Chancellor Rachel Reeves’s delivered Labour’s Autumn Budget on 26th November 2025. This introduced major property tax changes that will reshape the UK real estate market, particularly for high‑value homeowners and landlords.

Key Changes

Mansion Tax

Mansion tax is a planned levy on high value properties in the UK, designed to raise revenue from properties valued at more than £2 million. The measure is part of a wider effort to tackle fiscal pressures while ensuring that wealthier homeowners contribute more. It is expected to have the greatest impact in regions such as London, where property prices have risen sharply in recent years.

The mansion tax shall come into effect in April 2028 and shall cost £2,500 per year for homes valued between £2 - £5 million and £7,500 per year for homes valued above £5 million. This is expected to raise a £0.4 billion per year by 2029-2030. Overall, the mansion tax is expected to generate only modest revenue, yet it clearly reflects Labour’s strategy of shifting the tax burden toward wealth. At the same time, the policy has been carefully designed to avoid destabilising the broader housing market, striking a balance between fairness and economic stability.

Income Tax Increases to Landlords and Investors

The Autumn Budget confirmed that National Insurance will not be applied to rental income which was good news for landlords, however, from April 2027, landlords and individuals earning property income will pay an additional 2% tax on rental profits, dividends, and savings income, while freezing thresholds until 2031. The measure if projected to generate £2.1 billion per year, though landlords caution it could lead to increased rental costs. For investors, the measure diminishes net returns and could ultimately deter future investment in the real estate sector.

Business Rates

The Budget introduced permanently lower business rate multipliers for the retail, hospitality and leisure (RHL) sector, benefiting over 750,000 shops, pubs and small businesses. These represent the lowest business rates since 1991, funded by increased charges on properties valued above £500,000, such as warehouses and large distribution centres. Reeves also announced a £4.3 billion support package, spread over three years, to assist properties of any size facing significant increases in their business rates. The initiative is intended to prevent online firms from gaining an unfair advantage over the UK’s street retailers and to overall level the playing field between e-commerce and traditional high street retailers. Through maintain the sustainability of high street businesses, the scheme also safeguards local jobs and strengthens community infrastructure.

While the measure provides vital relief for high street retailers by helping them remain viable and competitive, it is funded through higher business rates on large properties such as warehouses and distribution centres. This redistribution carries risks, logistics firms may face rising costs, potentially passing them on to consumers through higher prices or reduced service levels, and investment in UK distribution infrastructure could be discouraged. Overall, the package strengthens the resilience of traditional retail and aims to level the playing field with online competitors, but policymakers will need to monitor its knock‑on effects to ensure it does not inadvertently undermine the wider retail sector.

Social Housing and the Construction Industry Scheme

The Government announced plans to launch a consultation on changes to VAT rules affecting land designated for social housing. The consultation seeks to ease financial barriers for housing associations, developers, and construction firms by exploring more favourable VAT rules on land transactions. One option under review is zero-rating land sales intended for social housing projects.

While land sales are usually VAT-exempt, many landowners choose to apply VAT in order to reclaim costs they have incurred. This practice often makes deals with housing associations more complicated and costly, The government is considering whether zero-rating land sales for social housing could simplify the process, eliminate VAT charges, and reduce overall development costs. Such a change would encourage more landowners to make sites available for affordable housing schemes.

Labour also plan to tackle fraud in the Construction Industry Scheme, including strengthening HMRC’s powers to revoke Gross Payment Status and penalties for firms involved in supply-chain fraud from April 2026. Overall

Labour’s Autumn Budget signals a clear shift toward fairness in taxation and stronger support for high street businesses. While the measures promise relief for communities and added contributions from wealthier property owners, ensuring long-term success will require close monitoring to guard against unintended financial pressures on renters, investors and consumers.