After Rachel Reeves’s pre-Budget speech set the stage for one of the most transformative Autumn Budgets in years, major changes to Britain’s housing market are in sight. With the full Budget due later this month, reforms to property ownership, investment and taxation could soon reshape the landscape for millions.
Maike Currie, VP Personal Finance at PensionBee, commented: “For a nation obsessed with home ownership, few things capture Britain’s anxieties and ambitions quite like the property market.
“Despite calls for the Chancellor to bring stability to the housing sector, the market is bracing for a potential wave of changes - from rumours of an 8% National Insurance levy on rental income, to partially removing the Capital Gains Tax (CGT) exemption for main homes, to the possible replacement of Stamp Duty Land Tax with a national property tax. There is also speculation about a new mansion tax for ‘expensive homes’, which would impose a 1% levy on the portion of a property’s value exceeding £2 million.”
On a potential ‘wealth’ or ‘mansion tax’ on high-value properties:
“Property taxes often come with unintended consequences - and are always highly emotive. Introducing a property-based ‘mansion tax’ on high value homes risks distorting investment behaviour and undermining confidence in long-term financial planning. It could also have serious repercussions for the housing market, with buyers delaying purchases or homeowners choosing to stay put to avoid an unexpected tax hit further down the line. Many people’s wealth is tied up in their property - particularly in regions where house prices have risen faster than wages - meaning such a tax could unfairly penalise those who are asset-rich but income-poor, such as retirees.”
On extending National Insurance (NI) to rental income:
“This would mark a major shift in how property profits are treated. Currently, rental earnings are subject to income tax but not NI. Under the proposed change, NI could apply similarly to self-employed income - potentially around 8 - 9% on profits above a set threshold. For example, a landlord making £15,000 in annual profit could face an additional £1,200 NI bill on top of income tax.
“The Government may argue this ensures landlords contribute fairly to public services and creates greater parity between income from work and income from property. However such a move would substantially increase landlords’ tax liabilities. It risks pushing smaller landlords out of the market, while for tenants such a change could mean fewer rental options and higher monthly costs.
“The implications could also extend to retirement planning, as many individuals rely on buy-to-let property as a key part of their strategy in retirement, using rental income to supplement pension savings. Higher taxation on rental profits could reduce yields and make property a less attractive retirement asset.”
On partially removing the Capital Gains Tax (CGT) exemption for main homes:
“Moving from full exemption from CGT when you sell your only or main home, to taxing gains on primary residences above a certain threshold would be controversial - representing a fundamental shift in how Britons view home ownership, with far-reaching consequences for the housing market and broader economic growth. Such a change could deter downsizing, restrict housing supply and leave retirees facing unexpected tax bills that disrupt financial planning and their ability to support the next generation.
“Any reform must carefully balance addressing wealth inequality with maintaining long-term confidence and stability in the housing market.”
