Autumn Budget 2025: Property & Construction Sector Predictions & Wish List

Stamp Duty Land Tax (SDLT)

One possibility is a reform of SDLT, or even its replacement for high-value homes (for example, those valued above £500,000) with an annual property levy. If introduced, the tax could accrue during ownership and become payable when the property is sold, shifting the liability from the purchaser to the seller.

The levy could apply to owner-occupied homes above a set value threshold, with rates starting around 0.5% and increasing for properties valued over £1 million. It would likely exclude second homes and buy-to-let properties, at least initially. This would represent a significant change to how residential property is taxed, moving from a one-off transaction charge to an ongoing levy based on property value. Any reform would need to address how valuations are determined, what transitional measures are required, and how it would interact with existing local property taxes.

There is also speculation that the rate of existing SDLT surcharges on second homes, buy-to-let properties, and other non-main residences could rise from 5% to potentially 6% or 7%. Such a change would align with the Government’s goal of supporting first-time buyers by discouraging investor activity.

Additionally, HM Treasury is understood to be reviewing how SDLT applies to transactions involving “property-rich” companies. Currently, when property is acquired indirectly through the purchase of shares in such a company, the transaction typically attracts the lower stamp duty rate on shares rather than SDLT. A company is generally considered “property-rich” if 75% or more of its gross assets value is derived from UK land and property. The Government may look to close this gap by introducing a higher rate of stamp duty on share transfers involving these companies, bringing them more in line with the tax treatment of direct property purchases.

Inheritance Tax

The Residence Nil-Rate Band (RNRB) is an additional inheritance tax (IHT) allowance that can apply when an individual leaves their home (or the sale proceeds of it) to direct descendants, typically their children or grandchildren. When combined with the standard IHT nil-rate band, it can allow up to £500,000 per person (£1 million for married couples or civil partners) to pass free of IHT.

However, the RNRB has long been viewed as complex to administer, particularly given its interaction with the main IHT allowance and tapering rules for larger estates.

As part of a wider review of the tax system, the Government may look to simplify IHT by reducing or even removing the RNRB altogether. Such a move would increase the number of estates falling within IHT and could raise additional revenue for the Treasury.

Any changes to the RNRB would have significant implications for homeowners and families with higher-value property holdings, reinforcing the importance of early and effective estate planning.

Business Rates and Commercial Property

Business rates continue to be a long-standing concern for the property and construction sector and remain an area the Government is expected to review. Possible updates may include more frequent revaluations to reflect market conditions, along with adjustments to reliefs to provide additional support for smaller businesses or those based in specific regions.

For owners and occupiers of offices, retail units, or industrial sites, higher property values could lead to increased ongoing costs, while smaller premises may benefit if reliefs are expanded.

Changes to business rates could influence the cost of occupying or developing commercial space. Developers, investors, and tenants may need to factor in potential rate increases when planning new projects or negotiating leases. Any measures aimed at supporting smaller businesses could also help encourage activity in local and regional markets.

Council Tax

Changes to Council Tax could also be on the agenda. In the short term, the Government may ask local authorities to revalue homes for the first time in decades or introduce new upper bands for more expensive homes. Any revaluation would likely be phased in, with measures to prevent sharp increases in household bills, but updating valuations would help modernise the system that many view as outdated.

In the longer term, there is a wider debate about replacing Council Tax with a revised local property tax, based on up-to-date property values, potentially capped, and with rates set by individual local authorities. For developers and landlords, this could influence the cost of new housing and shape investment decisions, particularly in higher-value areas.

Mansion Wealth Tax

Recent reports have suggested the possibility of a so-called “mansion wealth tax”, targeting properties valued at around £2 million or more and applying an annual charge of 1% on the value above this threshold. While still speculative, it suggests the Government may be exploring new ways to raise additional revenue from high-value property ownership.

Higher property taxes or new levies could increase costs for developers, investors, and landlords, putting pressure on margins and rental yields. Market activity could slow in the short term as buyers and investors reassess projects, with some shifting towards opportunities that are lower risk or structured in a more tax efficient way.

Capital Gains Tax

The Budget could include further changes to Capital Gains Tax (CGT) for residential property. Recent budgets have already seen CGT rates rise and certain reliefs restricted, particularly affecting higher-value assets. Future changes could see rates brought more closely in line with income tax.

There have also been suggestions that HM Treasury may review the Private Residence Relief rules, which currently exempt all gains on a homeowner’s main residence if specific conditions are met. Some reports have suggested that any change could include a cap for homes worth above £1.5 million, limiting the amount of gain that can be exempted and targeting only the higher-end properties. Introducing such a measure could raise significant additional revenue for the Treasury.

Any increase in CGT could make property disposals more costly for both investors and homeowners and could prompt some to bring forward planned sales ahead of any changes. For developers and investors, higher rates would reduce the profits realised on disposals and may lead to a more strategic approach to the timing and structure of future sales.

Rental Income and Landlord Taxes

There is increasing talk that the Government may look to bring rental income earned by private landlords (individuals and partnerships) within the scope of National Insurance Contributions (NICs).

If this goes ahead, it seems likely that for individuals with both employment or self-employment income and rental income, these earnings would be combined for NIC threshold purposes. With Making Tax Digital for Income Tax being phased in for landlords from 2026/27, it would be relatively straightforward for HMRC to extend NIC collection to rental income if new rules are introduced.

Corporate landlords are unlikely to be affected, as company profits are already subject to corporation tax and employer NICs where relevant. This would continue the wider trend of tightening tax rules for landlords in recent years, following the restriction of mortgage interest relief and other property-related deductions.

Higher taxes on rental income could reduce the returns landlords earn, particularly for smaller investors. Some may choose to review their portfolios or exit the market altogether, which could further constrain the supply of rental properties. For developers and investors, these potential changes may influence which types of properties they hold or invest in and could shape how rental portfolios are structured in the longer term. Further tax increases could also make the sector less attractive for new landlords, limiting the supply of rental homes and keeping upward pressure on rents.

Business Rates Reform

Business rates remain an important area for review, with many in the sector hoping for greater fairness and stability in the system. Freezing or capping the rates multiplier, or linking future increases to inflation, would give businesses more certainty when planning ahead.

Support for regeneration, such as temporary reductions for redeveloped or newly occupied buildings, could also help revive high streets and local economies.

Planning, Housing and Infrastructure

Planning remains one of the biggest barriers to growth in the property and construction sector. Steps to accelerate decision-making, particularly for brownfield and mixed-use developments, and to bring more consistency across local planning authorities would be widely welcomed.

Providing additional resources for planning departments and simplifying the process for large-scale housing projects could help unlock development and increase the supply of much-needed homes. A renewed focus on affordable housing, regeneration, and supporting infrastructure such as transport links would also strengthen confidence and attract further private investment.

Sustainability and Green Building Incentives

With the property and construction sector playing a key role in achieving the UK’s net zero goals, many in the industry hope to see stronger incentives for energy-efficient building and retrofitting. Possible measures could include enhanced allowances for green upgrades, grants for retrofit projects, or reliefs that encourage the use of sustainable materials and low-carbon construction methods.

These initiatives would not only help developers and investors meet environmental goals but also make it more viable to upgrade older buildings, driving innovation, sustainability, and resilience across the industry.

Corporate Interest Restriction

Many property and construction businesses rely heavily on debt financing to fund large-scale developments and infrastructure projects. With higher interest rates continuing to drive up borrowing costs, the current Corporate Interest Restriction (CIR) rules can limit the amount of tax relief available on genuine commercial interest expenses.

An increase in the CIR threshold, or greater flexibility for long-term or capital-intensive projects, would help ensure the rules reflect the realities of property development and investment. Allowing more interest to be deductible would free up cashflow and encourage further investment across the sector.

Property Transactions and Digital Conveyancing

Speed and certainty in property transactions remain key priorities for the sector. Delays in conveyancing and title registration can slow development timelines and disrupt investment activity.

Further progress on digital conveyancing reforms, including modernising the Land Registry process and expanding electronic signing and document verification, would help make property transactions smoother and more efficient.

Workforce & Skills Development

The construction industry continues to face significant skills shortages, which risk slowing housing delivery and major infrastructure projects. Increased investment in training and apprenticeships, along with greater support for modern methods such as modular construction, would help increase productivity and build long-term capacity.

Encouraging closer collaboration between education providers and the construction sector would also help ensure the next generation of workers develops the technical and sustainability skills needed for a modern, resilient industry.