Budget 2025: your key property questions, answered

The UK Budget 2025 introduced a number of changes that impact homeowners and landlords, including a new property tax for England’s highest value homes and adjustments to rental income taxation. If you own a property or are planning to move, these FAQs will help you understand what’s changing and how it could impact you. If you’d like to discuss your property plans for 2026 and beyond, please contact us.

1. How does the government decide the value of your house? 

   Properties are valued by the Valuation Office Agency (VOA), part of the UK Government. For the implementation of the new High Value Council Tax Surcharge (also referred to as the Mansion Tax) the VOA will value properties based on their market value in 2026. Revaluations will occur every five years. A public consultation on details relating to the surcharge will be held in early 2026.
   
   

2.  I have a main house and a secondary house under one title. How will the Mansion Tax affect me?

   The tax will be levied on the value of each single residential property (dwelling) that is valued above the £2 million threshold. If you own multiple properties, the tax applies only to those individual homes in England valued above the £2 million threshold. We anticipate that other more complex ownership structures will be reviewed as part of the public consultation in early 2026. There is more information about the surcharge on the Government website here.
   
   

3. Does the Mansion Tax apply to second homes or portfolios?

   The new High Value Council Tax Surcharge or 'mansion tax' applies to second homes and investment properties as well as main residences, provided they are in England and valued above the £2 million threshold.
   
   

4. Will the property announcements in the Budget disproportionately hit London and the South East?

   There are currently about 150,000 properties worth in excess of £2 million in England and Wales. Around two-thirds of affected homes are in London and the South East.
   
   

5. Can homeowners defer the Mansion Tax if they are asset-rich but cash-poor?

   This is to be determined. The government’s planned consultation early next year will look at reliefs and exemptions.
   
   

6. Will this affect property prices or the housing market?

   Around the price thresholds, yes, we expect there will be an impact. Until the new scheme is introduced in April 2028, buyers and sellers face uncertainty around payments. Even once valuations are completed, they could be challenged, which would prolong any uncertainty. This could result in some near-term price clustering just below £2 million.
   
   

7. What is happening to rental income tax for landlords?

   Under the new rules, property income will have its own tax rates (rather than being grouped with employment, pension and trading income). There will be a two-percentage point increase to rates of property income tax from April 2027.
   
   

8. What is the present rate of Property Income Tax and what will it increase to from 1 June 2027?

   Currently, property income is taxed at standard income tax rates: 
   · Basic: 20%
   · Higher: 40%
   · Additional: 45%
   
   From April 2027, these will rise by 2 percentage points as follows:
   · Basic: 22%
   · Higher: 42%
   · Additional: 47%
   
   There is more information about the changes to Property Income Tax on the Government website here.
   
   

9. Will National Insurance apply to rental income?

   There was no announcement in the Budget around National Insurance and rental income, just income tax. Further information can be found on the Government website here. 
   
   

10. Will this lead to higher rents?

    Probably. The OBR has said the move would “reduce returns to private landlords, following successive measures over the past 10 years,” and would put upwards pressure on rents as more of them sold and supply fell.
    
    

11. Are there any changes to Stamp Duty?

    No. Stamp Duty Land Tax rates are unchanged with the existing thresholds remaining in place. Use our stamp duty calculator to find out exactly what you would pay on a property purchase in England and Northern Ireland today. We also have calculators for overseas property purchases and buy-to-let purchases too.
    
    

12. Are there changes to Capital Gains Tax or main residence relief?

    No. Principal Private Residence relief remains.

For tailored advice, speak to a Chartered Tax Adviser or Accountant with property expertise. For more insight on the property implications from the Budget 2025, subscribe to our UK Residential Outlook newsletter: a snapshot of the latest property data, economic trends and political events shaping the UK housing market.

Image © Getty / Gary Yeowell