Autumn Budget 2025 – What It Means to the Property Sector

Rachel Reeves’ Autumn Budget was widely framed as a political “make-or-break” moment for Labour’s early economic credibility. For property, the headline is clear: the government has chosen ongoing and income-based property taxes over transactional reforms like Stamp Duty cuts.

That choice creates winners and losers across different slices of the market – prime homeowners, landlords, accidental landlords, and Build-to-Rent (BTR) investors – and it shifts the debate from “how much does it cost to buy?” to “how much does it cost to hold?”

1) High Value Council Tax Surcharge (“mansion tax”): an annual levy on £2m+ homes

What was announced

From April 2028, properties valued above £2 million will pay a new High Value Council Tax Surcharge (effectively a mansion-tax-style annual charge). The surcharge is separate from existing council tax and rises by value band, starting at around £2,500 per year for £2m–£2.5m homes and reaching about £7,500 per year for £5m+ properties. Valuations will be based on 2026 values, with CPI-linked uprating thereafter, and a consultation on exemptions/appeals is expected in 2026.

Market impact

Andrew Lloyd of Search Acumen argues the surcharge is designed to redistribute wealth and dampen regional inequality without triggering the boom-bust cycles that a Stamp Duty change often causes. He also flags a big practical question: revaluing hundreds of thousands of homes requires a digital Land Registry and robust valuation methodology to avoid legal disputes. His warning is that if high-value prices soften meaningfully before 2028, owners may push back hard against valuations perceived as stale or unfair.

Likely effects on the prime end:

• Softening of demand above the threshold. Buyers will price in a permanent annual cost, not a one-off hit. That can suppress appetite at the margin, especially for discretionary moves.

• “Threshold bunching.” Lloyd and other market watchers expect price gaps or slower sales around £2m, as sellers try to stay below the new band.

• More consideration of selling, but not a rush. Because it’s not triggered by a transaction, it doesn’t force immediate behaviour – it gently nudges owners to reconsider holding costs.

David Adams from Cavendish is blunter about feasibility: he calls the mansion tax a bureaucratic nightmare because it implies the first meaningful council-tax revaluation in ~35 years, and predicts large-scale appeals if and when it lands. His concern is the administrative drag itself could chill activity at the top end.

2) Property income tax up 2% from 2027: pressure on landlords and rental supply

What was announced

From April 2027, income tax on property profits rises by 2 percentage points across the board:

• Basic rate: 22%
• Higher rate: 42%
• Additional rate: 47%

Applies to landlords in England, Wales, and Northern Ireland.

Market impact

This is the Budget’s sharpest lever on the private rented sector (PRS).

Andrew Lloyd’s view is that many landlords could be hit twice – once by the new high-value council tax surcharge (if they own qualifying homes) and again by higher income tax on rental profits. His prediction: some will exit the market, shrinking supply and pushing rents higher.

He links that to already-tight conditions: rents are up roughly 36% since 2020 (per Search Acumen’s research), and a further loss of rental stock risks worsening cost-of-living pressures and overloading social housing systems.

David Adams reinforces that point with a specific lens: “accidental landlords” (estimated by Cavendish at ~one-third of landlords) – people who rent a former home, inherit a property, or rent temporarily – are especially exposed because they often don’t operate through limited companies and can’t offset tax in the same ways. He sees two likely reactions:

1. Rent rises to recover the tax difference, or
2. Market exit, especially after the Renters Rights Act has already increased compliance burdens.

Either way, the direction of travel is less PRS stock, not more.

3) No Stamp Duty or Help-to-Buy-style changes: confidence over incentives

A striking omission in the Budget was any change to Stamp Duty or new buyer-support schemes.

Search Acumen’s mortgage-market comments suggest this will disappoint would-be movers hoping for upfront relief, but the bigger story is psychological:

• With interest rates having eased earlier in 2025 and mortgage pricing stabilising, confidence is returning.

• The Budget doesn’t directly cut buying costs, but it clarifies the economic runway, which can shift households from “wait and see” to “let’s plan.”

So while transactional activity doesn’t get a mechanical boost, sentiment could still lift gradual demand through 2026 – particularly among buyers who now feel they can forecast costs more reliably.

4) Build-to-Rent: planning tailwinds, fiscal headwinds

Your BTR sector commentary captures the Budget neatly: there’s real planning momentum, but little fiscal help where viability is tight.

Positive signals

• Confirmation of the Planning and Infrastructure Bill, faster timelines for major schemes, resourcing local authorities, and pro-development defaults around transport hubs all improve delivery certainty.
• The government’s housing-supply rhetoric aligns with long-term BTR capital.

What wasn’t fixed

• No reinstatement of Multiple Dwellings Relief, whose removal has already rendered many schemes unviable.
• No extension of empty-property business rates relief or council-tax changes for unoccupied new-build BTR units.
• No VAT expansion for retrofit/refurbishment energy-saving works.

Net: the Budget improves conditions around BTR, but not the mechanics of delivery. Investors still need a stable tax environment to move stalled projects off the fence.

What this all adds up to

For prime homeowners (and sellers)

• Expect a drag on demand above £2m from 2026 onward as buyers pre-price 2028 holding costs.
• Potential pricing “cliffs” near £2m and slower turnover in upper-prime areas.

For landlords and renters

• The 2% income-tax rise is a supply-side shock to PRS.
• Risk of rent inflation and accelerated landlord exits, with accidental landlords particularly exposed.

For developers and BTR

• Planning certainty improves, but viability remains fragile without tax levers.
• Delivery depends on whether future fiscal events back planning reform with cost-reducing measures.

The underlying theme: stability vs. strain

Andrew Lloyd’s central plea is for policy stability: now that the Chancellor has chosen her path, property markets need no U-turns and no prolonged uncertainty. Housing – more than most sectors – prices in confidence. A stable (even if tougher) tax regime is, in his view, better than a volatile one.