The 2025 Budget brings a sense of steadiness to the property market, giving homeowners and landlords clarity while highlighting changes to watch over the next few years. Rather than introducing sudden shifts, the announcements outline a gradual evolution in taxes and regulations that could influence property decisions.
For homeowners, it provides reassurance that day-to-day costs like Stamp Duty will remain familiar, while investors and landlords gain insight into upcoming adjustments to rental income tax and support for commercial properties. Understanding these developments early allows property owners to plan, safeguard investments, and make informed choices tailored to their local markets.
Ellis and Co explores the main updates, explains their implications, and shows how they could affect homes, lettings, and investment strategies across the regions we serve.
High-value homes to face a future council tax surcharge
A key announcement affects homes in England valued above £2 million. From April 2028, these properties will pay a High Value Council Tax Surcharge, calculated using updated VOA valuations due in 2026. Annual charges will range from £2,500 to £7,500.
This measure impacts only a small portion of the market, concentrated in London and the South East. For most homeowners in other regions, the effect will be minimal, giving time to plan for the future.
Stamp duty and properties over £500,000 remain unaffected
Despite speculation of wider tax reforms, Stamp Duty Land Tax rates and thresholds remain unchanged. There are no new taxes for properties over £500,000 outside of the high-value surcharge.
For buyers and sellers in 2025–2026, this ensures predictable costs and familiar rules, helping with budgeting and planning transactions.
Rental income tax rises from 2027
Landlords in England, Wales, and Northern Ireland will face a 2-percentage-point increase in rental income tax across all bands from April 2027:
- Basic rate rises to 22%
- Higher rate rises to 42%
- Additional rate rises to 47%
Scotland is exempt due to its devolved tax system. While day-to-day lettings remain unaffected, long-term yields, refinancing, and investment decisions may need adjusting.
Extended support for commercial landlords
From April 2026, smaller commercial properties, including retail, hospitality, and leisure units with rateable values under £500,000, will benefit from permanently reduced business rate multipliers. This replaces temporary reliefs and provides certainty for mixed-use property owners.
Why property continues to be a reliable investment
Even with gradual tax changes on the horizon, property fundamentals remain strong:
- Sustained tenant demand in key towns and cities
- Limited rental stock supporting competitive yields
- Potential for long-term capital growth alongside consistent rental income
- Bricks and mortar offer stability compared to financial markets
Investors and homeowners alike continue to see property as a tangible and dependable asset.
Regional differences shape impact
The new £2 million+ surcharge is focused mainly on London and the South East. In most other regions, such high-value homes are rare, meaning the impact on local buyers and sellers is limited.
With no changes to Stamp Duty, market conditions remain familiar across much of the UK.
Key legislation to watch
Renters’ Rights Act (2025–2026)
A major reform is underway that will reshape tenancy management, from creation to termination. Ellis and Co will provide updates 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 income via approved software. Early preparation will help ensure a smooth transition.
Next steps for homeowners and landlords
The 2025 Budget brings measured change rather than sudden disruption:
- Buyers and movers face no changes to Stamp Duty heading into 2026
- Homes below £2m are unaffected by new taxes
- Landlords should prepare for the 2027 rental income tax increase
- Commercial landlords gain long-term certainty with permanent multipliers
- Digital tax reporting for property owners starts in 2026
With Ellis and Co’s local expertise, homeowners and landlords can navigate these updates confidently, making informed decisions in their property market.
