Chancellor Rachel Reeves delivered the Autumn Budget on 26 November 2025, bringing significant announcements that will shape the housing market over the next few years. While many of the headline changes won’t take effect until 2027 or 2028, the Budget’s long-term direction is clear: increased taxation on high-value homes and rental income, with no immediate support for first-time buyers through stamp duty reform.
Below, we break down the key housing updates and what they mean for homeowners, landlords, and those hoping to get onto the property ladder.
A New ‘Mansion Tax’ for £2 Million+ Homes
One of the most significant measures is the introduction of a new annual surcharge on high-value properties. Commonly referred to as a “mansion tax,” this charge will apply in addition to council tax and will begin in April 2028.
How the Mansion Tax Works
Annual charges have been set as follows:
|
Property Value: |
Annual Surcharge: | |
|---|---|---|
| £2.0m – £2.5m | £2,500 | |
| £2.5m – £3.5m | £3,500 | |
| £3.5m – £5m | £5,000 | |
| £5m+ |
£7,500 |
|
The tax will be paid by the owner, not the occupier. To determine which properties fall within each band, the government will run a “targeted valuation exercise” every five years.
Who is Affected?
Only around 1% of homes currently on the market are listed above £2 million, and the geographical concentration means the impact will be felt most strongly in London and the South East.
Sales of £2m+ homes have already fallen year-on-year, suggesting buyers and sellers have been reacting to months of speculation.
Although few properties are directly affected, experts warn of a “trickle-down effect”:
- The top end of the market may slow further as the implementation date approaches.
- Sellers may adjust pricing strategies to avoid falling into a higher surcharge band.
- Reduced activity at the upper end could create delays across the chain, impacting movers at all levels.
Impact for First Time Buyers
For the second Budget in a row there doesn’t seem to be any support for first time property buyers getting onto the market. Perhaps more will be announced once the Government have issued their overarching Housing Strategy Paper.
For first-time buyers, the introduction of the “mansion tax” doesn’t mean properties become instantly more affordable – but a cooling effect at the top can sometimes improve supply further down.
Landlords to Pay 2% More Tax on Rental Income
The second major housing announcement affects landlords. From April 2027, taxes on rental income will rise by 2 percentage points across all bands:
- Basic rate: 22%
- Higher rate: 42%
- Additional rate: 47%
Why does this matter? Landlords have already absorbed numerous financial pressures over recent years, including:
- reduced mortgage interest relief
- higher mortgage rates
- costlier compliance and regulations
- stamp duty surcharges on additional homes
This latest change further erodes profit margins, and many industry commentators expect:
- some landlords to increase rents to cover rising costs
- others, particularly small portfolio landlords, to exit the market
- reduced rental supply, creating further affordability challenges for tenants
For renters already stretched to their limit, this could mean higher monthly costs and greater competition for available properties.
No Changes to Stamp Duty – Despite Rumours
In the run-up to the Budget there was widespread speculation about a possible stamp duty cut or restructuring to support market growth. However, no changes were announced.
While some may be disappointed, the certainty alone is welcomed. Uncertainty around stamp duty often freezes the market as buyers wait for announcements before committing to offers. Conveyancing Solicitors will be grateful that Stamp Duty has been left alone following several changes over the last five and a half years.
What Happens Next?
Although the new taxes won’t take effect until 2027 and 2028, the market is likely to start responding now:
- Luxury home sales may slow as buyers evaluate long-term costs
- Landlords may rethink portfolio plans over the next two years
- First-time buyers may see a slight easing of competition if investor activity dips
The Budget also delivered clarity after months of rumours, which should help unlock stalled transactions. With potential interest rate cuts later in the year, early 2026 could see a renewed wave of market activity.
FAQs: Autumn Budget 2025 and the Housing Market
- Will the mansion tax affect most homeowners?
No. Fewer than 1% of UK homes are worth more than £2 million. However, the indirect impact may be felt through slower movement at the higher end of the market.
- Do first-time buyers receive any new support?
Not in this Budget. There were no changes to stamp duty or new incentives announced for new buyers.
- Will rents go up because of the landlord tax increase?
It’s likely. As rental income becomes less profitable from 2027, many landlords may pass on the additional cost to tenants.
- When do the changes come into effect?
- Landlord income tax rise – April 2027
- Mansion tax – April 2028
- Is now a good time to move home?
With the uncertainty now removed and potential interest rate cuts expected, many experts believe early 2026 could offer favourable conditions for buyers and sellers.
Help with Your Next Property Sale or Purchase
If you are thinking about progressing your house sale and purchase, now that the uncertainty of the Budget has passed, please do get in touch with our residential property team.
Our excellent reviews speak for themselves – we promise great communication and client service, to see you move into your next new home smoothly.
Call us on 01253 362500, email info@bbelaw.co.uk or for a quick estimate click here.
