The Chancellor’s Autumn Budget introduced a series of measures aimed at strengthening public finances while keeping core tax rates stable for working households. Although certain changes will affect higher earners, investors and owners of high-value homes, the outlook for the London property market remains steady. Buyers and sellers continue to be guided by real-life decisions and the fundamentals that support demand across the capital.

Below is a clear overview of the updates most relevant to property and what they mean in practice.

Income Tax and National Insurance Thresholds

Income tax and NI thresholds will remain frozen until 2028, while the main tax rates stay the same. As incomes rise over time, more people will move into higher tax bands.

For buyers, this creates a predictable backdrop for planning affordability. Although the freeze may influence long-term budgeting, it does not change everyday tax rates, which helps maintain confidence. For sellers, the impact on buyer sentiment is expected to be modest, particularly in family-driven markets.

Property, Dividend and Savings Income Tax

Tax on property income, dividends and savings will increase by 2 percentage points from 2026 onwards. This change is focused on higher earners and investors.

Landlords and investors may review how their portfolios are structured, although rental demand across London remains exceptionally strong and supply remains tight. Well-managed rental properties continue to perform well, even with the phased increase. For owner-occupiers, the impact is minimal.

High-Value Council Tax Surcharge

A new annual surcharge will apply from 2028 to higher-value homes.
Homes valued over £2m will pay £2,500 a year.
Homes valued over £5m will pay £7,500 a year.

This affects a small share of the London market. Prime and super-prime buyers are largely driven by long-term lifestyle choices rather than annual tax changes, so activity in these segments tends to remain resilient. For sellers, buyer motivation in these price brackets is unlikely to shift dramatically. James Evans, CEO at Douglas & Gordon, recently commented on the potential impact of the new surcharge on high-value homes. You can read the full article here: Daily Mail: Will the mansion tax lead to a full shake-up of council tax and lead to you paying more?

Economic Outlook: Growth and Inflation

The Office for Budget Responsibility has upgraded its growth forecast for 2025 to 1.5 percent. Inflation is expected to ease further next year and move closer to the long-term target.

This creates a more stable environment for buyers and sellers planning ahead. Lending conditions remain supportive, mortgage approvals continue to improve and demand is gradually building across many parts of London. Sellers benefit from greater visibility and a clearer economic backdrop, while buyers enter the market with renewed confidence.

D&G Insight: What to Expect in the Months Ahead

Although the Budget introduces several targeted tax adjustments, the core dynamics of the London property market remain unchanged. Families still look for more space, couples continue to relocate and homeowners make decisions based on life events rather than political announcements. London has long shown an ability to absorb policy shifts while maintaining strong demand across a broad range of price points.

Investors continue to benefit from a high-demand rental market. Sellers benefit from returning confidence and clearer mortgage conditions. Buyers can plan with more certainty as the market settles into a more predictable pattern.

If you would like clarity on what these changes mean for your plans, you can reach our team at [email protected].