The 2025 Autumn Budget introduced a series of tax changes set to improve public finances and support long-term economic growth.
The measures announced will have a knock-on effect on investment decisions and affordability across the property sector.
With a housing market that is already faced with flat pricing and households holding off buying, it is important to know how these reforms affect you.
What is the ‘mansion tax’?
The Chancellor confirmed a new annual surcharge on higher-value homes, commonly referred to as the ‘mansion tax’.
The charges include:
These changes will move away from one-off transactional taxes and towards recurring annual liabilities.
The introduction of this surcharge is expected to ease demand in the prime property market, particularly in London and the South East, as buyers reconsider purchases or look for properties below the threshold.
For developers in the high-value market, they may see slower sales rates and will need to review pricing strategies to avoid unintentionally pushing units into surcharge territory.
Those who deal with developments in the £1 – 2 million bracket might also see an increase in demand from buyers who are keen to avoid the levy.
Higher taxes on property and investments
The Budget confirmed a 2 per cent rise in tax rates applied to property income, dividend income and savings income.
This will affect basic, higher and additional rates and increase the tax burden for individual landlords and investors.
For landlords, these changes will place further pressure on net rental yields at a time when operating and financing costs are already heightened.
Some landlords may look to incorporate their portfolios or consider selling properties that no longer deliver viable returns.
Developers may also notice a reduction in investor demand for individual buy-to-let units and growing interest in build-to-rent properties, which can be more tax efficient.
Frozen Income Tax and National Insurance thresholds
One of the most impactful Budget measures is the extension of the freeze on Income Tax and National Insurance thresholds until 2030 – 2031.
Fiscal drag will pull more earners into higher tax bands and reduce disposable income for many people.
This could affect:
What does this mean for developers and residential investors?
Developers and investors will need to reassess the feasibility of their projects, considering higher taxes and rising employment costs.
With the potential for a slower market and reduced disposable income, buyers and tenants may take longer to commit and this could affect sales and rental timelines.
It is important to review your property portfolio so that your assets are held in the most tax-efficient structure.
Pricing strategies should also be carefully reviewed so that units are not left empty due to affordability pressures or being inadvertently pushed over the £2 million surcharge threshold.
These reforms may require you to rethink how you operate and acquire property and look towards alternatives such as build-to-rent models.
While the Autumn Budget’s reforms may feel daunting, our financial professionals can help you understand how your property is affected.
Our expert team can offer advice on how to update your property plans to comply with new regulations and succeed in an uncertain market.
Ensure your property is protected and contact our team for expert support and guidance today.
