The Chancellor, Rachel Reeves, delivered Labour’s long-awaited Autumn Budget this afternoon. In recent months, speculation has been rife about significant changes to Stamp Duty Land Tax (SDLT) and even the possible abolition of Principal Private Residence Relief for Capital Gains Tax (CGT) when selling a main home. Unsurprisingly, this uncertainty has led to serious hesitation in the market, with many buyers and sellers delaying decisions until after the Budget. Conversely, some parties accelerated transactions to exchange and complete ahead of today’s announcement to avoid any potential changes.

In the end, it has proven to be speculation. Only two measures announced today are likely to have a direct impact on the property market:

1. ‘Mansion Tax’ (High-Value Council Tax Surcharge)

A new, additional charge is proposed for properties valued at £2 million or more. This tiered tax will sit alongside existing council tax, with homes valued above £5 million facing an annual charge of £7,500. The measure is not expected to come into effect until April 2028.

In the context of purchasing and maintaining a property at this level, the financial impact is relatively modest. However, it raises some important questions:

• How will all properties above £2 million be valued?
• If the government relies on recent sales data, we may start to see an interesting trend with properties marketed and sold for £1,999,000 rather than £2,000,000.
• Looking further ahead, might we start to see bands of buyer interest forming around key thresholds – for example, up to £2 million, £2.5 million, £3.5 million and above £5 million – where the higher annual charges begin to kick in?

We are certainly going to be asked by sellers whether the mansion tax banding is going to affect the value and marketability of their houses.

2. Increase to Income Tax on Property and Savings Income

The Chancellor has also announced a 2-percentage-point increase in both the basic and higher rates of tax on property and savings income from April 2027. While not dramatic, this change adds further pressure on landlords and property investors, who are already bracing for reforms proposed under the Renters’ Rights Act 2025. Landlords will face an extra 2% income tax on rental income, alongside the wider effects of the Renters’ Rights Act – not a very palatable combination for them. As a result, we may see more former rental properties coming onto the sales market.

Market Outlook

General reactions, in addition to the welcome end of speculation, appear to be more positive than negative for the housing market, largely because the outcome was not as severe as many had feared. There is disappointment that the Chancellor did nothing about stamp duty, but clear relief that there were no changes to CGT for Principal Private Residences.

Although today’s Budget may not be embraced by higher-rate taxpayers or owners of high-value homes, the measures announced are less severe than expected. This should help restore confidence and stability in the housing market. We expect activity to pick up through early December, leading to a more decisive and active marketplace as we move into the new year and on into Spring 2026.

Ben Way | Butler Sherborn