Autumn Budget: Property tax changes and what they mean for the market

In her second Budget since Labour came into power, Reeves unveiled a raft of tax rises, but many rumoured property tax changes have not come to fruition.

It comes after several months of intense speculation about what Reeves might have in store for the property market, which has caused hesitation and slowed activity across the country.

Needless to say, the greatest impact has come from the uncertainty in the lead-up to the Budget - rather than the Budget itself. With the announcement today, buyers and sellers can feel encouraged to re-enter the market.

No new annual tax on homes over £500,000

The housing market stalled in recent weeks on fears of a new annual proportional property tax for those buying homes over £500,000 on top of the council tax. This is not happening although there will be a tax on high value homes over £2m collected via reforms to the council tax system. 

The threat of an extra tax for buyers of homes over £500,000 will be a huge relief for the owners of the 210,000 homes for sale over this price level. We expect this to renew buyer interest as we head into 2026, particularly across London and southern England where a large share of homes for sale sit above this threshold.

This is the moment for agents and housebuilders to get ahead of their competition by tailoring their marketing messaging to unlock latent demand before the Boxing Day bounce and boost in traffic Zoopla traditionally sees in the New Year.

New property tax on the highest value homes

As widely trailed, the Government is going to charge a Council Tax High Value Supplement on homes worth £2m or more in England. This will hit around 0.5% of homes and homeowners. Our data shows that 85% of these properties are in the highest value areas of London and the South East.  

The Chancellor reported an annual additional cost of around £2,500 a year for homes worth £2m, rising to £7,500 a year for homes over £5m. For a £2m home, this is less than double the average council tax today and is less than many feared. 

How much this creates a cliff edge around the £2m price band remains to be seen and the impact will depend on how this new scheme is rolled out. 

While home sales over £2m account for just 0.6% of sales, these homes generate over 20% of stamp duty tax receipts. There is a risk that there may be fewer sales in the short term, but it may also see more sales as homeowners look to mitigate the additional costs.

Rise to property income tax rates for landlords

Reeves has announced that landlords will face increased property tax rates from April 2027. The basic, higher and additional rates of income tax for property income will each increase by 2%, taking them to 22%, 42% and 47% respectively.

The move is likely to unsettle landlords, who already face tighter regulations from the recent Renters’ Rights Act, as well as new energy efficiency regulations and higher stamp duty on the purchase of additional homes (from 3% to 5%) in last year’s Budget.

For letting agents, your role in supporting strategy and compliance becomes even more vital. Audit portfolios to understand the exact tax impact, using this data to show your value in mitigating financial risk and guaranteeing compliance. Letting agents are the shield against the cumulative burden of tax and all other regulations, granting opportunity to nurture new business from the 50% of the market currently self-managing their lettings.

No changes to stamp duty rates or thresholds

While the threat of wider tax changes impacting the mainstream housing market has been removed, stamp duty remains a significant hurdle for home buyers, especially in southern England. 

The stamp duty price thresholds for existing home owners were set in 2014, while house prices are 47% higher over this time. This is creating ‘fiscal drag’ for home buyers in the housing market with buyers of average priced homes paying more 

Since 2019, the number of homes bought by existing homeowners where the cost of stamp duty is more than 2.5% of the purchase price has jumped from 21% to 33%.

The cost of buying is growing for average home buyers in towns across the south of England and the case for the abolition of stamp duty as part of wider property reforms remains a strong one.

Lack of major changes to support market stability

For the majority of the market, there’s a sense of relief that all the Budget speculation is behind us. The lack of significant change will deliver the stability the market needs, removing uncertainty for buyers and sellers across the mainstream market.

Agents can now confidently advise clients that the time to delay is over, encouraging them to re-enter the market and capitalise on the strong seasonal activity boost leading into the New Year.

Agents operating in high-end markets in the south of England and London must be proactive in communicating the new tax burden with clients, helping to model the financial implications of the mansion tax and consider options for a potential sale.