Autumn Budget 2025: Property & Construction Commentary

The Budget introduces a new “High Value Council Tax Surcharge” (previously referred to as a “mansion tax”) on properties worth over £2 million. It is not expected to begin until a full national property revaluation is undertaken in 2026, with the levy planned to come in from 2028.  For this reason, high-end luxury homes, may see some pressure on values and slower activity as owners and buyers reassess whether the extra cost justifies the ownership.  Moving forward owners of expensive homes may face extra long-term costs and some may rethink holding onto such properties, which could dampen demand at this end of the market.

The Budget increases the income tax rates on property income (i.e. rents) by 2 percent across all bands from 2027 onward, which is another blow for landlords. Many landlords are already contending with changes under recent rental-rights legislation, and mortgage costs but will now find yields squeezed further. As a result, some landlords may exit the rental market, especially those with leveraged buy-to-lets, reducing overall rental supply. The rates of capital gains tax remain unchanged, which are comparably lower to Income Tax so this may encourage some to sell. Reduced supply could push up rents, making it harder for tenants, especially those on modest incomes to find affordable housing so the private rental sector may tighten further.

No announcement on stamp duty land tax which will be a relief for conveyancers up and down the country.

It was disappointing to see no incentives to help first time buyers with of view of helping the property market. It is probably worth noting that leading up to the Budget, many buyers and sellers were holding off making decisions with a “wait and see” mindset. Although no major changes to the headline rates. The budget itself does give certainty for those waiting to make decisions. This may lead to an increase in transactions and activity.