The Autumn Budget 2025 introduced a few significant changes that will reshape elements of the UK residential sales and lettings market, with higher taxes for landlords and a new “mansion tax” on homes valued above £2 million.
However, after all the “kite flying” and speculation leading up to the statement, it did not make huge changes directly affecting the mainstream property market.
The sales market in recent weeks has slowed as people “sat on their hands” and waited to see what was happening. There is no reason now why the handbrake cannot be lifted and allow people to get on with their lives and we anticipate a small surge of activity pre-Christmas from that pent up demand.
Residential Sales
The most headline-grabbing announcement is the introduction of a “mansion tax” - a recurring annual surcharge on properties worth more than £2 million, payable from April 2028. This levy, applied on top of existing council tax, is designed to ensure that high-value homes contribute more to public finances. While the measure is expected to raise hundreds of millions in revenue, it may dampen demand at the top end of the market, particularly in London and the South East, where such properties are concentrated.
Buyers of luxury homes may delay purchases or negotiate harder, potentially slowing transaction volumes in this segment.
The sales market in recent weeks had slowed as people “sat on their hands” and waited to see what was happening.
There is no reason now why the handbrake cannot be lifted and allow people to get on with their lives and we anticipate a small surge of activity pre-Christmas from that pent up demand.
Interestingly, despite speculation, stamp duty remained unchanged, offering some relief to mainstream buyers. The continuation of existing stamp duty thresholds may help stabilise activity in early 2026, though sentiment remains cautious.
Residential Lettings
Landlords face the most direct consequences of the Budget. From April 2027, property income tax rates will rise by two percentage points, with the basic rate set at 22%, the higher rate at 42%, and the additional rate at 47%. This change is expected to raise around £500 million annually from 2028 onwards.
There is the widely voiced concern that the measure could drive some landlords to exit the market, reducing rental supply and pushing rents higher. With demand for rental homes already outstripping supply, tenants may bear the brunt of these reforms. The National Residential Landlords Association has cautioned that nearly one million new rental homes are needed by 2031, yet the Budget risks discouraging investment.
Many of these properties may be leasehold and it will be important that sellers get prepared at the outset by getting leasehold information ready for when a buyer is found.
Outlook
The Autumn Budget reflected the government’s determination to close fiscal gaps by targeting property wealth. For sales, the mansion tax may cool high-value transactions, while unchanged stamp duty provides stability for mainstream buyers. In lettings, higher landlord taxation is likely to exacerbate affordability pressures for tenants.
As the dust settles, we will see what impact the budget statement has on the financial markets but initial reaction was muted and long-term gilt rates which ultimately impact on mortgage rates came down.
We don’t therefore expect any significant change and certainly not an adverse one on the Bank of England base rate and mortgage rates.
As always, the team and myself are here to answer your questions and help you achieve your moving goals.
Darren Murphy
