What is Section 24, and why does it matter?
Section 24 is the tax change that stops landlords deducting mortgage interest from their rental income before tax. Instead, you pay tax on the full rent and get only a 20% tax credit on the interest. For higher-rate taxpayers especially, that can turn a modest profit into a loss — which is why many South Wales landlords are choosing to sell in 2026.
We’re David and Jason — landlords ourselves — so we’ve felt this one directly. Here’s the plain-English version.
How it actually hits your numbers
Before Section 24, you were taxed on rental profit (rent minus mortgage interest and costs). Now you’re taxed on the rent, then handed a flat 20% credit on the interest. The effect:
- Higher-rate (40%) and additional-rate (45%) taxpayers lose out most — effectively paying tax on money that went straight to the lender.
- Rising interest rates have made it worse: bigger interest bills, but still only a 20% credit.
- Some landlords are now taxed on a property that makes a cash loss.
It’s not the only pressure
Section 24 lands alongside other changes Welsh landlords are juggling:
- The Renting Homes (Wales) Act and its tighter obligations.
- Stricter EPC requirements pushing expensive upgrades on older rentals.
- Much higher mortgage costs at remortgage time.
Stacked together, the sums no longer work for the majority of landlords.
Your options if you want out
- Incorporate (move the portfolio into a limited company). Companies aren’t hit by Section 24 the same way — but transferring requires expensive specialist advice, more expensive corporate buy-to-let/commercial lending rates plus stamp duty (LTT in Wales), capital gains tax and corporate accounts prepared and delivered annually, so do take professional advice first from both corporate lawyers, chartered accountants and certified personal and company tax specialists.
- Sell with vacant possession — give notice, wait for the tenant to leave, then sell on the open market during the inevitable long void. More time and cost, potentially a higher price.
- Sell with tenants in situ to House Buyers Wales — no eviction, no void, rent continues to completion. This is what we do: we keep good tenants on and buy the property as a going concern.
Selling up cleanly
If you’ve decided to exit, House Buyers Wales buys tenanted or vacant rentals across South Wales — single properties or whole portfolios — with a fixed price and date, no eviction needed, and even where there are arrears or the property needs work. No void period eating your last months of return.
This is general information, not tax advice — speak to an accountant about your own position.
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Or call 02920 001331 to speak to David or Jason, not a commission salesperson.
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