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Autumn Budget 2025 Predictions for Landlords and Investors
With the Autumn Budget looming and the chancellor under pressure to raise revenue, eyes are particularly focused on the property sector.
Discussions and predictions over potential changes to how properties are taxed form the core of the Autumn 2025 Budget with the chancellor, Rachel Reeves, expected to announce both immediate changes and set the country on a path for a major reassessment for the future.
At Clifton Private Finance, we consider the likelihood of some of these changes and the impact they may have for property owners and investors in the coming years.
From SDLT to National Property Taxes
One of the more significant influences on this budget lies with the recommendations made by Onward UK in their recent proposal A Fairer Property Tax by economist Tim Leunig. Along with other reports, this proposal outlines major reforms to the structure of property taxation, namely moving it from a sales tax, represented by Stamp Duty Land Tax (SDLT), to an annual taxation on high-value properties for the portion of value over £500,000.
Dubbed a National Property Tax, the proposal suggests that removing the burden of SDLT from buyers and shifting the onus of payment to spread over years of property ownership would revitalise the housing market. Leunig suggests it would encourage a more vibrant marketplace where homeowners are more willing to move between properties rather than holding on to property assets to avoid the impact of large SDLT obligations.
The likelihood of immediate sweeping reforms coming on November 26th is not high - changes such as this would take time to implement and be unlikely to come into effect before the 26/27 financial year. Nonetheless, Reeves clearly has her eye focused on SDLT and the potential revenue available from additional taxation on high-value homes.
The Government has a goal of supporting first-time buyers which directly impacts property investment for landlords. It is plausible that an announcement is made that raises the rate of the SDLT surcharge for second homes and buy-to-let properties. This would raise revenue as well as discouraging investors from the lower-priced housing that’s most suitable for first-time buyers. Such a move could be seen as a quick-win for Reeves when compared to the longer term complexity of structural reform.
Prospective Changes to Council Tax
The Onward proposal is a comprehensive report that takes into consideration both low-value and high-value homes and their respective impact on both local and national taxation. Leunig suggests a local proportional property tax for homes under £500k to supersede Council Tax. Under the proposal, revenue from high-value properties would replace SDLT at a national level, while that from low-to-mid-value properties would generate income to replace the current Council Tax system entirely.
Once more, this proposal represents a longer-term view that is unlikely to be part of the immediate agenda, though steps may be taken by Reeves to lay the foundations for such changes. In the short-term, the Chancellor may announce a review or consultation regarding the calculations on which council tax bands are based. Because Council Tax bands in England are still based on 1991 property valuations, the system is widely viewed as outdated and increasingly misaligned with today’s housing market.
The ‘Mansion Tax’ and Capital Gains Tax on High Value Properties
Much speculation exists regarding a ‘mansion tax’, that would focus on properties valued at £2 million or more. Whether part of a wider reform that integrates many of the ideas from the Onward proposal, or a single targeted charge, there’s strong belief in the industry and media that the Government is keen to increase the tax obligations for those with significant property investments.
Similarly, it is possible that further changes could be made to Capital Gains Tax (CGT) and a tightening of the Private Resident Relief (PRR) rules which would impact the profits made by both developers and investors.
National Insurance Contributions for Landlords
There is an extremely strong likelihood that the Government will alter the classification regarding rental income for private landlords to bring it in line with other self-employed income regarding National Insurance Contributions (NIC). In the majority of cases, this would effectively increase the tax obligation for landlords by 8%, further limiting the profits to be gained through private letting.
The specifics of such a move cannot be known until after the budget announcement, making it difficult to speculate on how this might affect landlords utilising a SPV with a sole shareholder, though it is unlikely that a simple loophole would exist in this case. Larger corporate landlords should remain untouched by these changes, with employee NICs already firmly part of the company structure.
Potential Autumn Budget 2025 Impact for Property Owners and Investors
There’s little doubt that the upcoming budget is going to have significant influence on the current property market.
Tighter Profit Margins
The returns available for landlords could be significantly reduced, especially for starting investors or those with a small-but-growing portfolio. At the higher end, valuable investment properties may become slower to move, with investment profits diminished.
This is due to a combination of factors such as:
- potentially increased SDLT on high-value second properties
- tighter CGT / PRR rules
- increased competition from first-time buyers for low and mid-value homes
- NIC contributions for private landlords
These changes may mean that smaller landlords may be moved to choose between restructuring as a limited company or potentially leaving the property market completely, selling their portfolios and further shrinking the pool of available rentals.
Movement to Owner-Occupiers
There’s little doubt that the Government is looking to increase the number of homeowners living in their properties. These expected measures seem designed to make the property investment sector less attractive - a boost in the number of homes available for ownership only comes by shrinking the landscape of rental homes.
National and local proportional property taxes as proposed by Onward would move the onus of payment from tenant to landlord with regards any Council Tax replacement, and from buyer to owner in any SDLT reform. This could cause:
- Rents to rise - With council tax removed, renters would have more available funds, but both local property taxes and NIC contributions would significantly impact rental pricing. Reduced rental stock and continued demand would also contribute to larger rents.
- More market movement - Freed from SDLT, homeowners will be more relaxed both when downsize and upgrading homes.
- Reduced interest in lower-value properties - Established investors may begin to prefer mid-to-high value homes for stability and better rental yield.
Whether these changes affect property prices is harder to evaluate. Investors potentially looking to dispose of low-value stock could impact the market negatively, while a surge of both first-time buyers and those freed to make a smaller upgrade or downsize will increase interest.
Annual Property Taxation
Should a shift to annual taxation replace the current SDLT sales tax model, it would represent a major change in the structure of property investment. This could result in:
- Tighter affordability tests for landlords - Current buy-to-let affordability tests focus on rental yield, but should annual property taxes replace the current SDLT system, these taxes would become part of mortgage affordability tests, potentially limiting investment potential.
- Redeveloped business planning - Landlords will need to incorporate new tax obligations into their business models, looking at both the financial impact and the administrative adjustments that it could mean. The incoming Making Tax Digital infrastructure for HMRC should be adopted early by all private and corporate landlords.
- Adjusted cash flow forecasting - New taxes will impact cash flow, potentially impacting management and maintenance payment schedules. Short-term funding solutions may be required.
Budget Support from Clifton Private Finance
At Clifton Private Finance, our specialist property team are on hand to help you prepare for and manage the impact of the coming budget.
We can help you evaluate your property portfolio and how it might sit in a new financial landscape, discuss refinancing options to take advantage of current regulations before any changes are announced, and help you obtain rapid funding to seize any current opportunities that may disappear in the coming weeks.
For an in-depth consultation that explores your options, speak to a CPF advisor today.
