Autumn Budget 2025: What the property market needs to know

The run-up to this year’s Autumn Budget brought plenty of speculation, with many would-be movers choosing to pause their plans amid rumours of wide-ranging Stamp Duty reform. In the end, much of the talk proved to be just that - talk. While major Stamp Duty changes didn’t materialise, the Chancellor did unveil some important measures that will shape the property landscape over the coming years.

Below, we break down what did emerge and what it means for homeowners, landlords and the wider market.

A new Mansion Tax: The High Value Council Tax Surcharge

One of the headline-grabbing announcements was the introduction of what has been labelled a ‘mansion tax’. From April 2028, a High Value Council Tax Surcharge (HVCTS), will apply to homes valued at over £2 million.

How the surcharge will work

The surcharge will be paid by the property owner, not the occupier, and will fall within four value-based bands:

Property Value: £2.0m – £2.5m Annual Surcharge: £2,500

Property Value: £2.5m – £3.5m Annual Surcharge: £3,500

Property Value: £3.5m – £5.0m Annual Surcharge: £5,000

Property Value: £5m+ Annual Surcharge: £7,500

Although this sounds significant, it’s important to note that homes at this level make up a small fraction of the market. According to Rightmove, less than 0.5% of sales agreed this year involved properties over £2 million, and only around 1% of homes currently listed are priced above that threshold.

The valuation challenge

Many high-value homes haven’t changed hands in decades, which means determining accurate valuations will be no small task. The Government plans to carry out a targeted valuation exercise every five years. How these valuations will be conducted, and how disputes will be resolved, must be communicated clearly to avoid confusion and anxiety for homeowners.

Certain regions, particularly London and the South of England, will feel the impact most acutely due to their higher concentration of prime properties. With these areas still adjusting to this year’s Stamp Duty changes, the new surcharge may add an additional layer of complexity.

Potential market behaviours

There may be discussions around restructuring property ownership or even splitting land titles in an attempt to fall below the surcharge threshold. Whether such measures become common will depend on how the final rules are framed and how significant homeowners perceive the financial impact to be.

Overall, if the system is introduced with clarity and fairness, the day-to-day market impact may be limited. If it proves overly complex or burdensome, however, it could risk denting confidence at the upper end of the market.

Despite the concerns, prime property will always have its audience. Desirable homes in sought-after locations remain resilient, whatever the tax landscape.

Landlords face a 2% rise in tax on rental income

The other major property-related measure in the Budget impacts landlords. From April 2027, income tax on rental earnings will increase by 2%, raising the rates to:

22% (basic rate)

42% (higher rate)

47% (additional rate)

There had been fears of an even more significant shift, such as landlords becoming liable for National Insurance on rental income. While that change didn’t materialise, the announced increase will still reduce net yields for many.

What this could mean for the rental market

The cumulative effect of measures introduced over recent years has already placed pressure on private landlords. This latest change may prompt some to reconsider their portfolio or even exit the sector altogether.

Alternatively, some landlords may seek to offset the increased tax burden by adjusting rents over time. If so, tenants could eventually feel the impact through higher rental prices.

Now that the Budget is confirmed, market uncertainty should begin to ease. Movers, especially those at the top end of the market, can proceed with greater confidence, no longer waiting for possible tax reforms that didn’t occur.

While the Autumn Budget didn’t bring the sweeping reforms some expected, it did introduce measures that will reshape parts of the market over the next few years. The Guild of Property Professionals will continue to monitor developments closely and support Members and consumers alike in navigating these changes.

For now, with clarity restored, we expect to see renewed confidence among home-movers and a welcome boost to market activity as we head into the new year.

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