Rachel Reeves 2025 – November Budget

The budget had some items that will affect the property market. I will not discuss all the tax changes since they are not directly relevant here although of course less money in peoples pockets will affect the property market but in a less direct way.

The main item in the budget is for the “Mansion Tax”. This was previously speculated to be a tax on homes over £500,000. This has been avoided and the new mansion Tax is for homes over £2 million. This will impact approximately 0.5% of homes with the majority of these being in London and the South East.

The removal of uncertainty about the £500,000 threshold will provide some buoyancy and reassurance for the market and will bring relief to around 200,000 homes currently on the market above £500,000 and below £2 million. Buying interest is therefore expected to strengthen especially across the South East where the majority of homes fall between these two thresholds and below. The mansion Tax will come into force from 2028 and the cost will be £2,500 for homes with the value of between £2 million and £5 million and above £5 million the cost will be £5,000 per annum.
How this will affect the market is unsure given that we are still three years away from its implementation. Most owners of houses or flats above £2 million may not find an additional £2,500 per as being significant.

What is interesting for short flats is that these can be downvalued if leases are 90 years or less and this may bring the value below the thresholds. Please do contact us if you require any further information on this. It is unlikely that owners of properties above the two thresholds will look to sell purely due to the mansion tax given that the amounts involved are not significant when compared to the value of the properties.

Other aspects of the budget are that there is no change to stamp duty. Therefore buyers in modest housing will not be affected.

There is a rise to property income tax rates for landlords. This will be from April 2027 and will affect the basic and hire bands of income tax. The additional rates of property Income will increase by 2% so this will mean an increase to 22%, for 42% and 47% respectfully.
This will further cause issues with landlords who have already been hit by the Renters Reform Bill and the previous increase on stamp duty for additional homes from 3% to 5% in last year‘s budget.

Please do contact us if you require to discuss this or need any further information.

01903 890 666
sjb@southeastleasehold.co.uk