Autumn Budget 2025: What does the Budget mean for housing?
Key takeaways:
- Homes worth more than £2 million will be subject to a so-called mansion tax, from April 2028
- No changes to stamp duty, as had been widely rumoured in recent months
- Landlords to pay additional 2% income tax on rental income
Chancellor Rachel Reeves has delivered her Autumn Budget, and it includes changes to property taxes and other measures that relate to housing. Here’s a rundown of what the announcements mean for the housing market.
‘Mansion tax’ payable for homes worth more than £2 million
Paid on top of council tax, homes valued over £2 million will pay an annual surcharge. The charge will be £2,500 for properties over £2 million, and £7,500 for properties over £5 million. The tax will be payable by the owner of the property rather than the occupier.
Our data shows that less than 0.5% of all homes sales agreed this year have been for properties with an asking price of over £2 million, and around 1% of homes for sale are priced above this threshold. Sales agreed for homes worth more than £2 million have already been down 13% year-on-year, suggesting the market has been reacting to the speculation about this change in recent months.
Our property expert, Colleen Babcock, says: “The property market needs less taxation not more, to encourage and enable movement. Today’s announcement of a Mansion Tax could lead to some distortion at the top end of the market, particularly as the implementation date draws closer. It may also have an impact across the rest of the market.
“Importantly, while this likely very complex tax aims to target the £2 million price sector, there is an inevitable trickle-down effect for the rest of the market. Even though our data shows that less than 0.5% of sales would be directly affected, a slower market can affect all types of movers, from first-time buyers to key workers and families.
“While there will always be a market for the highest priced, premium properties in the most popular locations, this tax would disproportionately affect London and the south of England markets, which are still recovering from April’s stamp duty increase. It’s a tax which is more stifling than supportive of movement and growth within the housing market.”
When does the mansion tax come into force?
The mansion tax will be payable by eligible groups from April 2028.
How will the mansion tax impact homeowners?
Annual charges will be dictated by the property’s value, and the bands are laid out below:
| House value | Annual surcharge (£) |
|---|---|
| £2.0-2.5 million | £2,500 |
| £2.5-3.5 million | £3,500 |
| £3.5-5.0 million | £5,000 |
| £5+ | £7,500 |
Source: gov.uk
In terms of how valuations would be used to decide which bracket a home falls into, the government have said there will be a ‘targeted valuation exercise’ every five years to determine which surcharge band applies to the property.
This will predominantly affect London and the South East, where a larger proportion homes in this price bracket are located.
Income tax on rent to rise by 2% for landlords
From 2027, income tax on rental income for landlords will rise by 2%.
It had been widely rumoured that landlords would pay national insurance on rental income. But instead, the Chancellor has decided to increase basic, higher and additional property income tax rates from April 2027. This means landlords will now pay 22%, 42% and 47%.
How could the tax changes impact landlords?
This change will ultimately reduce net returns for landlords who have properties they rent out to tenants.
This could lead some landlords to increase rents to offset the additional costs. While others may choose to exit the market entirely, particularly those with smaller portfolios or landlords who have a lower rental yield.
Colleen says: “Landlords might look like an easy target, but rental market taxation is usually detrimental to tenants looking to rent a home. The simple fact is that in order to provide tenants with much needed homes landlord investors need to be able to make the sums add up.
“Changes to mortgage interest relief, buy-to-let mortgage rates, the cost of compliance changes, and stamp duty increases have only made that harder. While UK Finance data suggests that despite challenges, more landlords are investing in new purchases and remortgaging than last year, today’s news will make it even harder for some landlords to make investments viable.”
Did stamp duty change in the Budget?
No, no changes were announced to stamp duty. Despite lots of rumours over the last few months about how stamp duty might change, there were no announcements about stamp duty in the 2025 Autumn Budget.
How long before we start to see the impact of the Budget?
With the Budget now confirmed, home-movers can now plan their moves with more certainty, which can only be a good thing. The months of speculation have already been affecting market activity – particularly at the upper end.
Some of the changes announced aren’t due to come into force until 2027 (landlord income tax changes) and 2028 (mansion tax). So any movers or homeowners affected by these changes have time to plan and assess what the changes might mean for them.
And whether you’re looking to move soon, just curious to know how much your home is worth, or looking to work out how much you could borrow, we’ve got lots of tools and resources to help.
