We examine the key announcements for property agents, landlords and their clients, including measures in the full Budget document that were not covered in the Chancellor’s speech.
Property income tax to rise again
Rachel Reeves had already announced an increase on property tax by 2% effective from next year. Today John Healey has announced a further 2% rise from 6 April 2027. The new rates will be:
- 24% at the basic rate.
- 44% at the higher rate.
- 49% at the additional rate.
New equity loans for first-time buyers
The Your First Home scheme will offer 20% equity loans, with a five-year interest-free period. Buyers will need a deposit of at least 2.5%, with a maximum deposit of 15%.
Household income limits will be £110,000 outside London and £140,000 in London. Property price limits will reflect local authority median prices, with caps of £650,000 in inner London and £500,000 in outer London.
Pre-registration is due to open by the end of December 2026, followed by full applications from February 2027. The first loans are expected to be issued from April 2027.
The OBR judges that Your First Home will have only a marginal effect on overall housing supply, while potentially raising house prices slightly by increasing demand.
Changes to Lifetime ISAs and deposit savings
From 29 October 2026, the withdrawal charge for Lifetime ISA holders buying a first home above the £450,000 property price cap will fall to 20%, where the purchase otherwise meets the qualifying rules.
This is intended to protect savers’ original contributions when they buy above the cap. The charge for other unauthorised withdrawals will remain at 25%.
A new First Time Buyer ISA will replace the Lifetime ISA for new savers from April 2029. It will allow contributions of up to £4,000 a year and offer a 25% government bonus, paid when funds are withdrawn for a qualifying purchase.
The property price cap will remain £450,000, and the maximum bonus will be £20,000. There will be no upper age restriction. Existing Lifetime ISA holders will be able to continue contributing to and using their accounts under the current rules.
High-value council tax surcharge details confirmed
Owners of residential properties in England worth £2 million or more, based on April 2026 values, will face the High Value Council Tax Surcharge from April 2028.
|
Property value |
Annual surcharge |
|
£2 million to £2.5 million |
£2,500 |
|
£2.5 million to £3.5 million |
£3,500 |
|
£3.5 million to £5 million |
£5,000 |
|
£5 million and above |
£7,500 |
Owners, rather than occupiers, will be liable, and the surcharge will sit alongside existing council tax.
The Budget confirms a deferral scheme for eligible owners, exemptions and discounts, and a 100% premium for properties left substantially unfurnished and unoccupied for at least 12 months.
Draft valuation bands will be available in autumn 2027, with the first bills issued in March 2028. Owners will be able to challenge banding decisions and appeal to the Valuation Tribunal for England. Annual charges will rise with CPI inflation from 2029–30.
More funding for affordable homes and changes to development rules
An additional £1.5 billion for the Social and Affordable Homes Programme will support around 10,000 homes in England. Funding will prioritise Social Rent, particularly council homes, and takes total investment in the programme above £40 billion over ten years.
Preferential borrowing for council housebuilding will be extended for another year, to 2027–28. A zero rate of VAT on land sold to registered social housing providers will take effect from 1 April 2027.
There will be no major changes to building regulations for the rest of this Parliament, except to improve building safety. Ministers will still consider proportionate changes that support development.
Business rates support for high streets
From 1 April 2027, qualifying retail, hospitality and leisure properties in England will receive full Small Business Rates Relief up to a rateable value of £18,000, with tapered relief available up to £21,000.
Business rates bill increases for qualifying properties will be capped at CPI inflation in 2027–28 and 2028–29, subject to exceptions including changes caused by property improvements or the loss of other reliefs.
Relief for pubs, social clubs and all but the largest live music venues will rise from 15% to 35%.
Commercial agents should also note that the 1p Transitional Relief Supplement will continue for two more years. Vape shops and adult gaming centres will lose access to specified reliefs from April 2027.
The Valuation Tribunal’s £150 and £300 fees for non-domestic rating appeals will be abolished for the 2026 rating list and future lists, with refunds available for fees already paid on 2026 list appeals.
Energy support and costs for agency businesses
Households in council tax bands A to D in England will receive a £100 Household Energy Payment directly into bank accounts from January 2027. Devolved governments will receive funding to provide support in their nations.
The temporary VAT cut on domestic electricity will continue until 1 July 2027. Plans to remove gas standing charges will move those costs into unit rates, with targeted support to be set out.
The Budget also reduces capital grant funding for the Warm Homes Plan by £1 billion. Boiler Upgrade Scheme funding will remain at £400 million in 2027–28, rising broadly with inflation thereafter.
For agency employers, the National Living Wage will rise to £13.21 an hour from 1 April 2027. Tax-free mileage rates for employees and self-employed people using their own car or van for work will permanently increase to 55p for the first 10,000 miles and 35p thereafter.
The lifetime limit for gains eligible for Business Asset Disposal Relief will fall from £1 million to £500,000 for qualifying disposals from 6 April 2027.
Stamp duty on assured tenancy rents to be removed
The UK Government will remove Stamp Duty Land Tax on rent paid under assured tenancies in England, with effect from 1 May 2026, following the introduction of the Renters’ Rights Act 2025. This avoids tenants being unintentionally drawn into the tax once their periodic tenancies reach the net present value threshold.
OBR forecasts point to continued pressure on the housing market
The Office for Budget Responsibility’s October outlook forecasts house price growth of around 2% in 2026 and 2.5% in 2027.
However, it expects the average effective interest rate across outstanding mortgages to rise from 4% in 2026 to around 5% in 2031, as borrowers refinance and market rates feed through.
Property transactions are forecast to increase from around 1.2 million in 2026 to 1.3 million in 2031.
The proposed steep and punitive rise in income tax on property income from April 2027 is a further disincentive to potential landlords from entering the market, and it will hit existing landlords badly. As the Office for Budget Responsibility has pointed out, this decision to raise the tax will result in a steady, long-term rise in rents, impacting tenants as well as landlords.
The Your First Home scheme and the introduction of a new First Time Buyer ISA are positive steps towards helping people save for a deposit and access homeownership. However, support must extend beyond buyers of new-build properties and form part of a joined-up approach. The UK Government must also consider wider reforms to the housing market, including Stamp Duty, to help people move more easily through different stages of homeownership.
Measures to support high streets through business rates relief and a real-terms freeze for retail, hospitality and leisure properties are welcome. It is important, however, that the needs of other small businesses are also considered, including property businesses that support local economies and help consumers navigate the housing market.
