This year’s Autumn Budget, announced on 26th November, was highly anticipated by homeowners, buyers, and investors, with heavy speculation of major changes to stamp duty, capital gains tax, and rental income tax expected. Leading up to the budget there was noticeable market uncertainty as homeowners and investors placed their plans on hold pending the outcome of the Budget announcement, though house prices stayed steady. However, while highly anticipated, the content of Autumn Budget was somewhat anti-climactic, at least in terms of its impact on the housing market.
No changes announced for Stamp Duty
Despite supposition about reforms, such as paying stamp duty in instalments or shifting the tax to sellers, the Chancellor made no changes to stamp duty thresholds or payment methods. This was a disappointment to many hoping for measures to improve affordability and ease transactions, especially for first-time buyers after the lowering of the Stamp Duty threshold earlier this year.
New ‘Mansion Tax’ Introduced
Rather than adjusting capital gains tax as many anticipated, the Budget unveiled a new form of property taxation targeting the wealthiest homeowners: a High Value Council Tax Surcharge, commonly referred to as a ‘mansion tax.’
Starting from April 2028, this surcharge will apply to homes valued over £2 million, with annual charges ranging from £2,500 up to £7,500 depending on the property’s value band. This measure marks a significant step toward increasing the tax burden on high-net-worth property owners without altering stamp duty or CGT directly.
By introducing this annual surcharge, the government aims to generate additional revenue from expensive properties, particularly in affluent areas where these homes are concentrated. Some critics warn that such a tax could deter investment in high-value housing and potentially reduce market liquidity at the top end.
While the ‘mansion tax’ reflects the government’s intent to target wealth inequality through property taxation, given that house sales over the £2 million mark only make up a fractional percentage of overall sales, its long-term effects on the housing market remain to be seen.
Rental Income Tax Increases
The 2025 Autumn Budget brought unwelcome news for landlords, confirming that from April 2027 income tax on property and rental earnings will rise to 22%, 42%, and 47%. Expected to raise £0.5 billion, the increase follows speculation about an 8% National Insurance charge—which didn’t materialise, but the tax hike has had a similar impact on sentiment.
The 2% rise across all bands will further squeeze landlord returns, while new powers for regional mayors to introduce overnight visitor levies on short-term lets could add extra costs. Together, these measures are likely to influence investment decisions and tighten rental supply, with potential knock-on effects for rent levels.
Housing Market Outlook
The Budget forecasts steady house price growth, from £260,000 in 2024 to nearly £305,000 by 2030, growing roughly in line with earnings. While some tax changes may temper high-end market activity, long-standing issues like transaction delays remain unaddressed, though ongoing consultations may bring future improvements.
With no major stamp duty reforms, the housing market appears resilient but still constrained by affordability pressures. The added clarity may reduce uncertainty, yet the sector’s outlook will hinge on how both policymakers and the market respond in the months ahead.
Simon Jackson, CEO of SDL Surveying, shared his perspective on the budget’s contents:
“We seem to have been waiting for this budget for what feels like months and whole array of different possibilities have been trailed out, some of which were in the budget, and some were not.
The budget was neither a once in a generation opportunity to redistribute wealth nor was it a damp squib. There will undoubtedly be those who feel they have done well, those who feel they are now paying more than they want to, and those who can’t work out what happened.
But the markets should be happy, as the chancellor has widened fiscal headroom (meaning the economy can stand the impact of shocks without a heavy taxation led budget) and working families will feel like they are still reasonable shape. That coupled with likely falls in base rates over the next few months means we should have a healthy and transacting mortgage market as we come out of the festive period.”