On 26th November 2025, the Chancellor of the Exchequer stood at the dispatch box to reveal the budget, only an hour and a half before the Office for Budget Responsibility did the irresponsible thing of accidentally publishing budget detail on their website. They may have been first in line to publish the exact detail but a series of leaks and briefings meant that much of what was announced had already been widely trailed in the media.
Letting the cat out of the bag limb by limb in the weeks and months before had a dual affect on the property market. The positive side was that there the shock and awe that budgets such as that during Lizz Truss’ five minutes in the spotlight has not resulted in turmoil. There can’t be shocks if the detail is drip fed beforehand. The negative side is that what the market hates more than anything else is uncertainty and the constant briefing and throwing ideas out to test the court of public opinion left swathes of the public deciding to ‘wait and see’ before taking decisions.
The markets have been quite quick to react already, with Sonia Swap rates ranging right from the one year rates to the thirty year rates, all falling within hours of Rachel Reeves sitting down. These rates are a key indicator of where mortgage rates fall so it may be that mortgage rates, now begin to fall a little further as well, helping buyers in the process.
So, what’s happened specifically on property in the Budget and what can we expect?
Mansion tax
The High Value Council tax Surcharge (HVCTS) isn’t exactly a catchy name but we expect more people will know if by it’s unofficial name – the Mansion tax. Charged on properties large and small (go figure!) where the Market Value exceeds £2,000,000. The leaks were of a 1% annual tax on values above the £2million so a £2.5M property would have seen a £5,000 annual tax. What we got was watered down, with an annual charge of £2,500 for properties with a valuation of between £2M and £5M and an annual charge of £7,500 after that.
The tax isn’t due to come in until April 2028 so expect a deluge of high value properties to come to market in time for those who are asset rich and cash poor to escape before the charge comes in. Government have suggested they’ll consult on methods for deferred taxation so there may be a way out for some homeowners who would feel forced into selling. However, government consultations have a track record of taking a long time and giving little certainty. With so many of these homeowners unlikely to trust a government who regularly talk about targeting those with the broadest shoulders, we expect many will decide to bite the bullet and sell sooner rather than later.
For those that are selling, we may see values start to bunch up around the £2M level and the £5M level. Buyers may prefer a £1.9M house with no tax than a £2M house with tax to pay. Increased demand at the lower level may push prices up whilst reduced demand higher up may push prices down, causing a bunching affect. Given the falling cost of finance and the greater financial acumen often found at this level in the market, the reduction in value to properties where tax is paid may prove considerable. Only time will tell.
With the tax due in April 2028, buyers may speculate on what values of properties they buy now may reach the £2M or £5M mark by that time. Predicting that far into the future is uncertain so some may opt for properties in the £1.6M-£1.8M range and perhaps the £4.5M-£4.7M range now to give themselves that extra room for movement. As we get closer to April 2028, the brackets may narrow and increase.
What isn’t yet known is the how often the valuations will be done. If properties are revalued every year, a buyer may be cautious about a property hitting one of the thresholds. If however, revaluations are every three years or every five years, there’ll be less concern.
It’s also not yet known who will do the valuations. Most tax valuations, such as for Inheritance tax and Capital Gains tax are done by RICS Surveyors appointed by the tax payer. However, these are often in circumstances where the tax payer has good reason to be pro-active. For example, an Inheritance tax valuation is often required as part of the application for probate. The closest comparable scheme to what we’ll have in 2028 is Annual Tax on Enveloped Dwellings (ATED), a tax for company owned assets of high value which is done every five years. There are definite parallels and HMRC do allow (and even prompt) tax payers to get their own RICS valuation to determine the tax payable. As with any tax valuation, Government through the Valuation Office Agency have the right to dispute a report but they’re reviewing rather than writing it. The difference here is that the volume will be higher and Government may consider a pro-active approach of the Valuation Office Agency assessing everything and then leaving tax payers able to challenge if they wish through their own valuation.
Over the coming months, hopefully we’ll have some meat on the bone to understand exactly what it is Government will set to pass into legislation.
Landlord tax
Often the governments favourite punchbag, the Landlords have been hit again. Hot on the heels of Renters reform legislation passing through Parliament, the income tax that Landlords have to pay has increased by 2%.
This may see more landlords decide to incorporate as Corporation tax remains the same. Expect a number of Capital Gains tax valuations as Landlords consider tax strategies.
Landlords have been exiting the market in droves for a few years now. Higher tax and more difficulties evicting tenants is only likely to see more decide to leave. With capital appreciation of assets having been relatively low for many years now, most landlords strategies are high yield based – securing a high rental income compared to the mortgage payments but accepting that values may barely move for a number of years. The sort of properties that deliver this are, broadly speaking, mainly low down in the market. It may now prove to be the case that lots of landlords of low value properties seek to sell.
As landlords do sell, the supply of properties does not change so it’s likely to be owner occupiers and often first time buyers who replace them. Some will celebrate this but others will be concerned about where those who are far off being able to afford to buy will live. The stresses on the public rented sector will increase at a time when very few councils are building and many housing associations are tightening the purse strings. Build costs are close to an all time high and the Building Safety Act, for all its virtues, is making building at scale and in high density increasingly unviable for most of the country.
What we can do
In a challenging market, it’s important to get good quality professional advice.
Landlords may decide to incorporate in which case Capital Gains tax valuations may be required.
Buyers and Sellers may be fearful of the Mansion tax so may want preliminary advice on whether it’s likely to affect them, so they can forward plan strategic investment advice.
E-mail info@websterssurveyors.co.uk with your requirements if you’d like our help.
written on 26th November 2025 by Dan Knowles FRICS, Director and RICS Registered Valuer