The Budget 2025: What does it mean for you and your property?

The Chancellor’s Budget 2025 announcement brings several major changes for homeowners, landlords and property investors. From the introduction of a so-called “Mansion Tax” to increased taxes on rental income, these updates will influence the property market for years to come. Here’s what you need to know, and our expert view on how to navigate the impact.

Tax on Property  

An announcement that was not expected was the government’s decision to increase tax on property income from April 2027. A 2-percentage-point rise will apply across:

• Basic rate taxpayers: from 20% to 22%
• Higher rate taxpayers: from 40% to 42%
• Additional rate taxpayers: from 45% to 47%

Our view

In a climate of rising costs, which means possibly tighter margins, the support of a professional letting agent becomes more valuable than ever. By optimising rental yields, reducing void periods, ensuring compliance with evolving legislation and advising on market-driven pricing, agents can help landlords protect income streams and adapt to policy changes with confidence.

Mansion Tax  

One of the biggest headlines from the Budget is the introduction of the so-called “Mansion Tax”, an annual levy on properties valued above £2 million, which will come into effect via a council tax surcharge from 2028.

This will mean:

• Around £2,500 per year for properties worth just over £2 million
• Up to £7,500 per year for homes valued above £5 million

This represents a significant shift for the high-end property sector nationwide, but will have a particular impact on the London and Southeast marketplaces, where there’s a higher density of homes in this price bracket.

Our view

This announcement finally brings long-awaited clarity to the upper end of the property market. With clear guidelines in place, agents can now better advise landlords, investors and homeowners on how to adapt their strategies.

However, it remains to be seen what effect the £2m threshold will have, as it will artificially influence pricing behaviours around homes around this value. According to industry data, 85% of homes above £2m are located in London and the Southeast, and though these properties account for just 0.6% of annual transactions, they generate over 20% of total stamp duty receipts. Properties worth more than £5 million will see the surcharge increase to £7,500 per year, the maximum levy.

In the short term, we may see a pause in sales of properties at these price points, as homeowners weigh up their options, possibly followed by a surge as some may choose to sell to avoid ongoing costs when the implementation kicks in. An alternative perspective is that the policy may generate less revenue than anticipated due to it being deferrable. If opposition parties signal that they intend to reverse the measure, many homeowners may choose to wait and see, holding off on major decisions until the next election due in 2029.

The next six to twelve months will be crucial in understanding how the market responds.

If you have any questions about how the Budget affects you and your property, speak to one of our team today.