Autumn Statement 2025 – 5 key takeaways affecting the Real Estate sector

Robert Trench in our Real Estate team highlights below 5 key changes that are likely to affect the real estate sector announced by the Chancellor, Rachel Reeves, in her  Autumn Statement on 26 November 2025.

1.High value council tax surcharge

In an attempt to increase government revenues, the Chancellor has introduced a new annual levy on high-value homes, commonly dubbed the “mansion tax.”

It will apply to homes valued at more than £2 million or more using property values assessed in 2026 with the levy set to begin in April 2028.

The new charges are set to start at £2,500 per year, rising to £7,500 per year for properties valued above £5 million, and will be levied on property owners rather than its occupiers. With local authorities collecting this revenue on behalf of central government, the measure is intended to streamline administration while ensuring that the additional funds feed directly into national fiscal objectives, rather than being retained at the local level.

This will hit London and the south east hardest where 80% of homes valued at over £2 million sit.  Dominic Agace, chief executive of estate agents Winkworth, said: “In London, this is a terrace tax, not a mansion tax. Many £2 million-plus properties are likely to be terraced family homes.”

Real estate industry voices warn the surcharge could cause a slowdown in the high-end property market. Some suggest sellers might wish to offload properties before April 2028, potentially depressing prices at the top end.

Whether the surcharge will achieve its goals of raising revenue without destabilising the housing market remains to be seen.

2.Tax on rental income

Landlords received some positive news with the Chancellor’s decision to exclude rental income from the scope of National Insurance.

However, they may still see an impact on rental income, as the budget introduced a 2 percentage point increase in taxes on property, dividends and savings.

The basic, higher, and additional tax rates will rise to 22%, 42%, and 47%.

Industry professionals have raised concerns that these changes could influence the property market, potentially leading to shifts in investment strategies, increasing rents and affecting rental supply. The Office for Budget Responsibility (OBR), in a leaked report prior to the budget, suggested that continued pressure on private landlord returns could reduce the availability of rental properties over time. The National Residential Landlords Association (NRLA) has also highlighted that, with a growing need for rental homes, the increased tax burden could place additional financial strain on tenants without directly addressing the underlying challenges in housing supply.

 3.Agricultural landowners

As anticipated, there was no reversal of the inheritance tax changes announced in the 2024 Budget. The combined £1 million allowance for the 100% rate of Agricultural Property Relief (APR) and Business Property Relief (BPR) will remain fixed for another year, until 5 April 2031.

However, the Chancellor did introduce one long-awaited concession being that the £1 million allowance for the 100% rate of APR and BPR will now be transferable between spouses and civil partners helping landowners avoid having to transfer assets away on the first death. While this change offers some relief for agricultural landowners, it does little to alleviate the overall inheritance tax burden that continues to weigh heavily on the farming community, particularly given the rising value of agricultural land and assets. Agricultural landowners would be wise to engage with their tax planners to discuss succession planning particularly ahead of the implementation of the APR and BPR changes in April 2026.

4.Planning

The Chancellor confirmed a number of measures on planning.

Investment will go towards infrastructure and planning priorities, to support growth, new affordable homes, improved transport connectivity to more places and a boost in investment in new nuclear power.

£48 million of additional funding will also be provided to boost capacity in the planning system, including investment to employ more planners in England. The Chancellor stated the budget was ‘Backing builders not blockers” through the biggest planning reforms in a generation.

However, the Office for Budget Responsibility (OBR) actually reduced its estimate of new housebuilding to 215,000 new builds in 2026/2027 compared to the average per year of around 260,000 in the early 2020’s under the Conservatives. With that said, there is good news looking forward to 2029/2030 where the OBR predicts a sharp rising in housing stock additions to 305,000 as a result of the planning reforms.

5.Business rates

The Government said it would rebalance business rates to reduce bills for retail, hospitality and leisure but increase charges for properties with rateable values above £500,000 (effective from 1 April 2026). This will provide relief for smaller independent businesses and is expected to benefit 750,000 retail, hospitality and leisure properties.

However, the changes may impact the profits of medium sized businesses disproportionately including independent businesses who operate in high value areas. Additionally, the chancellor’s explicit focus on ‘the most expensive properties such as warehouses used by large online retailers’ could impact logistics landlords and may have adverse effects on supply chain costings.

By maintaining targeted business rates to support retail, hospitality, and leisure, the  budget offers hope for stability in the UK’s hospitality sector enabling them to plan with more certainty. Additionally, proposed planning reforms present new opportunities for hospitality and high street businesses to grow. While challenges remain, arguably these measures help create a more stable trading environment for retail, hospitality and leisure as we move toward 2026.

Summary

The Autumn Budget 2025 marks a major recalibration of how wealth tied up in property is taxed in the UK. For homeowners of high-value houses, landlords, and investors, this signals a more expensive, more regulated property environment. It may dampen demand at the high end, reshape the incentives for rental investments, and shift the shape of supply and demand across the property market.