There were particularly high levels of speculation and uncertainty leading into the 2025 Autumn Budget. And, on Wednesday (26th November), the Chancellor Rachel Reeves delivered the hotly anticipated speech.
As expected, this year’s Budget featured a range of tax hikes. But it also avoided many of the more radical policies that had been touted in the build-up to the announcement.
The dust is continuing to settle on the fiscal statement, but here is a summary of the key policies, along with our analysis of what they might mean for buy-to-let (BTL) landlords, the property market and mortgage rates.
New “mansion tax”
Although there had been widespread speculation about a new annual property tax on homes valued over £500,000, the Budget avoided this move.
Instead, a new “mansion tax” – in the form of a high-value council-tax surcharge – was unveiled. From 2028, it will apply to properties worth over £2 million. The surcharge will be tiered, starting at about £2,500 per year for a £2 million property and rising to around £7,500 for homes over £5 million.
Only a small fraction (around 0.5%) of UK homes falls into that high-value bracket, with the majority of those concentrated in London and the South East. For most BTL landlords, therefore, this means the Budget’s increased annual tax on high-value homes won’t directly impact their tax bills, offering some reassurance that the upper-end levy won’t cascade down the market.
Higher property income tax from 2027
A more significant change for landlords is the increase in property income tax. From April 2027, rates on rental income will rise by 2 percentage points across the board, taking the bands to 22%, 42% and 47% respectively.
Despite this tax increase on rental income, professional landlords operating via a limited company will likely be pleased that rumoured, punitive changes were not announced.
Stamp duty left alone
Stamp duty was another purported area of reform that did not feature in the Budget. It means that SDLT rates, bands and surcharges remain unchanged.
Our reflections…
This could hardly be described as a positive Budget for the property and BTL sectors, but it was also far more measured than the rumour mill had been suggesting over recent weeks.
Landlords will feel the blow of higher tax rates on rental income, and a very small percentage will also now face higher council tax payments. But largely the market has been left alone and often, when it comes to major political speeches, that is the best-case scenario.
There is scope for positivity, too: chiefly, the market will breathe a sigh of relief that the Budget is now behind us. There has been wild speculation for months about what the Chancellor would and would not announce – such uncertainty has done little to help with buyer and investor confidence, and the result has been that a degree of inertia had set in over recent weeks.
Now everyone knows what changes are being made and when they will come into effect, homebuyers, landlords and property investors can prepare accordingly. We could see an uptick in activity as a result, with demand that had become pent-up amidst all the turbulence leading up to the Budget now being unlocked.
At RAW, we’re here to help brokers meet that demand head on. We know they will require greater speed, certainty and flexibility, and our lending model is designed with these qualities at its core.