The speculation is over, the Chancellor has delivered his Budget and the detail has emerged. So what has actually changed for London’s homeowners, buyers, sellers and residential landlords, and what might it mean for the property market in the coming months?

In Tavistock Bow’s pre-Budget Journal article, we considered whether the Chancellor might introduce further property taxes, how uncertainty was affecting confidence and whether London’s residential market could benefit from a little more stability.

John Healey’s first Autumn Budget has avoided several of the measures that had caused concern within the market. There has been no change to residential Stamp Duty rates, the proposed mansion tax threshold remains at £2 million, and Capital Gains Tax rates on residential property have been left alone.

For buyers and sellers, little change is broadly reassuring news, even if the Budget hasn’t offered a great deal to positively incentivise movement within the market.

For residential landlords however, there are confirmed changes that will directly affect their financial position and may have a wider reaching impact on the private rented sector.

Stamp Duty: No change, but no relief either

Despite considerable industry support for reform, the Chancellor has left Stamp Duty Land Tax largely untouched for residential buyers. The existing thresholds and surcharges remain, including those affecting additional properties and overseas purchasers. For London’s buyers, the immediate implication is straightforward: the cost of purchasing a home has not increased, which is a positive, but neither has one of the market’s most significant financial obstacles been reduced.

As we discussed ahead of the Budget, Stamp Duty is particularly influential in central London, where moving can incur a substantial tax bill before legal fees, refurbishment costs and removals are considered.

That affects more than just the top end of the market. Homeowners contemplating a move for more space such as families needing additional bedrooms, and conversely those considering downsizing, may find the cost of moving harder to justify.

With no meaningful reform in this Budget, we would expect these factors to continue influencing transaction volumes and the availability of homes for sale across the Capital.

Mansion Tax: The £2 Million threshold survives

One of the more welcome confirmations for mid-higher-value London homeowners is that the High Value Council Tax Surcharge will retain its previously announced £2 million threshold.

Speculation that the threshold might fall to £1.5 million had created some concern, particularly in London, where properties within this price bracket are not necessarily the substantial luxury homes implied by the term ‘Mansion Tax’.

The surcharge is still scheduled for introduction in April 2028, with annual charges starting at £2,500 for homes valued between £2 million and £2.5 million and increasing to £7,500 for properties worth £5 million or more. The Government has also confirmed provisions for payment deferrals, discounts and exemptions, together with an additional 100% premium on qualifying properties left empty and unoccupied for at least 12 months.

For homeowners in Covent Garden, Soho, Bloomsbury and other central London neighbourhoods within the West End and on the South Bank, the £2 million threshold will remain particularly relevant when considering future ownership costs.

Importantly, the surcharge is based on property value rather than household income. Owners whose wealth is largely tied up in their homes may therefore need to consider how an additional annual liability fits within their finances.

The confirmation removes one area of speculation, but the surcharge itself remains a new cost consideration for those owning higher-value residential property.

Residential Landlords: A further increase in Income Tax

Perhaps the most significant property-related announcement concerns the taxation of rental income. Last year’s Budget had already introduced plans to increase Income Tax on personally held rental income by two percentage points from April 2027.

Yesterday, the Chancellor announced a further two percentage point increase, taking the new property income tax rates to:

• 24% for basic-rate taxpayers
• 44% for higher-rate taxpayers
• 49% for additional-rate taxpayers

These rates will apply from 6 April 2027, representing a four-percentage-point increase compared with today’s standard Income Tax rates.

For private landlords, particularly those with mortgaged properties, this represents another reduction in the potential after-tax return from residential investment. It follows a succession of changes affecting the sector, including restrictions on mortgage interest relief, higher Stamp Duty on investment purchases and additional responsibilities under the Renters’ Rights Act.

Taken individually, landlords may be able to accommodate many of these measures. The concern is their combined effect, particularly where rental income must also support mortgage payments, service charges, repairs, maintenance and ‘void’ periods without a tenant.

The reduction in privately owned rental stock available in the open market may well lead to an increase in rental prices through the simple economics of supply & demand, and may result in an improved rental yield, which would be a positive for landlords intent on staying in the market.

Those landlords will continue to see residential property as an attractive long-term investment, especially where rental demand remains strong. Others may understandably be reviewing whether their properties continue to justify the capital invested in them, although with the current slowdown in activity across the sales market, more competing stock and achievable prices less attractive than they once were, sticking with these investments may prove to be the sensible choice whilst rental demand remains strong and yields are improving.

For landlords holding properties through limited companies, the position is different, as company rental profits fall under Corporation Tax rather than these new personal property income rates. However, changing an existing ownership structure is not necessarily straightforward or financially beneficial.

What does this mean for London’s renters?

The potential consequences for tenants are arguably one of the Budget’s most important longer-term considerations.

London already faces a shortage of suitable rental accommodation in many established neighbourhoods, particularly those popular with young professionals, students and internationally relocating tenants. Savills’ October research highlighted that rental values across prime central London increased by 1.9% over the preceding year, with limited supply continuing to influence the market.

The same research also found that rental yields have improved as rents have increased and capital values softened. That is an important distinction: not every landlord is facing declining returns, and the investment picture varies considerably between properties.

Nevertheless, further taxation could encourage some landlords to sell rather than continue letting.

If more rental properties are withdrawn from the market, tenants could face greater competition for the remaining accommodation. In turn, that may place further upward pressure on rents, although affordability will continue to limit what tenants can realistically pay.

Global real-estate consultancy CBRE’s latest residential forecasts anticipate UK rental growth of 3.3% in 2026, with a cumulative increase of 16.8% over the period to 2030. Those forecasts predate yesterday’s Budget, but they underline the challenges facing tenants in a market where demand is expected to remain substantial.

In our view, the longer-term question is whether increasing the tax burden on private landlords will generate the desired revenue without inadvertently reducing the availability of rental homes, all within a market that us still deemed to be in ‘crisis’ with a lack of homes available to occupy.

First-Time Buyers: Some welcome assistance

There was certainly positive news for those hoping to purchase their first home.

The Government confirmed its new £4.7 billion Your First Home scheme, designed to assist approximately 70,000 first-time buyers across England. The initiative will provide eligible buyers of participating new-build homes with a Government equity loan of 20%, alongside a minimum deposit requirement of 2.5%. The equity loan will be interest-free for the first five years.

For London, household income eligibility will be capped at £140,000, with qualifying property price limits of £650,000 in inner London and £500,000 in outer London.

These thresholds could make the scheme relevant to some first-time buyers considering smaller new-build apartments, although the choice of eligible properties across central London may be relatively limited. A new First Time Buyer ISA has also been announced for April 2029, while changes to the existing Lifetime ISA withdrawal charge should help qualifying buyers purchasing above the current £450,000 limit.

These are constructive measures, but their success will depend on the availability and affordability of suitable housing.

London’s Sales Market: Has The Budget removed uncertainty?

One of the most interesting aspects of the Budget may be what it hasn’t done.

Research from Knight Frank earlier this month suggested prime central London prices were beginning to stabilise following a prolonged period of adjustment, with average values still around 22% below their 2015 peak. Yesterday’s announcements have not introduced a substantial new tax on property transactions, nor have they widened the forthcoming mansion tax to a larger group of homeowners.

That removes two potential sources of concern for buyers.

Initial post-Budget assessments also points towards a more predictable investment environment, although wider economic pressures and elevated borrowing costs remain important considerations.

We would therefore be cautious about predicting an immediate rise in house prices or a sudden increase in the number of transactions, but we are hopeful greater certainty may encourage buyers who have postponed decisions to reconsider their plans, and are already seeing an increase in general enquiries and viewing activity, certainly compared to the same time last year.

However, the underlying issues of affordability, financing costs and realistic pricing are all still important influences on the market.

For sellers, the importance of presenting and pricing properties appropriately remains unchanged. Buyers have more choice, are well informed and are generally taking time to assess value. For those purchasing, central London continues to offer opportunities in a market where prices in some sectors have adjusted considerably over the past decade, so actually are more attractive.

But with greater choice, it remains a buyer’s market, at least for now, so sellers must ensure they are presenting the best possible opportunity to the market, through excellent presentation, realistic pricing, appropriate marketing and considered exposure. The guidance of an experienced agent who understands the nuances of their particular market along with a real understanding of the appropriate buyer profile and their motivation is more invaluable than ever in the current climate.

Looking Further Ahead: Stability, supply and confidence

The wider economic outlook will have at least as much influence on the London property market as this Budget’s individual announcements. The Office for Budget Responsibility has raised its forecast for UK economic growth in 2026 to 1.2%, although its outlook for 2027 may be more subdued as a result of continuing pressure caused by the uncertainty surrounding ongoing global events.

Borrowing costs remain elevated, and international economic uncertainty continues to influence mortgage pricing, investment decisions and household confidence. Savills and CBRE have both highlighted the importance of housing supply in shaping the longer-term residential market. London continues to face challenges in delivering new homes, while rising construction costs and development viability remain obstacles.

The Government’s additional commitments to affordable housing and first-time buyer support are welcome, but meaningful improvements in housing supply will take time.

For central London’s established residential neighbourhoods, where opportunities for substantial new development are inherently limited, the balance between demand and available stock will remain particularly important.

Our Assessment?

On balance, the Autumn Budget has produced a relatively uneventful outcome for London’s residential sales market, but gives private landlords food for thought.

The decision not to introduce further transaction taxes or broaden the mansion tax removes some of the uncertainty that has influenced buyer sentiment, but whether that translates into increased sales activity will depend on confidence, mortgage rates and sellers’ expectations over the coming months.

For landlords, the further increase in property income taxation may be more consequential. Its effects are unlikely to be immediate, but it adds to the financial considerations facing existing and prospective investors.

And for tenant occupiers, the potential reduction in privately rented accommodation and the resulting potential increases in rent could be a concern, particularly in neighbourhoods where demand is already strong.

London remains an extraordinary city in which to live, work and invest, with an international appeal and depth of housing demand that extend well beyond individual political or economic cycles. What matters now is whether greater certainty can encourage people to make decisions, and whether the cumulative cost of property ownership and investment will continue to constrain the supply of homes available to buy and rent.

The Budget has answered some important questions. The market’s response over the coming months will tell us rather more.

For informed advice on selling, letting, purchasing or managing residential property across central London, contact the Tavistock Bow team.

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Sources and further reading

• HM Treasury – Autumn Budget 2026
• HMRC – Changes to Property Income Tax Rates
• HM Treasury – High Value Council Tax Surcharge
• Knight Frank – What the 2026 Autumn Budget Means for UK Real Estate
• Savills – Landlord Caution Squeezes Rental Supply
• CBRE – UK Residential Forecasts Q4 2026