UK BUDGET 2025: KEY PROPERTY ANNOUNCEMENTS & IMPACT ON THE HOUSING MARKET

UK Chancellor Rachel Reeves has just fired the starting gun on a brand‑new phase for the UK property market – one that will feel tougher on tax, but clearer, more predictable and, for the right investors, full of opportunity. For Luxe Living International clients, this Budget is not the end of the story; it is the moment to reassess, reposition and, in many cases, take action on selling or renting out UK property.

The “Mansion Tax” Finally Arrives

From April 2028, high‑value homes in England will face a new annual High Value Council Tax Surcharge – quickly nicknamed the “mansion tax.”

• It applies to properties valued over £2 million (using 2026 valuations) and will be collected alongside normal council tax.

• The annual charge starts at £2,500 and rises in bands up to £7,500 a year for homes above £5 million, affecting roughly 1% of properties and raising about £400 million a year by 2029–30.

For many London owners, this turns high‑end property into more of a “running cost” asset than a simple store of wealth – which is exactly why some will quietly decide to sell before 2028 rather than carry an extra five‑figure cost over a typical holding period.

Landlords Hit With Higher Rental Income Tax

From April 2027, the tax you pay on UK rental income will rise by two percentage points across the basic, higher and additional bands.

• New property income rates: 22%, 42% and 47% (above the £1,000 property allowance), while National Insurance will still not apply to rental income – a bullet many landlords feared but ultimately dodged.

• The Office for Budget Responsibility and major landlord bodies warn that this will further erode net yields, push some private landlords to sell, and tighten rental supply – which in turn risks higher rents over the medium term.

For serious investors with strong assets and professional management, this environment can actually strengthen long‑term rental performance, but it will punish over‑leveraged, hands‑off landlords who are already stretched.

Revaluation, Planning Reforms And House Price Direction

Alongside new taxes, the government is preparing for a broad revaluation of housing stock – the first comprehensive update to many council tax bases since the early 1990s – and is pushing planning reforms aimed at increasing delivery later in the decade.

• The OBR expects UK house prices to keep rising in cash terms, from around £260,000 in 2024 to just under £305,000 by 2030, with average growth of roughly 2.5% a year – broadly in line with earnings.

• Net additions to the housing stock are forecast to climb from a low in 2025–26 to around 305,000 a year by 2029–30, helped by a more flexible National Planning Policy Framework.

Put simply: the Budget may cool the very top end and squeeze landlords’ margins, but it does not signal a crash; instead it points to a more slowly growing, more regulated and more segmented UK housing market.

What This Means If You Own A UK Property

For sellers, landlords and overseas investors, the story is less about headlines and more about timing, strategy and pricing.

• Owners of homes approaching or above £2 million now have a clear deadline: either re‑position and hold with full knowledge of future costs, or plan an orderly disposal before the surcharge bites from 2028.

• Landlords facing higher income tax must decide whether to rebalance portfolios, refinance, or crystallise gains now – especially in London and key regional cities where buyer demand remains resilient.

For many Luxe Living International clients in Hong Kong, the Middle East and Asia, this shift is an opportunity to upgrade, rotate into better‑performing stock, or acquire quality units from motivated UK sellers who are reacting to the new rules.

Why This Could Be A Window Of Opportunity

Whenever a major tax change is announced, markets briefly lose their footing – then quickly reprice and move on.

• The end of speculation about a mansion tax, landlord National Insurance and broader SDLT reforms brings clarity: serious buyers and sellers can now put numbers in a spreadsheet and make decisions instead of waiting for rumours.

• Short‑term turbulence in prime London and high‑value segments – including some owners rushing to sell before 2028 – can create rare discounts for cash‑ready buyers and exit windows for landlords who want to lock in capital growth.

In every cycle, there is a small group of owners who read the policy, act early and come out ahead – and a much larger group who wait until everyone else is selling or buying and miss the most attractive terms.

How Luxe Living International Can Help You Now

The Luxe Living International team specialise in helping international owners and investors navigate exactly these inflection points in the UK market, with a particular focus on London and key regional growth cities.

• If you are considering reselling your UK property, this is the moment to review your likely buyer profile, realistic pricing under the new tax regime, and a strategy to complete well before the 2028 levy and 2027 income tax rise fully bite.

• If you prefer to hold, Luxe Living can help you reposition your asset for stronger rental performance – refining tenant profile, rent levels and management to offset higher tax and protect long‑term yield.

If you own a flat, house or portfolio in London or wider UK and want to talk through your options, reach out to Luxe Living International for a confidential review of your position and a tailored action plan for selling or letting in this new landscape. Click Here