Autumn Budget 2026 - impact on the residential property market
A budget the market can live with
Strutt & Parker has seen confidence building across prime housing markets in recent months, against a backdrop of shifting politics and global uncertainty, and in the anticipation of Chancellor Healey’s first budget.
On the ground, pricing remains key. The gap between buyers’ and sellers’ price expectations has narrowed slightly, helping to support activity. Properties that are correctly priced from the outset, or are best-in-class, are selling faster than those that require price reductions.
Our latest branch data points to renewed momentum across prime markets. In prime central London, the number of £4m-plus homes sold over the last three months is up 62% on the same period last year, underlining the capital’s continued appeal to international buyers. Around half of these buyers are purchasing in cash allowing them to avoid higher borrowing costs.
There are encouraging signs in the country market too, where, in August, we recorded the highest value of transactions over £2.5m in four years.
What does the Autumn Budget mean for the housing market?
The build up to the Autumn Budget brought relief for the market as several of the more significant property tax changes were ruled out, providing much needed clarity.
Claire Reynolds, National Head of Sales at Strutt & Parker, believes the market has approached this year’s Budget from a more confident position than last year.
Despite speculation, changes to the High Value Council Tax Surcharge, commonly known as the mansion tax, and Capital Gains Tax did not feature in the announcements.
“The government has prioritised stability rather than enhancing taxes and making it a more challenging tax landscape,” says Reynolds.
The focus was instead on a number of more targeted measures affecting landlords and first-time buyers.
Tax increase on property income
The Chancellor announced a further 2% increase in tax rates on property income across all tax bands. From April 2027, the basic, higher and additional rates will stand at 24%, 44% and 49% respectively.
The increase comes on top of the 2% rise announced at last year’s Autumn Budget. The government has described the latest changes as a fair and proportionate approach, adding that 84% of income taxpayers will not be affected.
Anna Ambrose, Head of Lettings at Strutt & Parker, believes the move is part of the government’s drive towards professionalising the sector. It is the latest in a series of changes to hit landlords and could potentially lead to more of them leaving the sector and placing further pressure on rental growth.
The cumulative impact of these measures will be an important consideration for landlords assessing the viability of their investments, with any tightening of supply that results from this coming at a time when demand is picking up.
Equity loan scheme for first-time buyers
The Chancellor also provided further details of Your First Home, a new equity loan scheme designed to help aspiring homeowners onto the property ladder.
The scheme, first announced in September, will be available to first-time buyers purchasing a new-build property with a minimum 2.5% deposit. It will offer equity loans of 20%, with a five-year interest-free period.
Income caps will be set at £110,000 per household outside London and £140,000 inside London. Property price caps will be based on local authority median prices, with limits of £650,000 in inner London and £500,000 in outer London.
Pre-registration is due to open in December, with loans expected to be issued from April 2027. The scheme follows the closure of Help to Buy to new applicants in England and Scotland.
First-time buyer ISA
A new ISA for first-time buyers is also planned for April 2029, replacing the Lifetime ISA.
Under the proposals, aspiring homeowners will be able to save up to £4,000 a year, with a 25% government bonus towards a property purchase worth up to £450,000.
The Chancellor also announced that the existing Lifetime ISA withdrawal penalty for buyers purchasing a home above £450,000 will be reduced to 20%.
Together, the measures represent further attempts to support first-time buyers, although their ultimate impact will depend on affordability, property availability and the wider economic backdrop.
Could further property taxation be on the cards?
More substantial property tax reform was notably absent from the Autumn Budget. For the market, the absence of significant new measures provides some near-term certainty, although the longer-term direction of travel remains less clear.
“Having a stable and predictable taxation and policy landscape is really fundamental for the market,” says Reynolds. “The Autumn Budget has played into that quite well.”
However, property taxation remains a feature of the wider political debate. Prime Minister Andy Burnham has previously proposed replacing stamp duty with a land value tax (LVT).
“The LVT, an annual tax on the market rental value of land, would allow for the abolition of stamp duty – a tax on the aspirations of young people to put down roots and get on in life,” he said in The Guardian in 2010.
On the other side of the political divide, Kemi Badenoch has pledged to scrap stamp duty, among other taxes.
Speaking at this year’s Conservative Party conference, she said: “No stamp duty when you buy your home, no mansion tax when you live in your home and no inheritance tax on your home when you pass it to your children or grandchildren. That is what the next Conservative government will deliver.”
The prospect of further reform therefore remains on the horizon, and any future proposals will be worth watching for their potential implications for transaction levels and buyer behaviour.
What's the outlook for housing?
Attention now turns to the Bank of England’s next Bank Rate decision, due on 5 November. The Monetary Policy Committee held the rate at 3.75% in September; however inflationary pressures have led to a hike being priced in to mortgage rates. The outlook for rates is closely linked to energy costs and their wider impact on inflation. We believe rate cuts are possible in 2027, although their timing and extent will depend on how inflation evolves, with geopolitical uncertainty remaining a key risk.
Across prime housing markets, we anticipate continued downward pressure on prices for the remainder of this year. This is expected to ease in 2027, with prices forecast to fall by a more modest 1% in prime central London, while prime outer London and prime regional markets are forecast to remain broadly flat.
Over the five years to 2030, we anticipate house price growth of 4.4% in prime central London, compared with 9.2% in prime outer London and 8.7% in prime regional markets.
For now, the combination of more settled market sentiment, improving activity in some prime markets and a Budget that stopped short of more sweeping property tax reform provides a degree of stability. The outlook will ultimately depend on the path of interest rates, the wider economy and how buyers and sellers respond to the policy environment ahead.