Date Published 28 November 2025
Chancellor Rachel Reeves has delivered her Autumn Budget, which includes significant announcements affecting property taxation and the wider housing market. Below, we break down the key changes and what they may mean for landlords, investors, and homeowners.
Key Takeaways
• A new ‘mansion tax' will apply to homes valued above £2 million from April 2028.
• Stamp duty remains unchanged, despite widespread speculation earlier in the year.
• Landlords will face a 2% increase in income tax on rental profits from April 2027.
New ‘Mansion Tax' for Homes Worth Over £2 Million
A new annual surcharge—commonly being referred to as a mansion tax—will apply to properties valued above £2 million. This will be paid in addition to council tax, and importantly, will be payable by the property owner, not the occupier.
Although only a small proportion of UK properties fall within this bracket—less than 0.5% of sales agreed this year—activity at the top end of the market has already slowed, with £2m+ sales down 13% year-on-year. Market commentators suggest the anticipation of this tax has been a contributing factor.
Property expert Colleen Babcock comments:
'The market needs policies that stimulate movement, not stifle it. A new mansion tax risks creating distortions at the higher end and could trigger a ripple effect across the rest of the market. While premium property will always attract interest, this measure disproportionately impacts London and the South East, where recovery from April's stamp duty increases is still underway.'
When will the mansion tax take effect?
The surcharge will apply from April 2028, giving homeowners time to prepare. A government-led valuation exercise every five years will determine which band a property falls into.
2% Increase in Income Tax on Rental Income
From April 2027, landlords will face a 2% rise in income tax on rental profits, increasing the applicable rates to:
• 22% (basic rate)
• 42% (higher rate)
• 47% (additional rate)
This replaces earlier rumours that landlord rental income would become subject to National Insurance contributions.
What does this mean for landlords?
The increase will reduce net rental returns, placing further pressure on profitability—particularly for smaller landlords or those with high financing and compliance costs. As a result:
• Some landlords may choose to increase rents to sustain margins.
• Others may consider exiting the market, adding further strain to rental supply.
Colleen Babcock notes:
'Landlords may appear an easy target, but tax increases ultimately feed through to tenants. For the rental market to function, landlords must be able to make the numbers work. With rising mortgage rates, increased regulation, and previous cuts to mortgage interest relief, this latest change adds yet another layer of financial pressure.'
Despite challenges, UK Finance data indicates robust activity among landlords purchasing and remortgaging—but these new measures may dampen future confidence.
No Changes to Stamp Duty
Although multiple stamp duty reforms had been predicted leading up to the Budget, no amendments were announced. Both homebuyers and investors will continue to operate under the existing stamp duty structure.
When Will We See the Impact of These Changes
While the Budget provides much-needed clarity after months of speculation, the practical impact will be gradual. With the key landlord and property tax changes not kicking in until 2027 and 2028, investors and homeowners have time to evaluate their options, plan strategically, and adjust their portfolios accordingly.
At Adams Estates, we understand that shifting tax policies and market uncertainty can feel overwhelming for landlords and property owners. Our expert team is here to guide you through these changes, help you assess the impact on your portfolio, and ensure you remain compliant and well-informed. Whether you need tailored advice, portfolio reviews, or ongoing management support, we are committed to helping you navigate the evolving property landscape with confidence.
