After so much speculation, many of us are relieved to know what’s in the Autumn Budget. Now, let’s look at how the housing market and private rented sector might react to the news.
A new ‘mansion tax’
People who own more expensive properties will need to pay an extra council tax each year – starting at £2,500 for properties over £2 million, and rising to £7,500 for properties over £5 million. This will affect around 0.5% of homeowners, mostly in London and the South East, where people are still recovering from the stamp duty hike in April. While the amount is less than feared, it may still see homeowners scramble to sell their properties before the tax lands in April 2028.
Landlords will pay 2% more income tax on rent
While some industry experts thought Rachel Reeves might ask landlords to pay National Insurance contributions on their rental income, instead, she decided to increase the basic, higher and additional property income tax rates. In effect, landlords will pay 22%, 42% and 47% from April 2027.
Since landlords will make less profit, they might choose to increase rents or else leave the business altogether. Either way, tenants are likely to face higher costs. This change, combined with the Renters’ Rights Act, will make for a turbulent time in the private rented sector as everyone adjusts to the new rules and tax rates.
No changes to stamp duty
Various ideas were floated for possible changes to stamp duty – none that came to pass. We’ll carry on with the same system into 2026: buyers will pay stamp duty on properties above £125,000, with first-time buyers having a £300,000 threshold on homes worth £500,000 or less. Likewise, it will still be a one-off amount that’s paid upon completion.
No new tax on homes over £500,000
Pre-Budget speculation included a potential annual tax that would have hit around 210,000 homes currently on the market for over £500,000. Reeves didn’t introduce this tax after all, boosting buyer confidence, especially in London and the South East, where more homes sit in this higher price range. This continuity will hopefully have an all-round positive effect in bringing more certainty to the market.Final thoughts
For months, the housing market has been adopting a ‘wait and see’ approach, with people holding off on their property sales. The private rented sector has also had its fair share of nervous anticipation, thanks to the Renters’ Rights Act. Finally, anyone seeking to move home can understand their financial obligations and therefore plan ahead with confidence. If you’d like to speak to an experienced estate agent, get in touch with your nearest Winkworth branch today and start planning your next steps.
