Economists expect the Chancellor to use the budget to target long-term revenue stability through tax reform, while tackling the UK’s housing supply and affordability crisis.
Even in the changing tax environment, houses in multiple occupation (HMOs) and HMO mortgages remain one of the most resilient parts of the private rental sector (PRS).
Tenant demand for affordable shared accommodation continues to grow while specialist lenders are increasingly tailoring products to professional landlords.
A stable interest rate environment and yield-based valuations mean experienced HMO owners are well placed to weather the policy changes.
That being said, landlords must continue to navigate the tightening of local rules, such as Article 4 Directions, licensing schemes and energy performance certificate (EPC) requirements.
Those operating in councils with clearer or more supporting frameworks will see the greatest stability in returns.
Talk of replacing Stamp Duty with a more progressive property tax has gathered pace over recent weeks, alongside speculation around council tax revaluations or additional charges on higher-value properties and homes.
If implemented carefully, these changes may reduce the friction of buying and selling, allowing landlords to restructure their portfolios more efficiently.
However, a move toward ongoing annual property levies would raise operating costs, particularly for larger HMOs or higher value London properties. Regional investors may therefore benefit if Rachel Reeves measures encourage a shift of capital north, where entry prices and yields remain much more attractive.
There is speculation that National Insurance could be applied to rental income as a way to align investment and earned income taxation. For smaller landlords, this could mark a significant blow to profitability, yet for professional landlords operating HMOs with higher yields, the impact could be more manageable.
With widespread talk of limiting tax-free gifting and freezing inheritance tax thresholds, landlords are understandably nervous. A cap on lifetime gifts could make it harder for parents to help their children and relatives onto the property ladder or to transfer property portfolios. For investors, proactive succession planning – through company structures or phased transfers – will become increasingly important.
As a sector, we’ve learned to thrive amid constant changes and rules, and while the Autumn Budget will undoubtedly bring new pressures, there is also opportunity. Stable interest rates, strong demand from tenants and growing lender competition continue to make HMO properties a viable long-term investment.
Joseph Lane is founder and director of Mortgage Lane
