Since Section 24 fully took effect in 2020, UK landlords have faced significant changes to how mortgage interest is treated for tax purposes. The question many property investors ask is simple: will Section 24 be reversed?

This restriction, which limits mortgage interest relief to the basic rate of tax, has pushed many landlords toward company structures or out of the market entirely. Understanding the likelihood of a section 24 repeal requires examining political positions, industry pressure, and economic realities.

Will Section 24 Be Reversed? A Realistic Assessment

The likelihood of full section 24 repeal appears low in the medium term. Several key factors work against reversal:

Political Landscape and Optics: No major political party has committed to reversing Section 24. The Conservative government that introduced the measure defended it as necessary for tax fairness, and Labour has not indicated they would reverse it either. Helping landlords remains politically unpopular, especially during a housing crisis affecting renters and first-time buyers.

Revenue Dependency: Section 24 generates significant tax revenue for HMRC. Reversing it would create a substantial hole in government finances that would need filling elsewhere. For a landlord with £100k rental income and £60k mortgage interest, Section 24 typically generates an extra £9,000-£18,000 in annual tax depending on their marginal rate. Estimates suggest Section 24 generates over £1 billion annually, revenue HMRC has become accustomed to.

Alternative Government Approach: The government appears to prefer encouraging institutional investment rather than supporting individual landlords.

However, some modifications remain possible if housing supply issues become critical. These might include partial restoration of mortgage interest relief, higher basic rate tax bands, transitional arrangements for long-term landlords, or regional variations in high-demand areas.

Industry Pressure and Economic Factors

Property industry bodies like the National Residential Landlords Association (NRLA) continue to lobby against Section 24, citing reduced rental supply, higher rents passed to tenants, distortion between individual and corporate property investment, and the administrative burden from forced incorporations. However, their influence appears limited when weighed against broader political priorities.

Several economic trends could influence future policy:

  • Housing Supply Pressures: If rental supply shortages become severe enough to affect government housing targets, this could create pressure for reform.
  • Market Distortions: The system creates clear advantages for corporate ownership over individual ownership. If this distortion becomes economically problematic, it might drive policy reconsideration.

Strategic Implications for Landlords

Given the low probability of section 24 repeal, landlords should focus on strategies that work within the current system:

Company Structures: Incorporation remains the primary method for avoiding Section 24 restrictions, as companies can still deduct mortgage interest as a business expense.

Portfolio Optimization: Focus on properties that generate strong rental yields relative to mortgage costs. Lower-leverage strategies may work better under current rules.

Professional Advice: The interaction between Section 24, capital gains tax, and incorporation timing requires specialist guidance. Consider speaking with property tax specialists about your specific circumstances.

Monitoring Future Developments

While full reversal seems unlikely, the situation could evolve. Key indicators to watch include government housing supply statistics, political party policy announcements, industry consultation responses, and regional rental market pressures.

The 2025/26 tax year will mark five years since Section 24's full implementation. This milestone might prompt policy reviews, though any changes would likely be gradual rather than wholesale reversal.

For most landlords, planning should assume Section 24 remains in place indefinitely. This makes understanding your options under current rules essential rather than waiting for political changes that may never come.