The 2025 Budget effects on the Property Industry

Delivering the 2025 budget today, Rachel Reeves confirmed several major changes that have tax implications for homeowners and landlords. Whilst some pre-Budget speculations did not materialise, changes related to higher-value properties and investment income are on the way.

Here’s a clear breakdown of what has changed, what hasn’t, and what it means for you.

1. New High-Value Council Tax Surcharge for £2m+ Homes

The standout announcement is the introduction of a new high-value council tax surcharge, coming into effect from April 2028.

This will apply to homes valued at £2 million or above, across four new surcharge bands, with properties between £2m – £2.5m receiving an annual surcharge of £2,500 and the surcharge of £5m+ properties rising up to £7,500 per year.

What this means for homeowners

For those in premium-value homes, this represents a significant future increase in annual holding costs. It’s particularly relevant for anyone considering downsizing, restructuring their estate, or planning long-term financial arrangements.

2. Higher Tax Rates for Property Investors’ Savings Income from April 2027

The government has also confirmed a meaningful change for landlords and property investors:

Tax rates on savings income linked to property investment will increase by two percentage points from April 2027.

This change will apply to the basic, higher and additional rates, which will rise to:

22% (basic rate)
42% (higher rate)
47% (additional rate)

What this means in practice

Landlords may wish to reassess pricing, adapt investment strategies, or reconsider leverage and liquidity positions ahead of the 2027 change.

4. No Change to Capital Gains Tax on Main Residences

Despite widespread expectation of reform, the Chancellor has made no announcement about Capital Gains Tax in relation to property, so the principal residence exemption remains intact.

Why this matters

Those planning to sell or transfer their primary home continue to benefit from a clear and unchanged tax position, offering important stability amid wider reforms.

5. No Changes to Stamp Duty Land Tax (SDLT)

Despite significant pre-Budget discussion, the Chancellor did not make any amendments to the Stamp Duty system. Upfront buying costs remain the same.

What To Do Next

If your property is worth £2m+, you could start forward planning for the surcharge arriving in 2028.
If you invest through savings-linked structures, recalculate yields using the new 2027 tax rates.
If considering a move, note that SDLT remains unchanged.
Seek tailored advice, especially if you hold or plan to acquire higher-value assets.

If you’d like financial advice regarding your property or investment, we’ll be happy to refer you to one of our trusted independent partners. If you’re thinking of selling, of letting, feel free to contact your local branch below.

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