayers on residential property disposals. Our property investment strategies hub covers the hold-or-sell framework in detail.
Some landlords are exploring incorporation - holding property in a limited company, which is not subject to Section 24 and can deduct finance costs fully. That route has costs and complexities of its own. Our business and systems hub covers the trade-offs. Speak to your accountant before changing how you hold property.
Key takeaways
UK average private rents rose 3.3% to £1,388 per month in June 2026, according to the ONS.
England averaged £1,446 per month; the North East saw the highest regional increase at 6.3% and London the lowest at 2.2%.
A higher-rate taxpayer on England's average rent with £8,400 in annual mortgage interest pays approximately £1,680 more per year under Section 24 than under pre-2017 rules.
Around 7 prospective tenants are chasing each available rental property at Propertymark member agents, according to Nathan Emerson.
Frequently asked questions
Frequently asked questions
What is Section 24 and how does it affect my tax bill?
Can holding property through a limited company avoid Section 24?
Does every rent increase automatically raise my tax bill?
