The 2025 Budget sets out a measured path for the property market, combining stability in the short term with gradual changes on the horizon. For those looking to buy, sell, or let, understanding the nuances of these updates is essential to make informed choices. Country Properties explores what the announcements mean for property owners and investors.
High-value homes: a new levy from 2028
Looking ahead, the Budget introduces a High Value Council Tax Surcharge for homes in England valued above £2 million. Effective April 2028, the surcharge will be calculated using updated VOA valuations due in 2026, with annual payments ranging from £2,500 to £7,500.
While this has drawn attention in the media, the impact is limited to a small segment of the market. Most homes in the areas Country Properties operates are well below this threshold, meaning the majority of homeowners will not be affected immediately. This gives local buyers and sellers time to plan without disruption.
Stamp duty and property costs remain stable
Contrary to pre-Budget speculation, Stamp Duty Land Tax rates and thresholds remain unchanged, and there are no new taxes on properties valued above £500,000, aside from the £2m+ surcharge.
For buyers preparing to move in 2025–2026, this means upfront costs remain predictable, supporting smoother transactions and clearer financial planning.
Planning for rental income tax changes
From April 2027, landlords in England, Wales, and Northern Ireland will see a 2-percentage-point increase across all income tax bands on rental earnings:
- Basic rate increases to 22%
- Higher rate increases to 42%
- Additional rate increases to 47%
Scotland is excluded due to its devolved tax system. These adjustments will influence long-term returns and portfolio management, although day-to-day lettings operations remain unchanged.
Support for commercial landlords
For owners of smaller retail, hospitality, and leisure premises with a rateable value under £500,000, the Budget introduces permanent reduced business rate multipliers from April 2026.
This ends the cycle of temporary relief extensions and provides certainty for commercial landlords managing mixed-use properties across the regions.
Property fundamentals continue to hold
Despite future tax adjustments, the market remains underpinned by strong fundamentals:
- Tenant demand remains high across local areas, with rental stock constrained in key towns and cities.
- Yields stay attractive where supply is limited, and long-term capital growth remains achievable.
- Bricks and mortar continue to provide a tangible, stable investment, offering reassurance during periods of broader economic uncertainty.
Regional nuances shape the impact
The new £2 million+ surcharge is concentrated in London and the South East, where such high-value properties are most common. Elsewhere, homes of this value are rare, meaning the effect on local markets and typical buyers is minimal.
With no changes to Stamp Duty, most regions will see continuity in property transactions and market activity.
Legislation to monitor alongside the Budget
Two important reforms will influence landlords beyond tax changes:
Renters’ Rights Act (2025–2026)
This major reform will reshape tenancy agreements, management, and termination processes. Country Properties will continue guiding as the details emerge. Read our full guide to the Renters’ Rights Act.
Making Tax Digital (April 2026)
Landlords and self-employed property owners will need to maintain digital records and submit property income via approved software. Early preparation will ease the transition.
Looking ahead
The 2025 Budget introduces measured changes rather than sudden shifts. For most homeowners and landlords, day-to-day decisions and planning remain largely unaffected, while the coming years will bring clear points to consider around high-value property taxes, rental income, and digital compliance.
Country Properties’ local estate agents are here to support local buyers, sellers, and landlords in understanding how these updates might shape decisions and investment strategies in their area.
