Chancellor Rachel Reeves has just concluded her Autumn Budget statement, which includes a new ‘mansion’ levy on properties above £2m from 2028 and a property income tax hike of 2% from 2027.
New Mansion Tax charges:
This will be an annual charge of…
+ £2,500 for properties worth more than £2m
+ £7,500 for properties worth more than £5m
Reeves says this will be levied on owners and collected alongside council tax.
She says that this new surcharge will raise over £400m by 2031 and will be charged on fewer than the top 1% of properties.
EYE NEWSFLASH: Leaked OBR report confirms Mansion Tax on homes over £2m – Property Industry Eye
Property income tax hike:
Reeves said: “I will increase basic and higher rate of tax on property, and savings income by 2 percentage points.
“I will ensure that the wealthiest will contribute the most.”
She adds that 90% of tax payers will not pay tax at all on their savings.
EYE NEWSFLASH: Reeves will increase property income taxes by 2% – Property Industry Eye
GDP will grow by 1.5% in 2025, the OBR forecasts, above 1% expected earlier this year. But from then on, the outlook is downgraded from what the fiscal watchdog projected in March.
In 2026, the economy is now expected to expand by 1.4% (below a previous forecast of 1.9%)
For 2027, GDP is estimated to expand by 1.6% (against March’s estimate of 1.8%)
In 2028, GDP is forecast to rise by 1.5% (down from predicted increase of 1.7% in March)
In 2029, the economy will expand by 1.5% (not 1.8% as previously expected)
Industry reaction:
Dominic Agace, chief executive of leading estate agents Winkworth: “Hitting landlords with National Insurance will further shrink the availability of rental property, particularly in London where the buy to let model for many landlords relies on mortgage funding and so there is no headroom for this extra cost in the investment. If we have fewer rental properties, there will be a poorer quality of life for people forced to live at home for longer, or live in a flat with more sharers.”
Amy Reynolds, head of sales at Richmond estate agency Antony Roberts: “Limiting the 2028 revaluation only to bands F, G and H will inevitably create new cliff edges between properties in band E and those pushed into higher bands. Homes on the same street will fall either side of an arbitrary threshold, triggering disputes, appeals and a huge amount of administrative red tape – all of which will cost local authorities time and money to resolve.
“And crucially, this partial revaluation won’t even deliver an immediate financial benefit. Because the changes are deferred until 2028, the measure is actually a cost, not a revenue-raiser – yet another layer of bureaucracy with no short-term gain.
“Given that council tax hasn’t been comprehensively updated since 1991, it would be far more sensible to invest the time in revaluing all council tax bands. A full, nationwide update would modernise a system that no longer reflects today’s property market and would deliver far greater fairness between postcode areas, rather than embedding outdated anomalies for another generation.
“After almost three months of political theatre and speculation, this Budget should have offered clarity and direction. Instead, it lands as a damp squib: big build-up, little substance, and no meaningful reform where it’s most needed.”
Ric Iannucci-Dawson, CEO of Alto: “This Budget signals a meaningful shift in how high-value homes will be taxed, and while the changes don’t come into force until 2028, the impact on confidence will be felt much sooner.
“Agents operating in the £2m-plus bracket should expect increased questions from clients around valuations, pricing and future costs, especially as council-tax revaluations begin to bite.
“For the wider sector, the message is the same: clarity and preparation matter. Landlords and homeowners will look to agents for guidance, and the agencies that use data well, to model scenarios, track valuations and explain what the changes mean in real terms, will be the ones who build trust. Today reinforces the need for modern tools that help agents give clearer, faster answers. It’s how the best agencies will stay ahead.”
Aneisha Beveridge, head of research, Hamptons: “After weeks of speculation that froze the housing market, the Budget finally delivered clarity – and a few surprises. The government opted for a council tax surcharge on homes worth £2 million or more: headline-grabbing, but relatively narrow in scope. It will create cliff edges, with homes just below the threshold gaining appeal, and the surcharge – due from April 2028 after a nationwide valuation exercise – could weigh on values of prime properties near the threshold over the next few years as reassessments and uncertainty play out. Still, given the price point at which it kicks in and the sums involved, the overall impact on the prime market is likely to be limited.
“The bigger surprise was the increase in property income tax rates – adding further pressure on landlords who own property in their personal name. Those operating through limited companies will remain unaffected, but for individual landlords who make up the bulk of the market and who are already squeezed by higher borrowing costs and previous tax changes, this could accelerate the trend of investors exiting the market. Over time, that risks reducing rental supply and pushing rents higher.
“Taken together, these measures should draw a line under months of uncertainty and give the mainstream market the clarity it needs to move forward, even if the top end remains a little tentative. Despite headline tax rates on expensive homes and landlords going up, the OBR don’t believe the new taxes will raise any money at all, with behavioural changes eating away at tax revenues.”
“The Government is holding up the Mortgage Guarantee Scheme as its flagship policy to support first-time buyers, but the numbers tell a different story. Since launching four years ago, the Scheme has accounted for just 1% of all new mortgages.
“The downturn in the new homes sales market is the single biggest issue for SME housebuilders at the minute and it’s preventing them from being able to scale up their output. We’ve seen volume housebuilders take matters into their own hands by launching their own versions of equity loan schemes. Unfortunately, this isn’t an option for SMEs who don’t have that kind of financial firepower. SMEs have always been at a competitive disadvantage to the PLCs and the gap between them is only going to grow wider at this rate. Without targeted intervention, we risk losing the very businesses that are building the high-quality homes that the country desperately needs.
Nick Sanderson, Audley Group CEO: “Labour’s initial promises on planning reform were a positive first step, and we’ve continued to hear the Chancellor’s promise to build, build, build. But more homes isn’t enough. There must be more on the types of homes that will be prioritised. A forward-thinking government must consider the demographics and prioritise age-specific housing. The impact would be significant – freeing up the housing market, helping people live longer healthier lives, reducing strain on the NHS, and ultimately enhancing the quality of life for our ageing population.”
Sarah Bush, head of residential at Cheffins: “Reeves’ new levy for landlords is yet another hammer blow to the private rented sector. Having already endured repeated tax hikes, looming EPC requirements, and the now-legislated Renters’ Rights Act, and this latest measure introduces yet another obstacle for landlords to overcome. What the government seems to overlook is that not all landlords are the multi-property owning, profit-driven investors who have tarnished the sector’s reputation. Many are small-scale or accidental landlords, individuals who chose to invest in property rather than savings accounts during times of strong capital growth and steady rental returns. These are people who may have inherited a property or two, or those who saw property as a more reliable long-term investment than a pension fund.
“It is these landlords which account for much of the rental housing stock on the market and these are the landlords for whom this might just be the straw that breaks the camel’s back. If these landlords decide that it is just simply too difficult to own rental property and decide to sell up, stock levels will plummet and rents will go up. This will directly impact the purse strings of the renters saving to buy and make their dreams of getting onto the housing ladder even less likely.
“The government now needs to give the private rented sector a break. In reality, the Renters Rights Act shouldn’t impact the responsible landlords who look after their properties and their tenants, and we are working closely with our clients to ensure they are all fully up to date and compliant. We can only hope that the government will eventually see the importance of the private rented sector, and those small-scale landlords out there who provide an essential service for tenants across the country. They provide the backbone for day-to-day renters and if they decide their money would be safer and earn more in the bank, they are going to sell up.”
Andrew Lloyd, MD at Search Acumen: “This budget has felt like the most anticipated political move in years – a make or break for Starmer’s leadership. For industry, many have been hoping that economics would win out to politics, but the result has been a mixed bag. Whilst Reeves’ salami sliced Budget has seen a plethora of penny grabbing tactics, she has also underscored some solid commitments to technology, science and infrastructure that have given her some runway.
“The chancellor’s decision to add a surcharge to higher council tax bands signals a desire to redistribute regional mobility and bridge the wealth divide, rather than create transactional peaks and troughs like a Stamp Duty change would have likely had. Whilst this will be difficult to implement, the three years until it comes into effect will allow careful planning if managed correctly. A fully digitalised Land Registry will certainly aid this process and support the monumental task of revaluations of hundreds of thousands of homes. The concern is how valuations will take place and how legally binding they may be. If we see higher value homes reduce in price over a sustained period of time between now and 2028, there is likely to be some pushback.
“Tinkering with property taxes was always going to divisive, but now that the Chancellor has made her choice, the priority must be stability. No U-turns, no prolonged uncertainty: give homeowners the confidence to plan their lives.
“For landlords, some will be hit twice in today’s Budget if stung by a council tax surcharge and an increase in property income tax. Some will have no choice but to exit the market entirely, reducing supply of the already squeezed private rental sector. Rents have increased nationally by about 36% since 2020, a figure that sits well above wage growth and has tightened the screws on the cost-of-living crisis.
“What’s more, the scarcity of rental homes will add further pressures to social care and social housing supply, with a housebuilding sector currently in turmoil. Our research shows that the gap between social housing availability versus the ballooning volume of the non-working population is the largest since 2019, widening 173% in 2024. This means that non-working people, or those between 16 and 64 who are economically inactive and often most in need of social care, are outnumbering new affordable and social housing numbers 12 to 1.
“Taxing landlords to the extent that they are forced to increase rents or leave the market paints a concerning future for the UK’s rental population.”
Read the orginal article: https://propertyindustryeye.com/property-industry-reacts-to-2025-autumn-budget-statement/?utm_source=rss&utm_medium=rss&utm_campaign=property-industry-reacts-to-2025-autumn-budget-statement
