Our Journal

What could the 2026 Autumn Budget mean for London’s property market? The hope is for more certainty and fewer surprises, but could changes to property taxation, Stamp Duty and investment rules influence the market in the months ahead? We look at the possibilities for buyers, sellers, homeowners and residential landlords.

Another Autumn Budget, another round of speculation about the future of property taxation.

With Chancellor John Healey preparing to deliver his first Budget on Wednesday 28 October, London’s residential market will be watching closely. Not necessarily in expectation of sweeping reform, but to see whether the Government intends to place any further financial demands on homeowners and property investors.

Following several years of tax changes, higher borrowing costs and economic uncertainty, the question is perhaps less about what one Budget might introduce and more about the combined effect of everything that has come before it.

In London, where property values are considerably higher than the national average, even measures aimed at the wealthiest homeowners can have much wider implications.

Stamp Duty: Will the Cost of Moving Finally Be Addressed?

Stamp Duty Land Tax remains one of the biggest considerations for anyone buying property in London.

For higher-value purchases, the additional expense is considerable, particularly when the surcharges applicable to second homes and overseas buyers are taken into account.

However the consequences extend beyond a purchase. Families needing more space, homeowners considering downsizing and investors seeking the safety of London real estate may all decide that buying/moving is simply too expensive. 

This leads to fewer transactions in the market fuelled by increased hesitation from buyers, longer periods between transactions and an overall slowdown in activity. The outcome of this is that Stamp Duty revenue for the treasury actually reduces, which is completely counterproductive.

There is certainly an appetite for reform from those within the property industry. An October survey by industry publication PrimeResi, involving 34 senior residential property professionals, found that 70% favoured reductions or changes to Stamp Duty, although relatively few anticipated meaningful reform in this Budget.

For now, substantial changes appear unlikely. However, the broader question of whether taxing transactions so heavily discourages movement within the housing market remains an important one.

The Mansion Tax: Could More London Homes Be Affected?

The High Value Council Tax Surcharge, announced in the November 2025 Budget, is due to take effect from April 2028.

Under the existing arrangements, owners of residential properties in England valued at £2 million or more will face an additional annual charge of between £2,500 and £7,500, depending on the property’s valuation.

There has been speculation that the threshold might be lowered to £1.5 million, although recent reports suggest that the Chancellor has decided against such a change.

For central London, the distinction is important.

In our core areas of operation, established West End and city fringe neighbourhoods such as Covent Garden, Soho and Bloomsbury, a property worth £1.5 million or £2 million is not necessarily an extravagant home. It could be a relatively conventional apartment, with much of its value attributable to its central location.

There is also a distinction between owning a valuable property and having substantial disposable income. Long-term homeowners, in particular, may have seen their homes appreciate considerably without experiencing a corresponding increase in their earnings.

The PrimeResi survey identified the proposed surcharge as one of the industry’s principal concerns, with 58% of respondents raising it and 39% specifically expressing concern about a potential reduction in the £2 million threshold.

Although the Government has indicated that the current threshold will remain, the longer-term treatment of higher-value residential property is likely to remain a subject of interest.

London House Prices: A Market Looking for Direction

Against this backdrop, the prime central London sales market has shown some encouraging signs, albeit from a relatively subdued position.

Knight Frank’s October research recorded the first quarterly increase in prime central London property prices for four years, with values rising 0.3% during the third quarter of 2026. Nevertheless, average prices remain approximately 22% below their 2015 peak.

Savills’ recent analysis paints a similarly nuanced picture. Buyers are taking advantage of more attractive pricing, but are also being selective, with location, condition and realistic asking prices playing an increasingly important role.

CBRE’s Q2 research meanwhile recorded improved transaction activity in prime central London, despite weaker achieved values compared with the previous year.

Together, these findings give some positivity by pointing towards a market where opportunities exist and transactions are happening, albeit at a slower rate with confidence remaining delicate.

Yet further taxation will inevitably lead to buyers reassessing their budgets, delaying decisions or negotiating even harder. Equally, a Budget containing little or no unexpected measures might give those who have been waiting for clarity greater confidence to proceed.

There is also the international dimension. London continues to be geographically important and is still able to compete with other major global cities for investment, business and internationally mobile residents. However, continued uncertainty over the tax environment is affecting how attractive it remains, and has become more of a factor influencing decisions, alongside those of lifestyle, educational excellence, employment opportunities and long-term financial planning.

Residential Landlords: Could Further Pressure Affect Rental Supply?

For residential landlords, the Autumn Budget comes at a time when the economics of property investment are already changing.

From April 2027, personally held rental property income will be subject to new Income Tax rates of 22%, 42% and 47%, depending on the landlord’s tax position.

These changes follow earlier restrictions on mortgage interest relief, increased transaction taxes and additional responsibilities arising from reforms to the private rented sector.

For landlords holding higher-value London properties, where the rental return can be relatively modest compared with the property’s capital value, the cumulative impact may be particularly relevant.

An additional annual charge under the High Value Council Tax Surcharge could further affect the returns on qualifying properties, while the prospect of future tax changes creates another consideration for longer-term investment decisions.

Might some landlords decide to sell? Yes, and we’re already seeing evidence of this. Others may reconsider how they hold or manage their investments, although any restructuring will have its own costs and tax implications.

But the potential consequences for residential tenant occupiers in a housing market deemed in ‘crisis’ cannot be overlooked.

Savills’ September research highlighted continued demand and limited availability across parts of London’s prime rental market, particularly for smaller apartments popular with young professionals and students.

CBRE also expects rental demand to remain supported by affordability pressures in the sales market, forecasting UK rental growth of 3.3% during 2026.

If further taxation contributes to a reduction in available privately rented homes, tenants will face additional competition for accommodation and although that may not automatically translate into higher rents, it would certainly add pressure to a market where suitable supply is already limited.

Could a Quieter Budget Be Good News?

Interestingly, the prevailing expectation within the PrimeResi survey was not for extensive new property measures, but for a comparatively uneventful Budget.

More than half of those surveyed identified consistent tax policy as a priority, while almost half expressed concern that further uncertainty could discourage transactions.

There is a reasonable argument that, after several years of adjustment, greater predictability might be more useful to the market than another ambitious set of reforms.

People buy and sell homes for all sorts of reasons, many of which have little to do with politics or taxation. Families grow, circumstances change, people relocate and investors reassess their plans. Those decisions do not disappear when confidence weakens, but they certainly become easier to postpone.

For London’s residential property market, Wednesday’s Budget may therefore be as significant for what it leaves unchanged as for anything new it introduces.

What Happens Next?

Whether the Budget delivers meaningful reform, modest adjustments or very little of direct consequence to property, its implications will only become clearer once the details are published.

For homeowners, the focus will be on future ownership costs. Buyers and sellers will be looking for greater certainty around transaction taxes and affordability, while residential landlords will be considering the longer-term viability of their investments.

Here in central London, the effects are unlikely to be uniform. The market for a compact Covent Garden apartment behaves rather differently from that for a substantial family home in Bloomsbury or a high-value investment property in Soho.

Location, quality, supply and individual circumstances will continue to matter, regardless of what emerges from the Chancellor’s red box.

We’ll return to the subject following Wednesday’s Budget, looking beyond the headlines to examine the confirmed announcements and what they may actually mean for London’s residential sales and lettings markets.

If you’d like specific advice on buying, selling, letting or managing residential property across central London, or are just interested in discussion about the current market, please contact one of our Partners here.