Budget 2025: What Property Owners & Landlords Need to Know.

BY;  Leanne Hathway – Head of Taxation Services

Arrow Conveyancing – Budget 2025

The Budget announcement of 26th November 2025 was much anticipated, with a wide range of potential policies having been rumoured over the past weeks.
There were no changes announced to Stamp Duty Land Tax, although many had anticipated that there would be and had waited to complete on purchases until after the Budget.

In respect of property owners there are two key tax changes:

1. Those owning properties worth more than £2million (based on an individual property value, not the total value of multiple properties) will see an additional tax surcharge added to their Council Tax Bill from April 2028. This is officially called the High Value Council Tax Surcharge but has been dubbed the “Mansion Tax”.

2. The rate of income tax charged on rental income has been increased by 2%, resulting in a basic tax rate of 22%, Higher rate of 42% and top rate of 47%.

The High Value Council Tax Surcharge (HVCTS)

There are 4 price bands proposed for the HVCTS:

Property Value

Annual Surcharge

£2million - £2.5million

£2,500

£2.5million - £3.5million

£3,500

£3.5million - £5million

£5,000

Over £5million

£7,500

The HVCTS will be introduced from April 2028 and, in the meantime, a valuation process will be introduced to identify the properties affected.

A Consultation has been announced to look at the possibility of introducing a possibility of rolling up of this charge until sale or death for homeowners that would not be able to pay the surcharge each year.

It is then proposed to revalue properties every 5 years to re-apply the surcharge.

The Chancellor has said that this impacts on 1% of properties, but there are concerns being raised that it will disproportionately impact on properties in the South of England.

It may be that we must await the valuation process to see quite how many properties are impacted.

Tax on Rental Income

The additional 2% rate of income tax will apply from April 2027.

There are already concerns being raised that this will result in rental costs increasing to cover the additional tax, particularly as many landlords already apply a large proportion of rental income to cover mortgage repayments.

Summary

Other than the two headline policies above, there was very little reference to property in the Budget. This will no doubt leave landlords and those who own high value properties reviewing their finances to see what impact the changes have on them.

There was one other aspect that was published in the supporting documents but did not make the main speech, and that was to announce a consultation into reviewing the Lifetime ISA (used to save deposits by first time buyers).

The consultation is scheduled for early 2026 so we await details of that…