Budget review – residential property

In a somewhat noisy House of Commons, the long-awaited budget statement was made by the Chancellor today.  For residential property, the key headlines were:

The “Mansion tax”

From 2028, residential properties valued at over £2 million will face a high value property surcharge of £2,500, increasing over a scale to £7,500 for properties valued at over £5 million. The Chancellor confirmed there would be consultation on deferment and reliefs.

Details of valuations, appeal processes, the bases upon which house owners may apply for a relief or deferment, and the impact on the higher end of the property market, all remain to be seen. There was some mention before the budget of exemptions for some London boroughs; this was not announced in today's statement.

Tax rate increases on property income

Rates for income received from property are to increase by 2% across all tax bands from April 2027. This will impact net revenue for those receiving rents from residential properties. The residential investment property market has seen various changes to its taxation regime over the past few years, including the loss of mortgage interest relief, changes to liability for rental agency fees and, coupled with the Renters' Rights Act, this will no doubt be a moment for landlord owners to review their investment strategies. 

On the flipside, with housing at the centre of Labour policy, should we see an increase in investment owners selling, there will be more housing stock available to owner-occupiers, including those starting out on the housing ladder.

No mention of Stamp Duty Land Tax reform

Reforms to or abolition of Stamp Duty Land Tax and more wide-reaching reform to property taxation was not mentioned during the budget statement.  This was widely discussed in the lead up to the budget and saw a general slow down in the property market, especially for higher-value properties.