Key Changes Announced in the Budget

1. Annual Levy for High-Value Homes (from April 2028)

The new mansion tax introduces an annual surcharge for properties over £2 million:

• £2,500 per year for homes valued between £2m–£2.5m
• Increasing up to £7,500 for homes worth £5m or more

According to early estimates from the Office for Budget Responsibility (OBR), this measure is expected to raise around £400 million in 2029.

Around 153,000 homes will be affected, with roughly 88% of these located in London, where family homes in certain neighbourhoods already exceed the threshold.

2. Rental Income Tax Increases (from April 2027)

The budget also introduces a two-percentage-point increase to property income tax:

• New rates: 22%, 42% and 47% depending on tax band
• Applies to property income above £1,000

While this will add further pressure to private landlords, it is far less punitive than some of the options that had been floated in advance of the Budget.

Notably, the government rejected the proposal to apply National Insurance to rental income, a substantial relief for many investors.

3. Revaluation of UK Housing Stock

For the first time since 1991, large parts of the UK housing market will undergo revaluation.

This may cause some disruption and delays in the short term, but it also moves the UK closer to other global property markets where regular valuation cycles are the norm and can improve long term transparency.

Short Term Market Reaction

As can be expected, there has already been some turbulence:

• The OBR expects downward price pressure in certain upper tier segments.
• Shares in some London focused developers initially moved lower on the announcement.
• Market analysts have warned of short term distortions as buyers and sellers reassess pricing.

However, one of the biggest positives is that the uncertainty around potential new taxes has now ended.

“Finally the budget from Rachel Reeves today puts an end to months of speculation in the property market and now provides some much needed clarity, for buyers, sellers and landlords.”

— Roger Fagg, Blackmore Global

In property markets, clarity is often the key that reopens conversations and unlocks transactions.

Why This May Be Good for the Housing Market

1. Stability and Predictability Return

The so called mansion tax has been discussed for years. Now that the policy is confirmed:

• Buyers can plan ahead with a clearer understanding of future holding costs.
• Sellers can price strategically around key thresholds.
• Developers and lenders have greater clarity when assessing demand and funding.

Confidence tends to thrive when uncertainty ends, even if the headline changes initially feel challenging.

2. The UK Aligns with Global Standards

Many major international markets, such as Singapore, Hong Kong, New York and others, already apply recurring or layered taxes to higher value real estate.

International investors are familiar with this type of framework and often see it as a sign of a mature, transparent market, particularly when valuations are updated and bands are more reflective of current values.

3. Opportunities Will Accelerate, Not Slow Down

These changes are likely to create new opportunities for:

• Buyers who have been waiting on the sidelines for more clarity.
• Sellers positioned just below key value thresholds.
• Investors focused on long term value and robust rental demand.
• Developers offering strong incentives and compelling payment plans.

The end of uncertainty typically leads to a period of renewal, repricing and increased activity.

What About the Rental Market?

Landlords have faced an increasing tax burden over the past decade. With the latest changes,
some private landlords may choose to reduce or exit their portfolios.

In many markets, reduced rental stock leads to:

• Tighter supply of quality rental homes.
• Upward pressure on rents over the medium to long term.
• Potentially stronger rental yields for those who remain invested.

For professional landlords and institutional investors, this environment can strengthen the long term fundamentals of well located, well managed rental property.

What Happens Next?

Over the coming months and years, we are likely to see:

• Premium London property values adjust, but the core appeal of the capital remain intact.
• Buyers focusing more on value, quality and developer incentives.
• More strategic pricing around the £2 million threshold and subsequent bands.
• Continued demand from overseas investors looking for stability and long term growth.

The prime London market has already weathered multiple rounds of tax reform over the past decade. It remains one of the world’s most resilient and desirable real estate hubs.

Conclusion: A New Stage for the UK Housing Market

This Budget signals the  start of a new, clearer phase for UK property.

There will always be demand for London and other key UK locations. There will always be demand for high quality homes and well-positioned developments. Markets adapt, and well advised buyers and sellers adapt with them.

At Blackmore Global, we believe this announcement ushers in an era of greater transparency, more predictable frameworks and fresh opportunity for those willing to navigate the changes.

If you would like to discuss how these measures could affect your property strategy, whether you are buying, selling, investing or reviewing your rental portfolio, our team is here to help.

Talk to Us About Your Property Strategy

To arrange a confidential discussion about your plans in London, Dubai, Oman or other key markets,
please get in touch with Blackmore Global.

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