## Introduction to Section 24 and Its Intended Purpose

In April 2017, the UK government began phasing in Section 24, a tax reform restricting mortgage interest relief for individual landlords. Introduced over four years, it aimed to create a fairer tax system by removing tax advantages that landlords previously enjoyed compared to homeowners. Policymakers argued that highly leveraged landlords were distorting the housing market by outbidding first-time buyers, and that limiting finance cost deductibility would moderate investor demand and support owner-occupation.

## Varied Landlord Responses and Market Adaptation

The impact of Section 24 has been nuanced rather than uniform. Landlords with significant borrowing faced sharply increased effective tax rates, tighter interest cover ratios, and more complex refinancing conditions. Some portfolios that were profitable before tax became cashflow negative after tax, prompting behavioural changes. Many landlords deleveraged or sold selectively, while others incorporated their rental businesses into companies where mortgage interest remains deductible. This shift towards incorporation has been widely discussed within the landlord community and reflected in media commentary.

The commercial effects of Section 24 have varied depending on factors such as geography, portfolio size, and timing. Landlords with low gearing absorbed the changes more easily, whereas those with higher borrowing in areas of slower rental growth felt greater pressure. The sector adapted, but did not contract uniformly.

## The Challenge of Measuring Rental Supply Impact

Determining the impact of Section 24 on rental housing supply is complex. The key question is whether the reform has led to a meaningful transfer of rental properties to owner-occupiers, a contraction of rental stock in certain regions, or a shift in landlord profiles. Data on incorporation shows structural change but does not clarify whether stock was lost or merely restructured. Rental growth trends exist, but causation remains contested due to overlapping factors such as interest rate cycles, demographic demand, and other housing reforms like the Renters’ Reform Bill.

## Broader Economic Context and Policy Implications

Section 24’s introduction coincided with rising interest rates, pandemic-related market distortions, and inflationary pressures, all of which have influenced landlord confidence and investment decisions. The reform altered risk perceptions, with landlords seeking predictability in fiscal treatment to support business planning. Compared internationally, the UK’s direct approach contrasts with other European countries that maintain full or partial finance cost deductibility, often with capital incentives or longer transition periods.

## Moving Towards Evidence-Based Policy Evaluation

Nearly a decade after Section 24’s implementation, the focus should shift from fairness narratives to measurable outcomes. Policymakers need transparent evidence on whether rental supply has contracted, ownership patterns have changed, or incorporation has become the dominant adaptation strategy. Understanding these effects is essential for shaping credible future housing policies.

## Property118’s Housing Research Panel Initiative

To support rigorous evaluation, Property118 has launched a Housing Research Panel aimed at examining long-term policy impacts across housing markets. The panel invites landlords, journalists with access to regional rental data, economists analysing housing trends, and academics studying fiscal reform effects to contribute data and insights. This initiative seeks to move beyond assumptions and provide a clearer picture of Section 24’s legacy.

## What This Means for UK Landlords

For landlords, Section 24 has underscored the importance of stable tax assumptions in business planning. The shift towards incorporation and selective portfolio management reflects a strategic response to increased fiscal risk. Landlords should remain informed about ongoing policy developments and consider how structural changes may affect refinancing, rental income, and investment decisions.