The Chancellor's latest Budget increases tax rates on property income from April 2027, introduces a 100% Council Tax premium on homes empty for at least twelve months, and allocates £4.7bn to a new First Home scheme for first-time buyers.
Higher taxes on landlords
From April 2027, tax rates on property income rise to 24% for basic-rate taxpayers, 44% for higher-rate taxpayers and 49% for additional-rate taxpayers across the UK, apart from Scotland. The Treasury describes this as fair and proportionate.
The likely consequence is that more private buy-to-let landlords will sell their investments, reducing the supply of rental properties and putting upward pressure on rents. The sector accounts for 19% of homes, or 4.7 million properties, compared with socially rented housing, which represents 16%, or 4.1 million homes.
Council tax premium and stamp duty
A 100% Council Tax premium will apply to homes left empty and unoccupied for at least twelve months. The exact exemptions for properties vacant for legitimate reasons beyond the owner's control have not been specified.
Stamp duty has been left unchanged, with buyers continuing to pay the tax when changing address.
First Home scheme and affordable housing
The Chancellor has allocated £4.7bn to a new First Home scheme, offering 20% equity loans intended to help around 70,000 households. Deposits start at 2.5%, subject to income limits and regional price caps, with developers expected to contribute towards the cost.
An additional £1.5bn has been allocated to affordable housing, with the aim of delivering around 10,000 social and affordable homes, with social rent a priority. This amounts to approximately 2.4% of the existing socially rented housing stock. The pledge to build 1.5 million new homes during the electoral term could fall at least 500,000 homes short on present form.
Wider implications
Every additional tax on ownership or rental income risks making investment less attractive, while transaction taxes continue to obstruct movement. The government wants more homes, more transactions and more affordable rents, while simultaneously increasing the tax take from property.
The Chancellor appears to have kept a low profile on this Budget, with references to a further spending review in 2027. The Budget may be designed to offend the fewest possible voters ahead of a potential snap election in December. The housing market, at least, has been given another going-over.
