"Unlike previous budgets – think Kwarteng’s mini-budget – Reeves opted for a more measured approach, refraining from pulling any proverbial rabbits out of the hat – although the increase to Stamp Duty surcharge on second homes was unexpected"
- Paresh Raja - Market Financial Solutions
In many recent Budgets, housing and property seemed to take a back seat. Today's Budget was very different in that respect with the new Labour government bringing into sharp focus the importance of the UK property industry as a tool to drive growth and revealing multiple changes in rules and regulations that are set to affect landlords, tenants, first-time buyers, and homeowners for years to come.
Over the past few weeks we have seen words like "tough" and "painful" used to describe "difficult decisions" the Chancellor has had to make to lay the groundwork for recovery and balance the books after the last Tory government left a "£22bn black hole" in the public finances.
But with increases to income tax rates, national insurance, and VAT ruled out months ago, many had been left in limbo wondering if they were those with the "broadest shoulders" required to bear the heaviest burden. Today, we found out who they were.
As you would expect, the property industry was quick to react. Here's what they're saying:
Nathan Emerson, CEO of Propertymark said: “The UK Government has taken its first steps in delivering a range of measures that look to provide more affordable and safe homes for the nation, in which we desperately need with a growing population.
“However, what we now need to look out for are the crucial plans that underpin all of these proposals as without the correct infrastructure, these targets will not be delivered in a sustainable and socially responsible way."
Richard Pike, chief sales and marketing officer at Phoebus, said: "As a first budget, Labour can’t be accused of not making a big impact. As to whether it’s the impact they intended, only time will tell. With the measures that make it more difficult for businesses to operate, we will have to wait and see whether it actually creates the high growth economy that Labour says that it wants."
Toby Leek, NAEA Propertymark President comments: “We’re pleased to see that the UK Government has addressed the urgent need for more new homes to be built within its upcoming projects. We now hope to see the details mapped out to ensure skilled workforces continue to grow in line with these plans to get these homes built, and infrastructure and planning changes are adapted appropriately to accommodate.”
Pete Mugleston, MD and mortgage expert at Online Mortgage Advisor said: “The new Budget will certainly shake things up for homeowners in the UK in a few key ways. For starters, the rise in Employer’s National Insurance contributions could slow down job creation in the construction sector, which might impact housing supply. Plus, with income tax and NI thresholds frozen, more homeowners could find themselves paying higher taxes as their wages increase, leaving less money for savings or new home purchases.
“The changes to inheritance tax could also affect how properties are passed down through generations. And if capital gains tax on second homes increases, it might discourage some people from selling altogether.
“The higher Stamp Duty threshold for first-time buyers, set to revert to pre-COVID levels in 2025, could price out some first-time homeowners. The changes to non-dom tax status could also affect foreign investment in UK properties.
“However, there’s some good news; the government plans to boost affordable housing, which could help first-time buyers and an increase in the National Minimum Wage could lift incomes too. Just keep in mind these higher employer costs could trickle down into prices across the board.
“Going forward, homeowners should take a proactive approach and budget for potential tax increases, monitor the housing supply constraints, and consider the implications of capital gains tax changes. For prospective buyers, it may be better to act quickly as prices may rise, take advantage of affordable housing initiatives, and assess long-term financial readiness."
Paresh Raja, CEO of Market Financial Solutions, said: “The Government had warned of tax rises to fill the black hole in public finances, so there was apprehension across the property and finance sectors heading into today’s Budget. Unlike previous budgets – think Kwarteng’s mini-budget – Reeves opted for a more measured approach, refraining from pulling any proverbial rabbits out of the hat – although the increase to the Stamp Duty surcharge on second homes was unexpected. This approach should calm the lending and property markets, easing some of the uncertainty that has lingered in the lead-up to this announcement.
“In general, the clarity offered today is certainly welcome, though we’ll need to see how these policies translate practically. While certain tax reforms may require careful consideration from investors and brokers alike, I anticipate the market will soon shift back to ‘business as usual’ – particularly as some of the tax increases were less substantial than many were expecting. This is promising, as the property sector has shown great resilience in recent months amid an improving economic outlook. Today’s steady fiscal approach should help maintain that positive momentum, provided that investors are able to navigate the more unexpected changes that have been made with confidence.
“Indeed, some of today’s announcements will undoubtedly put a slight dampener on investors’ moods. As such, it’s up to lenders and brokers to work together to provide financial products that can help them navigate the evolving market conditions with confidence in the months ahead. The property investment landscape may have shifted, but through collaboration and innovation, there’s no reason why it can’t continue to thrive in the aftermath of today’s announcements.”
Tim Parkes, CEO of RAW Capital Partners, said: “This bumper Budget will not be popular with many property investors or brokers, but the new reality has at least been laid out before them. The level of uncertainty and speculation there has been over recent months regarding potential government reforms has been unhealthy, so having a clearer view on the policies being introduced is an important step forward. Landlords and investors, in particular, are now in the position to make informed choices about their portfolios. And, given the upward trend in property and rental prices this year, plus the recent drop in inflation and interest rates, we could start to see greater growth and momentum within the UK property market, even if the BTL market faces challenges.
“It is also important we see the bigger picture. The private rental sector is being subjected to tax and regulatory reform, but at the same time the government is working to stabilise the economy and drive growth, which was highlighted by today’s commitments to investing in public services. If these initiatives have their desired effect, they could strengthen consumer confidence and set the UK on a clear growth trajectory in the coming years. Therefore, while the abolition of the non-dom tax status and increases to Capital Gains Tax (CGT) and stamp duty may introduce additional complexities or costs for some landlords, we should not overlook the fact that the overarching appeal of the UK as an attractive property investment destination remains strong.
“Now, it’s essential that lenders and brokers step up and support investors who are eager to begin or expand their portfolios in the UK market, which includes providing guidance on how their investments will be impacted by today’s raft of announcements. Reforms are coming. Rather than dwelling on their drawbacks, it’s time to seize the multitude of opportunities that this highly attractive and resilient asset class will continue to provide in the months and years ahead.”
Nick Leeming, Chairman of Jackson-Stops, comments: "Today’s Budget misses a key opportunity for broader stamp duty reform—a sentiment shared by one in four people across the UK, and by a third of those aged 65 and over. A targeted downsizing incentive would have been a forward-thinking approach, encouraging older homeowners to move to smaller homes without incurring high tax burdens. This would help free up family-sized properties for growing households and create a more balanced housing market.
"With one in three people over 65 calling for change to this burdensome tax, it’s clear that today’s Budget could have gone further to address the broader needs of the housing market and to create a more fluid property chain."
"We do however welcome the Chancellor's decision to leave Capital Gains Tax (CGT) on residential property and buy-to-let properties unchanged. With supply already tight across the rental market, increasing CGT would have likely discouraged landlords from maintaining or expanding their portfolios, adding further upward pressure to rental prices and impacting affordability for renters."
“We also welcome the government’s recognition of the critical role of the 'bank of mum and dad' in helping younger generations onto the housing ladder through the extension of the frozen inheritance tax threshold to 2030. With increased tax burdens potentially limiting the ability of families to support their children in homeownership, the government must continue to consider how it can best support prospective homeowners through meaningful housing strategy.”
Terry Woodley, MD of Development Finance at Shawbrook, commented: "Reducing planning red tape and streamlining processes is going to play a crucial role in delivering the ambitious 1.5 million new homes target. But it’s not the only answer: a multi-faceted approach is needed to really address the issues currently facing developers.
“The recruitment and training of additional planners will take time, and any further planning reform remains unclear. The Government must prioritise effective, comprehensive planning overhauls to kickstart progress and unlock the UK’s full housebuilding potential.”
Ross Turrell, Commercial Director at CHL Mortgages, said: “Today’s Budget clearly calls for careful consideration from the buy-to-let (BTL) market. But, given the sector’s proven track record for successfully navigating ever-shifting regulatory and economic landscapes, we should be wary of excessive doom-mongering. Just look at the challenges that BTL landlords have had to respond to over the past decade – while almost every regulatory, tax or legislative reform is framed as an existential threat, the market consistently demonstrates resilience and adaptability.
“The Budget marks another chapter in this ongoing story. The CGT and SDLT changes are obvious challenges, and will not be received favourably by landlords. But at the very least, ending speculation and knowing the details of the policies will bring clarity to the sector after a period of significant uncertainty. This is underpinned by the Chancellor’s broader goal of achieving strong economic growth, which could bolster both consumer and wider property market confidence, ultimately supporting the long-term future of the BTL sector.
“Now, as an industry, our focus should shift to collaboration and building confidence among borrowers, landlords, and brokers as they adjust to new regulatory and tax changes. While it’s tempting to dissect each policy and focus on their potential negatives, our priority must be on providing robust education and support. The reforms have been made – with the right guidance, lenders can help landlords adapt with confidence to ensure a sustainable and resilient BTL market for years to come.”
Mark Baycroft, Partner, haysmacintyre commented: “Governments naturally think in the short-term, and in reality, it would probably take longer than a single parliament to entirely rewrite the more complicated areas of the tax system. Stamp Duty Land Tax, for instance, is an unpopular and arguably unfair tax on the process of moving, but an alternative that taxes on the value of property would also be distortive and punish those whose money is tied up in property assets but do not have much by way of liquid assets. There has been no sign of such reform in this budget, only a 3% increase in stamp duty land surcharge for second homes.
“The challenge for Rachel Reeves and the Treasury is to introduce property tax changes that would actually constitute an improvement. The reality is that whilst there is plenty of criticism of the state of property tax – and justifiably so – alternative suggestions are equally subject to justifiable criticism and would benefit from being consulted on.”
Brian Byrnes, Head of Personal Finance at Moneybox comments: “This was a disappointing budget for first-time buyers who have been doing all they can in recent years to navigate economic challenges and continue to make progress towards their home ownership goals.
“While the Chancellor has no doubt had some difficult choices to make, the decision not to future-proof the Lifetime ISA or extend the current stamp duty relief beyond next March is a blow for FTBs at a time when affordability is already a key obstacle.
“A commitment to build 1.5m houses and boost affordable housing over the course of the next government is certainly needed, but fulfilling this promise will be complex and take time to bear fruit. And, despite the best of intentions, it remains to be seen whether the introduction of a further stamp duty surcharge on second homes will give FTBs a competitive advantage.
“A considered strategy to support first-time buyers now and into the future is needed and this must include near-term pragmatic measures that are proven to provide tangible financial support to FTBs who need it most.
“We passionately believe that futureproofing the Lifetime ISA by index linking the property price cap and reviewing the unauthorised withdrawal penalty fee will provide some much-needed support and reassurance to first-time buyers of the length and breadth of the country.
“As a note of reassurance to all those aspiring homeowners many of whom have been calling out for greater support from the government, it is important to remember not all support measures need to be legislated for in a fiscal event such as a Budget.”
John Phillips, CEO of Spicerhaart and Just Mortgages said: “Today’s Budget was an opportunity for Labour to show that its plans for housing are far more than just increasing supply. Sadly this wasn’t the case, with a real lack of support for buyers and the wider housing market. While increasing supply is necessary, we also need tangible support right now to increase routes to homeownership and reduce affordability pressures, particular for first-time buyers.
“While not mentioned, it seems the Stamp Duty relief will still end in April, removing important financial support for buyers and downsizers, while creating another cliff-edge deadline for the industry to deal with. We will have to see if the almost instant increase in stamp duty on second homes does indeed increase transactions as the Chancellor hopes, or whether as some worry, it will impact rental supply further and send rents higher – adding further pressure to those trying to save for deposits.
“With the Budget now done, we have to hope that some of the waiting and seeing will now clear and we see buyers moving forward with plans. Plus, with the consensus being that we will still see another cut to the base rate this year, we will hopefully see some activity from both lenders and potential buyers. It’s a shame though that it is left to the industry once again to do the heavy lifting to support buyers and keep the housing market moving.”
