Dr Shamol Miah

The UK property market has faced its fair share of surprises, and Chancellor Rachel Reeves’s Autumn Budget 2025 is no exception. Homeowners, landlords, and investors alike are watching closely, as the changes announced could have lasting effects on real estate. Here’s what it could mean for the market and your property plans.

Residential Property: Winners and Watchers

One of the most discussed points of the 2025 budget is what didn’t happen. Many feared a new annual tax on homes over £500,000, which could have impacted housing affordability. For now, mid-market homeowners can breathe a sigh of relief.

The budget did, however, introduce a mansion tax for properties valued over £2 million. From April 2028, owners of luxury homes will face additional council tax charges: – £2,500 per year for homes between £2m–£2.5m – Up to £7,500 per year for homes above £5m

This mostly affects high-end markets in London and the South East and could slow demand, potentially putting downward pressure on prices.

Market Sentiment: Cooling Off

After the budget announcement, buyer enquiries slowed, showing a cautious market. Some London areas have even seen small price drops, suggesting high-end homeowners are factoring in the future tax burden when deciding whether to sell or buy.

Landlords and Rental Market: Tighter Margins

Buy-to-let investors face a tougher outlook. Rental income tax for individual landlords will increase by 2% across all bands from April 2027, reducing net returns. Some landlords may leave the market or pass costs to tenants, which could tighten supply and push rents up over time.

Commercial Property: Higher Costs Ahead

The budget also includes a revaluation of commercial property business rates, raising concerns for sectors such as hospitality. Higher rates could affect operating costs and influence investment decisions.

Timing Matters

Most major tax changes, including the mansion surcharge and landlord tax rise, are phased in from 2027–28. This means short-term market reactions are largely sentiment-driven, while the full effects will take shape over the next few years.

What This Means for You

Whether you’re a homeowner, investor, or tenant, here’s the takeaway:

• Homeowners: Mid-market properties are largely unaffected, but high-end owners should plan for future surcharges.
• Buy-to-let landlords: Expect tighter margins and consider adjusting your strategy.
• Investors: Commercial property decisions may need to factor in higher business rates.
• Market outlook: Short-term caution, medium-term stability once policies take effect and interest rates settle.

Self-Check:

Question 1: Do you own a residential property valued over £2m? Yes → Prepare for the mansion tax from 2028. No → Keep an eye on broader market trends.

Question 2: Are you a buy-to-let landlord?  Yes → Factor in the 2% tax rise from 2027. No → Observe potential rent adjustments affecting tenants.

Question 3: Considering commercial property investment? Yes → Consider higher business rates. No → Monitor market sentiment for future opportunities.

Final Thoughts

Reeves’s 2025 budget shows a targeted approach: easing pressure on average homeowners while tightening taxation on high-end and investment properties. Expect slower growth in luxury residential markets, a cautious buy-to-let sector, and pressures on certain commercial properties. Understanding these nuances will help you make informed property decisions and adapt strategies accordingly.

The 2026–27 period will be key in seeing how market sentiment and policy changes play out.