If you’re a landlord in a higher tax bracket, your margins just got cut in half.
This is the new reality for landlords in the UK as Section 24 has just fundamentally changed the game.
It didn’t just tweak the numbers… it restructured how rental income gets taxed in a way that punishes exactly the kind of landlord who used leverage to build a portfolio.
Here’s what’s happened.
Previously, mortgage interest was deductible as a business expense before tax calculations. You paid tax on actual profit.
The new system works differently. You now declare your full rental income (minus maintenance and other costs, but NOT mortgage interest).
You get taxed on that inflated number at your marginal rate. Then, after the damage is done, you receive a 20% tax credit based on your mortgage interest.
If you’re a basic rate taxpayer at 20%, this doesn’t hurt you much. But if you’re a higher-rate taxpayer at 40% or 45%? Then the numbers begin to bite a lot more.
Let’s walk through a typical scenario:
Say you own a property generating £14,000 in annual rent. Your mortgage interest is £8,000 per year. Other expenses (maintenance, insurance, letting fees) come to £1,500.
Under the old rules:
- Rental income: £14,000
- Minus mortgage interest: £8,000
- Minus other costs: £1,500
- Taxable profit: £4,500
- Tax at 40%: £1,800
Under Section 24:
- Rental income: £14,000
- Minus other costs (can’t deduct mortgage interest yet): £1,500
- Taxable amount: £12,500
- Tax at 40%: £5,000
- Minus 20% tax credit on mortgage interest (£8,000 x 20%): £1,600
- Final tax bill: £3,400
Your tax bill went from £1,800 to £3,400. That’s an 89% increase for doing absolutely nothing different. Same property. Same tenants. Same income. Just a policy change that nearly doubled your tax liability.
Multiply that across a portfolio of 3-4 properties, and you’re talking about an extra £5K-£8K in annual taxes. This is the difference between profitable and break-even for many landlords.
Why Property Still Works (For Some)
Before we go further, let’s establish something clearly: property investing in the UK is not dead.
Rental demand remains exceptionally strong. In some areas, it’s actually increasing.
Housing supply hasn’t caught up with population growth, and homeownership rates continue falling among younger demographics. If you’re providing housing, you’re solving a real problem with real demand.
Some strategies still generate solid returns in 2025. HMOs (houses in multiple occupation) can deliver strong cash flow if managed well. Serviced accommodation in the right locations performs better than traditional lets.
Rent-to-rent and lease options let you control property without huge capital outlays. Commercial conversions in specific postcodes are creating opportunities.
Some landlords are even thriving right now. They’re the ones who treat property like a serious business. They budget meticulously, stay on top of regulations, work with quality solicitors and accountants, and focus relentlessly on cash flow optimization.
If you’re one of those landlords… if your properties are fully paid off or lightly leveraged, if you’re in the basic tax rate, if you genuinely enjoy the operational side of property management… there’s no reason to change what you’re doing.
But if you’re sitting on significant equity in heavily mortgaged properties, paying higher-rate tax, and watching your margins evaporate while dealing with more compliance headaches every year… there’s a question worth asking:
Is this the highest and best use of your capital right now?
The Cash Flow Problem (And Why It Matters More Than Ever)
Section 24 didn’t just increase your tax bill. It fundamentally changed the economics of leveraged property investing.
For landlords in higher tax brackets (which includes most people with multiple properties), the effective yield on rental property has dropped to 3-5% after all costs and taxes.
That’s assuming everything goes right. No void periods. No emergency repairs. No problem tenants.
But your capital is locked up. Property is illiquid. You can’t access that equity without refinancing or selling, both of which come with significant costs and complications.
Here’s the reality: most landlords are capital-rich and cash flow-poor.
You might have £500K, £750K, even £1M+ in property equity. But after mortgage payments, maintenance, insurance, compliance costs, letting agent fees, and the new tax treatment… your actual monthly cash flow is surprisingly small.
And that cash flow is what actually matters. That’s what pays for your life. That’s what you can reinvest. That’s what compounds.
So when we talk about the housing market transition, we’re really talking about a cash flow crisis for leveraged landlords. The asset might be appreciating (slowly), but the income it generates relative to the capital tied up and the headache involved has become increasingly unattractive.
The Alternative Most Landlords Don’t Know Exists
This is where the conversation gets interesting.
While landlords have been focused on tackling Section 24, rising interest rates, and increasing regulation, there’s been a shift happening among a subset of property investors. They’re not abandoning real estate entirely. They’re not rushing into index funds.
They’re doing something different.
They’re using their equity to buy a business instead.
An existing, cash-flowing business with established customers, proven revenue, and real operations.
Here’s why this matters for cash flow:
A well-structured business acquisition with proper systems can generate 20-35% annual returns. In actual distributable cash flow that hits your account monthly.
We can even compare the numbers directly. You have £750K in equity from property sales or refinances.
Option A: Reinvest in More Rental Property
- £750K investment (after SDLT surcharges)
- Net cash flow after Section 24 taxes: £2,000-£3,000/month if you’re lucky
- Annual cash flow: £24K-£36K
- Cash-on-cash return: 3.2-4.8%
- Liquidity: Terrible (months to sell, transaction costs 3-5%)
- Oversight required: Ongoing tenant management, maintenance, compliance
- Tax efficiency: Poor (can’t deduct mortgage interest)
Option B: Buy a Business
- £750K investment (can get you a £1-2M revenue business)
- Net cash flow with proper team: £12K-£20K/month
- Annual cash flow: £144K-£240K
- Cash-on-cash return: 19-32%
- Liquidity: Better (can sell in 3-12 months at 3-5x earnings multiple)
- Oversight required: Strategic decisions, team management (not day-to-day ops)
- Tax efficiency: Excellent (all business expenses deductible)
Same capital deployed, but one gives 5-8x the cash flow and half the operational headache if you set it up correctly.
Why Business Acquisition Works Better for Cash Flow
Let’s break down why buying a business generates superior cash flow compared to rental property in the current environment:
- No Section 24 Tax Penalty
Business expenses are fully deductible. Marketing, software, salaries, equipment, travel… legitimate business costs reduce your taxable income. There’s no equivalent to Section 24 killing your ability to deduct financing costs.
If you finance part of a business acquisition, that interest is fully deductible against business income.
This is how the tax code used to work for property before 2017. It still works this way for business.
- Higher Profit Margins
Rental property typically generates 15-25% gross yield before financing and taxes. After everything, you’re lucky to keep 20% of that as actual cash flow.
A well-run e-commerce or service business typically generates 15-30% net profit margins after all operating expenses. That’s the cash flow you keep, not the gross revenue.
On the same capital investment, you’re often generating 5-10x the distributable cash because the underlying margins are just structurally better.
- Scalability Without More Capital
Want to increase your rental income? You need to buy another property. More deposits, more SDLT, more mortgages, more compliance, more tenants.
Want to increase business cash flow? You optimize marketing, improve conversion rates, raise prices, launch new products, and improve operations. You can even double revenue without doubling capital investment.
Your cash flow isn’t capped by how many properties you can afford to buy. It’s limited by how well you execute growth strategies.
- Faster Exit Timeline
Property is a long-term hold. You need years to build meaningful equity through mortgage paydown and appreciation. Your capital is locked up, generating modest cash flow while you wait.
A well-executed business acquisition can return your entire initial investment in 18-36 months through cash flow. Then you either keep collecting that cash flow indefinitely, or you sell for 3-5x earnings and move to the next opportunity.
The velocity of capital is completely different. You’re not waiting 10-15 years to realize gains. You’re generating meaningful returns within 1-3 years.
- Control
This might be the most underrated advantage. In rental property, you’re at the mercy of interest rates, government policy, tenant behavior, and local market conditions. You control very little.
In business ownership, you control marketing spend, pricing strategy, cost structure, team performance, and operational efficiency. If cash flow drops, you can do something about it immediately.
You don’t need to wait for market conditions to improve or hope the government reverses Section 24.
That control matters enormously when you’re trying to optimize for cash flow.
How the TrendHijacking.com Model Works
The problem isn’t that business acquisition is a bad strategy for generating cash flow. The problem is that most landlords have no idea how to buy a business, let alone find one that isn’t overpriced or fundamentally broken.
Buying a business isn’t like buying property. There’s no Rightmove. No standard valuation methodology. No conveyancing process that every solicitor understands. The market is opaque, full of inflated listings, and designed to extract maximum value from inexperienced buyers.
This is why Trend Hijacking was established. To create a systematic process that removes the guesswork and prevents expensive mistakes.
Phase 1: Clarity & Fit
They start by understanding your actual situation.
What kind of business makes sense given your skills and interests? What’s your realistic acquisition budget? How hands-on or passive do you want to be? What’s your risk tolerance after years of dealing with property headaches?
This phase essentially filters out the noise. They identify the narrow profile that actually fits your goals and cash flow requirements.
Phase 2: Deal Discovery & Vetting
The consultancy searches through 2,000+ private seller businesses and connect with 54+ brokers who have off-market opportunities. The best deals don’t get publicly listed because sellers with quality businesses get swarmed with private offers before they ever need to list on a marketplace.
Then they run forensic-level due diligence on every potential target. They score and shortlist the top 20-30 deals, then filter down to 3-7 acquisition-ready opportunities that match your profile and cash flow requirements.
You don’t waste months looking at overpriced listings. You only review businesses that have passed our vetting process and can realistically generate the cash flow being targeted.
Phase 3: Negotiation & Acquisition
This is where having TrendHijacking.com pays for itself multiple times over.
Most business sellers list high. Brokers inflate valuations based on “future potential” rather than current cash flow. Inexperienced buyers accept the first number because they don’t understand negotiation leverage.
The team negotiates aggressively on your behalf. Our team regularly gets 15-40% below initial asking prices. On a £1.2M acquisition, that’s £180K-£480K in instant equity. That alone often exceeds what most landlords make in cash flow over 1-2 years of property ownership.
Beyond price, they handle all the acquisition complexity. Paperwork, legal coordination, Letter of Intent preparation, deal structuring for tax efficiency, and closing guidance.
Phase 4: Team Setup & Scale
This is where most acquisitions fail. New owners either freeze up and watch revenue decline, or they make rash changes and break what was working.
That’s why in the first 30 days post-acquisition, they help you build a lean, remote operations team. You own the business. You make strategic decisions. They build you the infrastructure.
Why This Makes Sense Right Now
Property values have stabilized or dipped in many areas, meaning landlords can exit without taking major losses. Rental demand remains strong, so properties are actually selling (unlike in a true crash). This creates a window where liquidating property equity is realistic.
At the same time, interest rates on business acquisition financing are still manageable for creditworthy buyers. Business valuations haven’t inflated the way property did from 2010-2021.
And there’s a massive supply of baby boomer business owners looking to exit in the next 2-3 years, creating buyer-favorable conditions.
For landlords specifically, the combination of Section 24 squeezing margins and the opportunity to deploy that capital into higher cash flow assets creates a never-before-seen arbitrage opportunity.
You’re not abandoning real estate because it’s crashing. You’re reallocating capital from lower cash flow assets (property) to higher cash flow assets (businesses) at a moment when both the exit and entry conditions are favorable.
The Risk Reality
As you know, every investment isn’t without its risks. You need capital reserves and realistic expectations.
This isn’t passive income, especially in the first 6-12 months. You need to be engaged, make decisions, and oversee your team. But with proper systems and the right people in place, it becomes progressively more hands-off.
The difference between this and property is that YOU control the variables. In property, you’re at the mercy of interest rates, government policy, and tenant behavior. In business ownership, you control marketing spend, pricing strategy, team performance, and operational efficiency.
If cash flow drops in a rental property, your options are limited. Maybe you raise rent, hope for better tenants, or just wait for the market to improve. If cash flow drops in a business, you can test new offers, optimize conversion rates, cut unnecessary costs, or pivot strategy within days.
That control fundamentally changes the risk profile.
What Happens Next
Many landlords will stay in property. They’ll implement HMO strategies, focus on cash-flowing areas, use creative financing techniques, and make it work. For some, that’s the right move. Property isn’t dead, it’s just harder than it used to be.
But if you’re sitting on significant equity (£400K+) and your current cash flow doesn’t justify the capital tied up or the headache involved… there’s an alternative worth exploring.
The landlords who’ve made this move aren’t abandoning real estate out of panic. They’re reallocating capital to higher-return opportunities at a moment when market conditions favor exactly this kind of transition.
And you can assess this opportunity for 14 days without having to commit to any partnership or make a down payment.
Yes, during the trial, you get:
- Full walkthrough of our acquisition process
- Preview of actual acquisition-ready businesses in our current pipeline
- Strategic planning session to see if this fits your cash flow goals
- Access to our deal vetting criteria and due diligence framework
If it’s not for you after 14 days, no problem. You walk away having learned how business acquisition works, with zero cost.
If it is for you? We move forward with Phase 1 and start finding your first acquisition.
Because here’s the reality: cash flow is king in 2025. Property can still generate it, but the margins are thinner than ever. Business acquisition generates 5-8x the cash flow on the same capital, with proper structure and team.
The question isn’t whether property is dead (it’s not). The question is whether your capital is working as hard as it could be. And for many landlords dealing with Section 24, rising rates, and shrinking margins… the answer is no.
About Trend Hijacking
Trend Hijacking is an e-commerce investment consultancy that specializes in helping high-net-worth Individuals,busy investors acquire and scale profitable businesses. Founded by Dolapo Adedayo, the firm has developed a systematic approach to business acquisition that removes the guesswork and heavy lifting traditionally associated with M&A deals.
The company’s Smart Acquisition Program guides investors through the entire acquisition journey, from initial deal discovery and forensic due diligence to negotiation, closing, and post-acquisition scaling.
By searching through over 2,000 private seller businesses and connecting with 54+ brokers, Trend Hijacking gives partners access to acquisition opportunities they wouldn’t find on their own.
For investors looking to build wealth through business ownership rather than startup risk, Trend Hijacking offers a proven pathway from acquisition to seven-figure scale.
A 14-day trial period allows potential clients to experience the full acquisition process, preview current deal opportunities, and develop a strategic plan before making any financial commitment.
Media Contact: Trend Hijacking
Support@trendhijacking.com
+1 213 632 3209 (US)
+44 20 3287 7320 (UK)
