Accidental Landlord: Capital Gains Tax, Income Tax, Stamp Duty & More

Property investors, for the most part, likely consciously move into the buy-to-let market. But it’s not unheard of for homeowners to end up becoming “accidental” landlords.

In fact, in recent years, this type of landlord has become an important part of the buy-to-let scene. Where demand drops, some homeowners have little choice but to generate rental income from their existing assets, as opposed to selling them on.

Many reading this blog may be accidental landlords, or worry that they’ll become one without knowing what it all entails. To help these people avoid any nasty surprises, this blog will break down the key details and costs they need to know including accidental landlord capital gains tax, income tax, insurance, and more.

What is an accidental landlord?

Generally, this is someone who owns a property that they let out as a result of unexpected circumstances, rather than because they planned to become a landlord.

While this may sound like an unlikely scenario, accidental landlords may make up as much as 29% of all landlords across the UK[1]. This number could rise even further over the coming months.

In London specifically, the estate agency Chestertons has reported that in 2025 so far, 41% of short-let landlords were letting their properties after failing to sell them, up from 26% in 2024[2]. This is likely to be the case for much of the UK too.

What’s important to remember is that these accidental landlords contribute greatly to the wider private rented sector (PRS). Savills estimates the PRS is worth £1.58 trillion[3]. Meanwhile, the 2024 English Private Landlord Survey found that 37% of landlords acquired their first rental property to live in themselves first, meaning they were likely forced into renting out their asset down the road.

When combining these two elements, we can gauge that billions worth of the BTL market falls into the accidental category.

How do people become accidental landlords?

There are many reasons why this might happen, especially in the current market. Homeowners may not be able to sell their properties to other buyers, and so may have no option but to rent them out instead.

They may also end up becoming accidental landlords following a separation. Many people could inherit a property, which they can then rent out if it proves too difficult to sell.

Shifting working habits can also play a part. Homeowners may need to relocate for a long period of time. While they’re away, they could end up renting out their main residence until they return.

Some of these scenarios may sound familiar to readers. They may even be thrust upon them without warning. But regardless of whether people expect to move into the buy-to-let market or not, they should at least be prepared for the possibility.

–> Want to learn more about buy-to-let? Check out our Complete Guide to Buy-to-Let mortgages.

Do I need to change my mortgage, and what about accidental landlord taxes?

While becoming a landlord brings with it several new rules and commitments, the chief concern will likely involve getting a mortgage set up. If one is on the verge of becoming an accidental landlord, they’ll want to speak with an expert mortgage advisor.

This is because they’ll need to tell their lender about their changing circumstances to get approval to rent out the property. There’s two main ways to go about this. They could obtain a “consent-to-let-agreement[4]” from their lender, which will allow them to rent out their property without needing to formally change the mortgage. These agreements are ideal for short-term plans.

Or, one could switch to a buy-to-let mortgage. This may be the likelier option and fortunately, optionality is on the rise in the market. The number of available buy-to-let mortgages has hit record highs in recent weeks, according to Moneyfacts[5].

Should one become an accidental landlord, tax changes will also likely be a key concern. Landlords face many unique tax obligations, which can catch some off guard. Tax rules for any investment will always be complicated. The fact that the government can tweak the rules as it sees fit doesn’t help.

To fully be on top of what one owes to the state as a landlord, it’s probably best to seek out expert guidance from accountants and other professionals. But there are a few key levies one can get ahead of.

Income tax

Accidental landlords will be liable to pay tax on the rental income they generate. They will need to pay this through a self-assessment, which needs to be submitted to HMRC. This tax is paid on the net rental income – the profit made on all the income generated from the properties, minus any tax allowances, reliefs, or expenses due.

Some of these allowable expenses include the costs of insurance, letting agent and accountants’ fees, maintenance, and business expenses.

How much income tax one pays will be dependent on the amount of profit made from the property, or properties, along with how much income is generated from other sources. In England and Wales, everyone gets a “Personal Allowance” of £12,570. This is how much income one can generate before they’re taxed at all.

Beyond this, the following tax rates are applicable from the 2025/26 tax year:

• Basic rate: Income between £12,571 and £50,270 = 20% tax
• Higher rate: Income between £50,271 and £125,140 = 40% tax
• Additional rate: Income over £125,140 = 45% tax

But remember, we haven’t covered the numerous perks that may be available. These include self-employed trading allowances, property income allowances, and other reliefs.

What one owes in income tax as an accidental landlord could be a tricky question to answer. They’ll want to seek out expert advice.

Stamp duty

Stamp duty is usually levied on increasing portions of a property price when one buys a residential home valued over £125,000[6]. But, as always, there are reliefs and exemptions for certain buyers including charities, and registered social landlords.

Broadly, those who buy a property that is the only residential property they own, they’ll pay the following stamp duty rates in 2025/26:

• Property price: below £125,000 – 0%
• Property price: £125,001 – £250,000 – 2%
• Property price: £250,001 – £925,000 – 5%
• Property price: £925,001 – £1,500,000 – 10%
• Property price: Over £1,500,000 – 12%

However, there is a surcharge in place for those who purchase additional properties, which was raised from 3% to 5% in April 2025[7]. This includes second homes and/or buy-to-let properties, and may affect accidental landlords. With this surcharge in place, the following stamp duty rates may be applicable:

• Property price: below £125,000 – 5%
• Property price: £125,001 – £250,000 – 7%
• Property price: £250,001 – £925,000 – 10%
• Property price: £925,001 – £1,500,000 – 15%
• Property price: Over £1,500,000 – 17%

Accidential landlord Capital Gains Tax (CGT)

For an accidental landlord, capital gains tax will be payable if they sell a rental property that has risen in value. This is a tax which could hit landlords particularly hard. They don’t have to pay CGT if they sell their main residential home. However, they need to pay capital gains tax on profits made from the sale of buy-to-let properties, business premises, land, or inherited property[8].

Currently, one only has to pay CGT on their overall gains above their tax-free allowance, which is £3,000, or £1,500 for trusts[9].

This will result in accidental landlords having to fork out more for the taxman should they sell their assets. Also, property investors may have to pay more in CGT than other types of investors or entrepreneurs.

Following the Autumn Budget, CGT was increased as follows:

• The main rates of CGT that apply to assets other than residential property and carried interest from 10% and 20% to 18% and 24% respectively, for disposals made on or after 30 October 2024
• The rate of CGT that applies to trustees and personal representatives from 20% to 24% for disposals made on or after 30 October 2024
• the rate of CGT that applies to Business Asset Disposal Relief and Investors’ Relief from 10% to 14% for disposals made on or after 6 April 2025, and from 14% to 18% for disposals made on or after 6 April 2026[10].

Also, Business Asset Disposal Relief has increased from 10% to 14% on a lifetime limit of £1,000,000 [11]for trading businesses and companies. It will rise to 18% from April 2026[12].

Corporation tax and National Insurance

If one becomes an accidental landlord, they may choose to incorporate a limited company to manage their new asset through a property business. This would then make them liable for corporation tax, over income tax or capital gains tax. Their National Insurance could also be affected.

In 2025/26, corporation tax will be 19% on profits under £50,000, and 25% on anything above £250,000. Firms with profits between £50,000 and £250,000 will receive “marginal relief[13]”.

With National Insurance, landlords, as the government explains[14]: “may be eligible to pay voluntary Class 2 National Insurance contributions if you’re considered ‘gainfully employed’ for National Insurance purposes. For example, if:

• being a landlord is your main job
• you rent out more than one property
• you’re buying new properties to rent out

If you’re not sure if you count as ‘gainfully employed’, read paying voluntary Class 2 National Insurance contributions as a landlord[15].

If you are not eligible, you may be able to pay voluntary Class 3 National Insurance contributions instead. For example, if being a landlord is not your main job but you still:

• collect rent
• arrange or carry out repairs
• maintain common areas
• prepare properties between lets
• advertise for tenants
• arrange tenancy agreements.”

What about insurance?

Currently, there isn’t a legal requirement to have landlord insurance. But, it’s probably wise to invest in some. If one ends up with tenants, regular home insurance won’t cover them should anything costly happen to the property. Also, some mortgage lenders may require that landlord insurance is taken out before they move forward.

Landlord insurance costs can vary widely, being affected by everything from the location of a property, through to how many tenants are involved. But, accidental landlords who are new to the scene could benefit from insurance. With tenants to house, they’ll face many new obligations and scenarios.

Landlords need to ask themselves if they’re ready for a tenant to lose their job and suddenly stop paying rent? What about if they accidentally leave the bath running too long, leading to flood damage? Landlord insurance can help with these kinds of issues and more.

What rules do accidental landlords need to follow?

Landlords have several responsibilities to their tenants. Broadly, they’ll need to:

• Keep their rented properties safe and free from health hazards
• Make sure all gas equipment and electrical equipment is safely installed and maintained
• Provide an Energy Performance Certificate for the property
• Protect their tenant’s deposit in a government-approved scheme
• Check their tenant has the right to rent the property if it’s in England
• Give their tenant a copy of the How to rent checklist when they start renting from them (it can be emailed[16])

Landlords will also be required to make repairs to a property where needed, review rent on a regular basis and agree increases with tenants, and settle disputes as they arise.

However, more stringent rules may be on the way. The Renters’ Rights Bill[17] is in the works, and the government has vowed to tackle rogue landlords and bad practices. Accidental landlords could be caught by all this if they’re not careful.

Do I need a license to be an accidental landlord?

It depends on where one is based. Some local authorities in the UK may have powers to introduce selective licensing for privately rented homes[18]. This would be done to tackle problems in their areas. But generally, landlords do not need to be licensed, unless they’re renting out a house in multiple occupation (HMO[19]).

Landlords will likely need to get a licence from their local council if their property is rented out by at least three people who are not from one household, but share facilities like the bathroom and kitchen. These properties are sometimes called a house share and are popular with students.