Having waited for what seemed like an eternity for the Budget – in one sense it came ‘early’! The OBR report, which is usually available hours after the Budget, was published by accident 35 minutes before.

Anyone watching the BBC pre-amble to the Budget will have seen Chris Mason and Faisal Islam frantically grabbing their phones to try and see what the 400-odd pages of the OBR report (with supporting documents) had to say. The phrase ‘this is unprecedented’ seemed to be on constant repeat.

Exact timings, aside the major take-aways from the Budget where the so-called mansion tax, and a new tax on landlords.

Mansion tax

The Chancellor revealed that owners of properties worth more than £2m will be hit by a new “mansion tax” that will net the government £400m per year.

The levy will take the form of council tax surcharge from April 2028, on homes that are identified as being worth more than the threshold by the Valuation Office, based on 2026 prices. Unlike standard council tax, the revenue from this extra charge will go to central government.

The industry response has been mixed.  Savills head of residential research Lucian Cook said the introduction of an annual tax surcharge for properties worth over £2m, was at levels somewhat lower than many will have feared, and was probably the least worst outcome for owners of prime property.

“And with the uncertainty in the run up to the budget having already impacted prices, the impact on the market will be much less severe than it would have been in the event of an open-ended mansion tax. “However unwelcome any tax increase, the certainty which this provides will allow buyers and sellers to formulate plans which have been put on hold over recent months.

MPowered director of mortgages Peter Stimson was more critical.  “The ‘mansion tax’ is red meat to Labour’s Red Wall but an indiscriminate tax grab on swathes of London. “The average price paid for homes in the capital fell by 1.8% in the year to September. That slip could now turn into a slide as buyers shy away from homes in the grey zone below the £2m mark.  “While we’re still awaiting the details of how the Government will accurately value the thousands of homes in the firing line, the measure raises the bizarre spectre of homeowners trying to reduce kerb appeal and shave off value.”

He added: “All this disruption for a mere £400m increase in tax revenue seems like a very poor return. Rather than overhauling the creaking Stamp Duty or Council Tax systems entirely, the mansion tax feels like political posturing masquerading as policy.”

Stonebridge’s chief executive Rob Clifford was equally damning: “It feels like a short-term revenue-raising measure designed to plug a fiscal gap, rather than a considered reform of an outdated system.

“Few would dispute that owners of more valuable properties should contribute more. The issue is the way the government has chosen to approach it. A more sensible long-term and fairer solution would be to reform the whole system, rather than layering on more complexity.”

He added: “As things stand, this change offers little benefit to anyone. Households in higher-value homes will pay more, yet those at the lower end see no relief. It will also likely cause market distortions around the £2m threshold Ultimately, the UK needs a long-term approach to property taxation – one that modernises the system rather than relying on short-term fixes.”

Property income tax

Chancellor Rachel Reeves also revealed that property income tax rates will rise by 2% from April 2027. Property income tax is set rise by 2% across basic, higher and additional rates, taking these to 22%, 42% and 47%, respectively.

This will raise around £500m a year in extra tax, according to the Office for Budget Responsibility.

COHO founder and chief executve Vann Vogstad was vocal in his opposition to the rise. “Landlords have become an easy political target. This tax hike, especially when coupled with the upcoming Renters’ Rights Bill reforms, will inevitably result in higher rents. That’s just basic economics.”

Hamptons head of research Aneisha Beveridge said: “Those operating through limited companies will remain unaffected, but for individual landlords who make up the bulk of the market and who are already squeezed by higher borrowing costs and previous tax changes, this could accelerate the trend of investors exiting the market.

“Over time, that risks reducing rental supply and pushing rents higher.”

L&C Mortgages associate director David Hollingworth said the announcement was another big blow to landlords who had been increasingly hit by measures that have made it harder to maintain returns on rental property.

“A limitation in the relief available on mortgage interest, tougher lending requirements and higher interest rates has affected private landlords.

“This will be another test of their appetite to remain in the market.  If they choose to exit it may potentially free up property for first time buyers.  However, there is a risk that it will reduce the supply of rented property despite ongoing demand and ultimately push rents higher.”

What was missing?

Despite the kite-flying of a major stamp duty overhaul, nothing materialised in this Budget.  Maybe it is one for next time?

While some will no doubt welcome the Chancellor’s decision to resist the temptation to rework the stamp duty charge, others were disappointed that no changes came.

Houzecheck commercial director Richard Sexton said: “Rachel Reeves could have done us all a favour by reducing stamp duty rates for first-time buyers and all residential purchases below £500,000.  Lowering a transaction tax like this would have decreased upfront costs for buyers and stimulate demand, especially among younger first-time buyers.

He added: “She could have introduced a temporary stamp duty holiday for properties under £750,000 for the next 12 months.  Historically these boost market activity – just look at the impact this had in 2020 when buyers rushed to complete deals before the due date and sellers list more properties.  A cut in stamp duty would have signalled government support for brokers, conveyancers and agents.  The new Mansion Tax signals precisely the opposite.”

Nobody was ever under any illusion that this was going to be a giveaway Budget. And the property market was evidently in the government’s sights from the get-go.  But at least the market can move forward and deal with what is now known.