November 28, 2025
The latest UK Budget introduces several important changes that will influence the property market over the next few years. While some measures increase tax pressure on landlords and high-value homeowners, others may create new opportunities for buyers who have been waiting for the market to cool.
We have broken down the key points and what they mean for buyers, sellers, and investors across the UK.
A New Surcharge on High-Value Homes
One of the most talked about changes is the new annual surcharge for properties valued above £2 million. This comes into effect in April 2028 and focuses mainly on the prime and ultra-prime market.
Key things to know:
- Properties over £2 million will face an annual fee between £2,500 and £7,500.
- This could reduce competition at the top end of the market.
- Buyers in the luxury sector may have more room to negotiate.
While this affects a smaller portion of the UK market, it may influence sentiment and spending patterns in higher-value areas.
Rental Income Taxes Are Increasing
From April 2027, taxes on rental income will rise by two percentage points across all bands. This is significant for landlords at a time when many already face higher costs from mortgages, maintenance, and regulatory requirements.
This may lead to:
- Some landlords choosing to sell or reduce their portfolios.
- A reduction in rental property supply.
- Increasing rent in major cities such as London, Manchester, and Birmingham.
- More renters considering ownership earlier than planned.
The rental sector is already tight, and this change could add further pressure.
House Price Growth Expected to Slow
Government forecasts show that UK house prices will continue to grow, but at a slower and more controlled pace. After several years of sharp rises, the market appears to be settling.
Current trends:
- Mid-market homes, especially under £1 million, are expected to remain stable.
- Investor demand may cool, reducing bidding pressure.
- First-time buyers could benefit from a more balanced market.
- Negotiation may become more common as competition levels ease.
Although the pace of growth is slowing, demand remains strong in areas with good employment, transport, and schools.
Rental Market Likely To Tighten Further
With the possibility of fewer landlords and a steady flow of renters, the rental market could see further price increases.
What this means in practice:
- Rents are expected to rise through 2025 and 2026.
- Well-located properties may attract multiple applicants.
- Renters may increasingly explore Shared Ownership or low deposit schemes.
This environment highlights the long-term value of buying for those who are able to.
What Buyers and Sellers Should Expect
For buyers, the next one to two years may provide a more favourable environment than we have seen recently. Slower price growth combined with reduced investor competition can create opportunities for well-prepared buyers.
For sellers, accurate pricing and strong presentation are more important than ever. Good properties will still perform well, but the market is becoming more price sensitive.
London Property Broker’s View
The Budget creates both challenges and opportunities. High-end homeowners and landlords will feel increased financial pressure, but the wider market remains resilient. We expect mid-market homes to continue performing strongly, while prime properties may see more negotiation. The rental sector is likely to remain under pressure, reinforcing the attractiveness of buying for long-term stability.
At London Property Broker, we help clients navigate these changes with clear advice, local knowledge and a national view of the UK property landscape.