Burnham's Tax Blueprint Could Hit London Co-Living Landlords Hardest

A Tax Threat Taking Shape in Manchester, But London Landlords Should Pay Close Attention

Andy Burnham's proposed Greater Manchester property levies are no longer just political noise. According to recent reporting from Landlord Today, the tax threat is already depressing sales volumes in Q2 2026. Investors are pausing acquisitions, yields are being recalculated, and the ripple effects are being felt well beyond the M60.

So why should London landlords care? Because regional devolution doesn't stay regional for long. When a mayor successfully introduces a new revenue mechanism, it creates a playbook that other metro leaders can replicate. And if you're running a co-living or professional house-share model in the capital, you could face the greatest exposure of all.

Let's unpack why.

What Are Devolution Tax Proposals, and Why Do They Matter?

The core idea behind Burnham's proposals is simple: give metro mayors the power to levy additional surcharges on certain property types to fund local infrastructure, housing, and services. The details are still evolving, but the direction is clear. Multi-tenanted properties, properties held in portfolios, and high-density rental stock are all in the crosshairs.

London's mayor already has more fiscal tools than any other metro leader in the UK. The infrastructure for borough-level and mayoral-level property levies exists. Council tax premiums on empty homes and second homes are already in play across several London boroughs. The question is not whether London will explore similar surcharges, but when.

For landlords operating traditional single-let buy-to-lets, the impact of a new levy might be manageable. But for those running co-living models, the maths changes dramatically.

How Co-Living Works, and Where the Vulnerability Lies

Co-living, sometimes called professional house shares or multi-let HMOs, involves renting out individual rooms within a property rather than the property as a whole. It has been one of the most popular strategies for London landlords over the past five years, and for good reason. Per-room rents can generate significantly higher gross yields compared to a single-tenancy arrangement.

A four-bedroom property in Zone 3 might let as a whole unit for £2,200 per month. Rent those same four rooms individually to young professionals, and you could bring in £3,200 to £3,600 per month. The yield premium is obvious.

But so is the regulatory exposure.

Licensing, Compliance, and Rising Costs

Most co-living properties in London require an HMO licence. Mandatory licensing applies to properties with five or more occupants forming two or more households, but many boroughs have introduced additional licensing schemes that capture smaller HMOs too. Licence fees, safety requirements, minimum room sizes, and management regulations all add up.

Now layer on a potential mayoral surcharge targeting multi-tenanted properties. If a levy is applied per bedroom, per tenancy, or as a percentage premium on properties with three or more separate tenancies, co-living operators stand to absorb the highest per-property cost increase of any landlord type.

Tenant Turnover and Management Complexity

Co-living isn't passive income. Rooms turn over more frequently than whole properties. Each changeover involves advertising, referencing, inventory checks, cleaning, and often minor maintenance. You're managing relationships between multiple tenants sharing communal spaces, handling disputes, coordinating repairs, and staying on top of compliance across every tenancy.

At Airhosts, we speak with London landlords every week who have moved away from co-living because the management burden outweighed the yield premium, even before new tax threats entered the picture.

The Yield Illusion

Here's what many co-living landlords discover after a year or two: the headline yield rarely matches the net result. Once you account for higher void periods between tenants, furnishing and maintaining individual rooms, utility costs that are harder to pass on, licensing and compliance expenses, and the sheer time investment of managing multiple tenancies, the gap between co-living and a well-managed alternative narrows considerably.

And if new local authority levies arrive? That gap could disappear entirely.

Why Short-Term Lets Offer a Cleaner Path to High Yields

This is where the comparison becomes genuinely interesting. Short-term letting in London, when managed professionally, delivers many of the yield benefits that attract landlords to co-living, without the same regulatory exposure to multi-tenancy surcharges.

A short-term let is a single property, let as a whole unit, to one booking party at a time. It doesn't trigger HMO licensing. It doesn't create the multi-tenancy profile that devolution tax proposals are designed to target. And when pricing is optimised across peak seasons, corporate demand, and weekend leisure travel, the annual income can match or exceed a well-run co-living setup.

The key word there is "professionally." Short-term lets deliver strong returns when pricing, guest management, turnovers, and compliance are handled by a team that does this every day.

That's exactly what Airhosts provides.

A Hands-Off Alternative That Protects Your Returns

With Airhosts managing your London short-term let, you get dynamic pricing that responds to real-time demand, professional guest screening and communication, full turnover management including cleaning and linen, compliance with the 90-night rule and local authority requirements, and transparent reporting so you always know how your property is performing.

You keep the yield advantage that drew you to co-living in the first place, but you lose the complexity, the tenant disputes, the licensing headaches, and critically, the exposure to incoming multi-tenancy levies that could reshape the co-living landscape in London over the next 12 to 24 months.

The Smart Move for London Landlords in 2026

The Burnham proposals are a signal, not an anomaly. Devolution is expanding, mayoral powers are growing, and multi-tenanted properties are squarely in the frame for new revenue-raising measures. If you're running a co-living model in London, now is the time to stress-test your numbers against a scenario where a new per-tenancy or multi-let surcharge lands on your property.

And if those numbers don't hold up, the pivot is straightforward.

Talk to the team at Airhosts. Whether you're looking to convert an existing co-living property into a high-performing short-term let, or you want to understand how your London property could earn more with less hassle, we'll give you an honest, no-pressure breakdown of the numbers. Reach out today and find out what hands-off, high-yield property income actually looks like.