Market Watch
After endless build-up and feverish speculation, fuelled by drip-fed leaks, the Chancellor finally delivered her Autumn Budget. With it comes some changes relating to the UK property market.
From the introduction of a mansion tax to adjustments to property income tax, the reforms are intended to stabilise the property market and encourage sustainable investment while addressing housing affordability.
Changes will affect homeowners, landlords, and property investors. Some property professionals might consider the budget lacklustre in bringing life into the property market, but many will be feeling relief over the anticipated measures that didn’t materialise.
Here, we take a quick look at what’s new.
New taxes on high-value homes and shifts in income tax rates linked to property could cause a mini-recalibration in the UK property market.
The key highlights include:
The so-called mansion tax acts as a new annual charge (from £2500 per annum) in addition to council tax, applied to residential properties valued at £2 million and over, and paid by the owners. Property over £5 million will incur a £7500 surcharge.
To implement the high-value property tax, the government intends to carry out a ‘targeted valuation exercise’ every 5 years to determine the surcharges due to be applied.
The impact: According to Rightmove, less than 0.5% of all homes sales agreed in 2025 were for properties priced £2m or more, and sales of properties above £2m have dropped 13% year on year, suggesting the market has already been reacting to speculation about the mansion tax.
The tax will predominantly affect London and the South East, but while it directly affects just a small portion of the market, a slowing down of sales in any house price bracket can seep through to the rest of the market.
From 2027, a 2% income tax rise on rentals will apply, adding further financial pressures to landlords. This means landlords will now pay a minimum of 22% tax on their rental income, eroding net gains.
The impact: As with previous legislations aimed at the rental market, it is likely to be most detrimental to renters, with the probable outcome being an increase in rent prices to offset the higher costs and reduced supply due to landlords exiting the sector.
Areas where house prices are lower, with a strong rental market demand that generate higher rental yields will likely become prime property investment spots.
Despite continued speculation, the anticipated stamp duty changes and annual tax to properties of £500,000 or more did not materialise.
Maintaining the status-quo avoids creating a cliff-edge at £500,000, where activity might have concentrated just below the limit and dropped off sharply above it.
In short, the property market has escaped relatively unscathed in the Autumn Budget. Ultimately, this consistency, and with the changes not due to come into force until 2027/2028, gives the market a steadier foundation for the next 12 months.
Nevertheless, the budget perhaps lacks the dramatic reform some had anticipated and does very little to support people onto the ladder and incentivise movement up or down.
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