Rachel Reeves’ Autumn Budget on 26 November landed at a tough moment for confidence – late in the year, with Christmas trading already under pressure, and households still feeling the cost-of-living squeeze.
For property owners, the picture is clear: taxes and regulations on traditional long-term lets are going up – just as the Renters’ Rights Act from May 2026 locks in far less flexibility.
Against that backdrop, professionally managed short-term rentals (STRs) and serviced accommodation stand out as one of the strongest ways to keep your property assets working for you.
The Budget in a nutshell: what changed for landlords
1. Higher tax on rental income
From April 2027, tax on property income rises by 2 percentage points:
- 22% – basic rate
- 42% – higher rate
- 47% – additional rate
This is on top of frozen income tax thresholds to 2030/31, which quietly pull more people into higher bands as wages rise. Financial Times has more here
Impact:
Landlords are hit twice – more of their income is taxed at a higher rate, and each pound of rental profit is worth less after tax.
2. Mansion tax on higher-value homes
From April 2028, a new annual “mansion tax” applies on homes worth over £2m, starting at £2,500 a year and rising with value bands.
Impact:
If you own a higher-value property, your holding costs rise regardless of whether it’s sitting empty, on a low-yield AST or earning strong income – which makes underperforming long-term lets harder to justify.
3. Business rates – a small win for hospitalit
From 2026/27, around 750,000 retail, hospitality and leisure properties get a permanently lower business rates multiplier than other sectors. More on this at GOV.UK
Impact:
If your property qualifies as holiday accommodation/serviced apartments and sits on the business rates list, you may pay less in property tax than an equivalent asset used as a standard buy-to-let paying council tax.
4. Labour costs and the overnight visitor levy
- The National Living Wage rises again in April 2026, increasing staff costs for cleaning, maintenance and hospitality roles.
- Mayors in England are being given powers to introduce an overnight visitor levy on hotel rooms and short stays, likely a small per-night charge in certain regions.
Impact:
Labour-intensive, low-margin operations will struggle most. Agile STR operators who can optimise pricing and keep overheads lean are best placed to absorb these changes.
The real game changer: the Renters’ Rights Act from May 2026
The Renters’ Rights Act 2025 (formerly the Renters’ Reform Bill) is one of the biggest overhauls of private renting in decades. Key measures start from 1 May 2026 in England and you can read more about them on the Government’s websites here
Here’s what it means for long-term landlords:
1. End of Section 21 “no-fault” evictions
From May 2026, Section 21 notices are abolished. Landlords can no longer end a tenancy without giving a specific legal reason.
You’ll only be able to regain possession using Section 8 grounds, such as:
- Serious rent arrears
- Anti-social behaviour
- Needing to sell or move in yourself / a family member
These grounds are being broadened but will still require clear evidence and more process than a simple Section 21.
Impact on flexibility:
You lose the ability to exit a difficult tenancy quickly just because your circumstances change or the tenant relationship deteriorates.
2. Fixed terms scrapped – rolling tenancies as standard
Fixed term Assured Shorthold Tenancies are being replaced by Assured Periodic Tenancies:
- Most tenancies will be open-ended from day one.
- Existing fixed terms will convert to periodic once the Act applies.
- Tenants can usually leave with two months’ notice; landlords, in contrast, must use statutory grounds.
Impact on flexibility:
You have less control over timings.
Tenants can come and go relatively easily; you may face long, drawn-out possession processes if things go wrong.
3. Tightened rules on rent and marketing
From 2026, the Act introduces further constraints:
- Rent increases limited to once per year via a formal process, with at least two months’ notice and the right for tenants to challenge above-market rises.
- No rent bidding and restrictions on taking large sums up front.
- More paperwork and compliance: for example, providing tenants with official guidance on their new rights at the start of the tenancy.
Impact on flexibility & returns:
- Raising rent to keep pace with wage, tax and mortgage rises becomes slower and more bureaucratic.
- Any mis-step on paperwork could make it harder to enforce your rights.
Why short-term rentals look stronger in this new landscape
Put the Budget and Renters’ Rights Act together and a pattern appears:
Long-term AST-style letting is becoming a high-tax, high-regulation, low-flexibility game.
Short-term rentals, when structured correctly as holiday/serviced accommodation, typically sit outside the Assured Shorthold Tenancy regime – and therefore outside many of these new constraints. Always check local rules, but in general:
1. Higher yields to offset higher tax
- A well-run STR can often generate 1.5–2.5x the gross income of a comparable long-term let, depending on location and seasonality.
- Even after higher operating costs, the net profit before tax is usually stronger – and that’s what really matters once property income is taxed at 22/42/47%.
If the government is taking a bigger slice, the simplest response is:
make the slice bigger.
2. Flexibility on pricing and use
Because STR guests are on short licences/booking terms, not ASTs:
- You’re free to adjust nightly rates with demand, events and inflation.
- You can decide when to take the property in or out of service – for refurbishment, personal use, or sale – without navigating the Renters’ Rights possession rules.
That combination of pricing flexibility plus control over the asset is exactly what long-term landlords are losing from 2026.
3. Potential business rates advantages
Where an STR qualifies as a self-catering or serviced accommodation business on the non-domestic rating list, the Budget’s commitment to permanently lower hospitality/retail business rates from 2026 can be a genuine win.
Compared with:
- Higher council tax and
- Heavier regulation under the Renters’ Rights Act
…this can tilt the numbers decisively in favour of a professional STR model.
4. Resilience under a future tourist tax
A modest overnight levy will hit hotels hardest, because:
- Their fixed costs are high.
- They rely more heavily on corporate and conference trade, which is price sensitive.
A well-positioned STR can usually:
- Still undercut a hotel on a per-guest, per-night basis, and
- Offer the space, kitchen and “home feel” that value-conscious domestic travellers are looking for.
That makes your revenue line more resilient even if a visitor levy appears in your area.
What property owners should do now
1. Run the numbers on STR vs AST
Pick one property and compare:
- Current AST rent and costs (mortgage, insurance, repairs, compliance).
- Projected STR income using realistic nightly rates and occupancy for your area.
- Apply the new 22/42/47% tax rates to both scenarios.
In many markets, that exercise alone is enough to show how much income you’re leaving on the table with a standard long-term let.
2. Map your legal position
- Check whether your property can legitimately be operated as short-term or holiday accommodation under local planning and licensing rules.
- Confirm your council tax vs business rates position and whether moving to non-domestic rates is possible and beneficial.
- Understand how the Renters’ Rights Act phases apply to your existing tenancies ahead of May 2026.
3. Decide whether to self-manage or partner
With higher wage costs and more complex rules, the case for professional management is stronger than ever:
- Centralised cleaning and maintenance
- Revenue management and dynamic pricing
- Multi-channel marketing and review management
- Compliance handled by people who live and breathe the regulations
Yes, there’s a fee – but if your total revenue jumps and the regulatory risk drops, your net position often improves.
Ready to future-proof your property strategy?
Budget 2025 and the Renters’ Rights Act send a clear message:
- Owning property is still a powerful way to build wealth.
- But traditional long-term letting is being squeezed on all sides – tax, flexibility and compliance.
- Short-term rentals, run professionally, offer higher earning potential and more control at the exact moment owners need both.
Whether you’re looking to increase income, streamline operations, or simply reclaim your time, My Getaways has the comprehensive solutions you need for property management in Brighton and Sussex. Let’s discuss how we can transform your property into a thriving Brighton short-term rental.
Get in touch for a complimentary, no-pressure chat holiday rental management in Brighton to earn you more with My Getaways.
+44 (0) 1273 917 909
owners@mygetaways.co.uk
We’re excited to help you unlock the full potential of your holiday let!