Section 24, which restricted mortgage interest tax relief for individual landlords, remains a significant concern within the private rented sector. Many landlords worry whether similar rules could be extended to limited companies, potentially affecting their investment strategies. This article examines the political, legislative, and economic factors surrounding this issue, providing clarity on the actual risk and what landlords should focus on moving forward.

The Impact and Legacy of Section 24

Introduced without consultation, Section 24 was a political intervention aimed at shifting the housing market focus towards first-time buyers by targeting individual landlords. It altered income tax rules, restricting the deductibility of finance costs, and changed borrowing economics almost overnight. The measure was politically popular at the time, framed as a correction to market imbalances, but it left many landlords feeling betrayed and traumatised.

This experience has created a lasting fear among landlords that similar measures could be applied to limited companies, which currently operate under a different tax framework. Understanding the differences between individual and corporate taxation is key to assessing this risk.

Why Section 24 Targets Individuals, Not Companies

Section 24 applies solely to personal income tax under the Income Tax (Trading and Other Income) Act 2005 (ITTOIA 2005). Limited companies, on the other hand, are subject to corporation tax under the Corporation Tax Act 2009. These are separate systems with distinct rules and mechanisms.

The legislation behind Section 24 modifies how individual landlords calculate their profits for income tax purposes. It does not interact with the corporate tax system, meaning limited companies have not been affected by these changes. This structural separation is significant and forms a barrier to extending Section 24 to companies.

The Complexity of Applying Section 24 to Limited Companies

Applying Section 24 to companies would require a fundamental rewrite of the corporation tax system. Unlike income tax, corporate tax supports a wide range of entities and functions including Housing Associations, Real Estate Investment Trusts (REITs), pension funds, institutional investors, commercial landlords, Build to Rent operators, infrastructure providers, and major financial institutions.

Restricting finance cost deductibility for companies would have far-reaching consequences, potentially destabilising these organisations and the broader housing market. For example, Housing Associations rely heavily on the ability to deduct finance costs to maintain their funding models, covenant compliance, and development capacity. Any restriction here could lead to increased financing costs, reduced surpluses, and higher rent pressures.

Institutional Investors and the Role of REITs

REITs form a critical part of pension fund portfolios and institutional investment in UK housing. Predictable corporate tax treatment is essential for their performance and market stability. Limiting finance deductions for companies would risk damaging pension fund returns, destabilising listed property markets, reducing investment in housing, and undermining Build to Rent developments.

The Treasury is acutely aware of these risks, making a corporate version of Section 24 politically and economically challenging to implement.

Practical Challenges and Political Considerations

Even if the Government wished to target only smaller landlord companies, it would face significant practical obstacles. These include:

• Splitting the corporation tax system
• Defining a new class of “residential landlord companies”
• Creating exemptions for Housing Associations, REITs, and commercial property
• Drafting anti-avoidance rules and blocking group structuring loopholes
• Managing legal challenges and defending two parallel tax systems
• Justifying why certain corporate landlords retain deductibility while others lose it

Such complexity would require the largest overhaul of property taxation in decades, with high political and economic risks.

Why the Fear Persists Despite Limited Evidence

The trauma caused by Section 24’s sudden introduction in 2015 has left many landlords wary of further changes. However, a review of official policy documents—including annual Budgets, tax legislation overviews, HMRC technical notes, consultations, policy costings, and impact assessments—reveals no proposals or indications that Section 24 will be extended to companies.

This fear is therefore based more on past experience and memory than on current policy evidence.

Current Political and Market Context

The UK housing market today depends heavily on institutional investment and corporate landlords to deliver new homes and affordable housing. Build to Rent schemes, REITs, Housing Associations, pension funds, and inward investment all play vital roles. Destabilising landlord companies through restrictive tax measures would risk the entire housing system’s stability.

Unlike in 2015, when targeting individuals was politically straightforward, companies represent a far more complex and sensitive policy area.

What Landlords Should Focus On

Rather than concern themselves with speculative fears about Section 24 for companies, landlords should prepare for tangible challenges ahead, including:

• The 2027 income tax rise
• Ongoing impacts of Section 24 on individuals
• Refinancing and interest rate risks
• Energy Performance Certificate (EPC) reforms
• Higher maintenance standards
• Expansion of licensing schemes
• Strategies for deleveraging
• Incorporation planning
• Inheritance planning and Family Investment Companies

These factors will have a more direct effect on landlords’ financial and operational decisions than unsubstantiated concerns about corporate tax changes.

Conclusion: Section 24 for Companies Is Not a Live Policy

Section 24’s application to individual landlords was a politically expedient move that required only minor adjustments to income tax law. Extending similar rules to limited companies would involve a comprehensive restructuring of corporation tax, with significant political, economic, and legal challenges.

No government has proposed such a measure, nor has there been any consultation or technical analysis suggesting it is under consideration. The risk remains a fear rooted in past experience rather than current policy.

Landlords are advised to focus on real strategic decisions affecting their portfolios and to stay informed about genuine policy developments.

Looking Ahead: Support for Landlords

The Landlord Association (TLA) is launching a new Trusted Partners Hub in Q1 2026. This platform will feature verified and approved service providers selected to support landlords, tenants, and property management businesses. Legal, trades, insurance, financial, mortgage, tenant screening, and other service providers are invited to register their interest here: https://landlordassociation.org.uk/become-a-tla-service-partner/.