The 2025 Budget brought a reassuring level of stability for the property market, alongside a handful of longer-term measures that landlords and homeowners should keep on their radar. Most day-to-day buying, selling and letting costs remain unchanged, which gives people space to plan with confidence.
Northwood has reviewed the key announcements and set out what they mean in practical terms, both for the decisions you are making now and the changes coming further ahead.
A new surcharge for the highest value homes from 2028
The government has confirmed a new council tax surcharge for England that will apply only to properties valued at £2m or more. Using updated VOA valuations from 2026, these homes will pay an additional £2,500 to £7,500 each year from April 2028.
This measure is expected to affect around 100,000 homes, almost all concentrated in the highest value markets. For the majority of property owners, this change will have no immediate effect.
No changes to stamp duty or £500k+ ownership
There had been speculation of wider property tax changes, but the Budget did not introduce anything for homes valued above £500,000. The only new measure is the 2028 surcharge for properties valued at £2m or more.
Despite rumours of wider reform, no new property tax or stamp duty changes were announced, so the existing rules remain in place until 2026.
Rental income taxation rising from April 2027
A key update for landlords is the rise in income tax on rental earnings in England, Wales and Northern Ireland.
From April 2027, each tax band increases by 2 percentage points:
- Basic rate becomes 22% (from 20%)
- The higher rate becomes 42% (from 40%)
- The additional rate becomes 47% (from 45%)
Scotland is excluded from this change as it has its own income tax rates and bands.
Longer-term support for certain commercial landlords
The government has confirmed that reduced business rate multipliers for hospitality, retail and leisure spaces in England will become permanent for properties with a rateable value under £500,000. This adjustment begins in April 2026 and replaces temporary reliefs.
Why property remains a sound investment
Although further tax changes are expected in the coming years, property continues to be one of the most dependable long-term investments. Demand for rental homes remains strong in many areas, supported by changing demographics and a shortage of available housing.
In many regions, yields are still competitive, particularly where rental supply is limited and tenant demand is consistently high. Property also offers the potential for long-term capital growth alongside the benefit of regular rental income.
During periods of economic uncertainty, many investors still view brick and mortar as a more stable option than financial markets.
With a strategic approach and the right support, landlords can continue to secure reliable returns and make the most of the resilience of the UK rental market by working with an experienced letting agent.
Most regions will see limited impact from the £2m+ threshold
The new surcharge focuses almost entirely on a small segment of the market. London and the South East hold the overwhelming majority of homes valued above £2m+, so the policy will have little to no effect on towns and cities across most UK regions.
With no stamp duty revisions announced, the broader buying and selling landscape remains steady across the UK.
Key reforms set to influence the market
While the Budget sets long-term tax expectations, other legislation will shape the property landscape sooner.
Renters’ Rights Act progressing through 2025 and 2026
This significant reform of tenancy law will change the way landlords manage their properties. Northwood is preparing clear guidance to help clients adapt as details are finalised. Read our full guide to the Renters’ Rights Act.
Making Tax Digital from April 2026
Many landlords will be required to maintain digital tax records and file returns through MTD compatible software. Northwood will support clients through the shift to digital reporting.
In summary
Budget 2025 offers stability in the short term and gradual adjustments in the years ahead. The essential points are:
- Stamp duty remains unchanged
- There are no new taxes for homes valued above £500,000
- The council tax surcharge for homes over £2m+ starts in April 2028
- Rental income tax rates will increase from April 2027
With rental demand still strong and market fundamentals holding firm, landlords remain in a favourable position. Northwood estate agents will continue to provide expert guidance to help you navigate upcoming reforms and make confident decisions in a resilient and opportunity-rich property market.
