With tax now central to every buy-to-let conversation, brokers need to understand how the landscape is changing – and where they can add value
One thing I've noticed in conversations with brokers over the past year is how often tax now increasingly features in discussions that would previously have been focused solely on finance. Conversations are no longer just about rates and lending criteria; they’re also covering portfolio profitability, ownership structures and long-term planning. That’s a reflection of how much the buy-to-let landscape has evolved.
Recent changes to how property income is taxed, including the two percentage point increase announced in the 2025 Budget, are adding further pressure to buy-to-let returns. Many of the structural changes affecting landlords have built up over time, and the combined effect is now coming through more clearly in margins and deal viability.
The pressure on profitability
For brokers working closely with landlords, this is evident not just in the numbers, but in how clients are approaching growth, structure and long-term planning.
One of the most immediate impacts is on profitability. The increase in tax on rental income, due to come into effect from 2027, will reduce net returns across all bands. This sits alongside existing constraints, including the restriction on mortgage interest relief for individual landlords and the higher transaction costs associated with purchasing additional properties. As a result, what was once a relatively simple assessment of income against borrowing costs now needs to reflect the full tax position behind each deal.
Many landlords are therefore operating with tighter margins. This is particularly evident in areas where rental growth has not kept pace with rising costs. While rents have increased in many parts of the market, these gains are often offset by higher borrowing costs, increased regulation and ongoing maintenance requirements. The overall picture is one where profitability needs to be actively managed, rather than assumed.
This is feeding through into landlord behaviour. One of the most notable trends is the continued move towards limited company structures. For some landlords, this provides a more effective way to manage finance costs, as mortgage interest can still be treated as a business expense. The gap between personal and corporate ownership has widened in recent years, and more landlords are reviewing how their portfolios are held as a result. That said, incorporation is not the right answer in every case, and the detail needs careful consideration. Brokers have an important role to play in highlighting the options available, but decisions around ownership structures should always be made with support from a qualified tax adviser.
Alongside this, there is a more deliberate approach to portfolio strategy. Landlords are more selective about the assets they acquire, with greater focus on income reliability and long-term performance. That can mean prioritising properties in locations with consistent demand, or assets where there is scope to add value over time. In some instances, it also means reshaping an existing portfolio, with underperforming properties sold to support future investment.
Shifting landlord behaviour
More broadly, buy-to-let is being treated less as a passive investment and more as an active business. Tax sits at the centre of that thinking, influencing both how deals are structured and how portfolios are managed over time.
For brokers, this is changing the nature of client conversations. Securing finance remains central, but there is a greater need to understand how a deal performs once tax is factored in. That includes considering ownership structures, testing affordability under different scenarios and identifying products that are aligned to a landlord’s wider strategy.
The broker's evolving role
Brokers are not expected to provide tax advice, nor should they. However, having a strong awareness of the tax considerations affecting landlords can help them ask the right questions and identify when specialist advice may be needed.
Lenders are evolving in response to this more complex environment. There is a greater focus on supporting more complex cases, including different ownership models and portfolio landlords with varied assets. Underwriting is also taking a broader view, looking at the overall strength of a portfolio rather than a single property in isolation. This becomes increasingly important where tax has a direct impact on cash flow and borrowing capacity.
This is where collaboration is important. Early engagement between broker and lender can help ensure that deals are structured appropriately from the outset, particularly in cases where there are multiple moving parts. With a clearer view of the client’s objectives and constraints, it becomes easier to identify a workable route forward. Successful landlords are increasingly taking a long-term view, recognising that sustainable performance is built over time rather than achieved through quick wins. In many respects, it is not unlike building a successful football team: strategy, discipline and having the right support around you often matter more than any single decision.
Tax changes have not removed the appeal of buy-to-let, but they have made the market more exacting. Landlords are having to think more carefully about how they invest, how they structure borrowing and how they manage performance over time.
For brokers, there is a clear opportunity to add value by bringing those elements together.
A strong understanding of lending, combined with an awareness of the tax considerations affecting landlords, is becoming increasingly important in helping clients make informed decisions and deliver sustainable outcomes across their portfolios.
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