On 26 November, Chancellor of the Exchequer Rachel Reeves announced the introduction of two key housing policies. The first is the introduction of the High Value Council Tax Surcharge, also known as the Mansion Tax, which is set to introduce a surcharge of at least £2,500 for properties valued over £2m. The second is increasing the property income tax for landlords by two percentage points across all tax bands, with the basic rate moving up from 20% to 22%.
These measures, already points of much speculation prior to the official announcement of the Autumn Budget, have concerned industry experts. There is the expectation that housing market activity, even accounting for seasonal fluctuations in demand, is set to decline at least in the short term.
Industry Reaction
Overall, industry experts have raised concerns regarding the Mansion Tax and the increase in property income tax for landlords. This has been underscored by the latest RICS UK Residential Market Survey for November 2025, where respondents have expressed concerns that the immediate impact of the budget will involve a subdued property market until spring 2026.
Simon Rubinsohn, a chief economist at RICS, said: ‘The ending of Budget related uncertainty is welcome, but the fundamental challenges of affordability and elevated borrowing costs will in all probability keep activity subdued in the near term.’
Summarising the general sentiment among landlords and industry analysts, Anthony Codling, the managing director of equity research at RBC Capital Markets, said: ‘The latest RICS UK Residential Market Survey reflects the initial reaction of its members to the Budget. In short, they were not amused.’
Paul Cheshire, an emeritus professor of economic geography at LSE, pointed out that introducing four higher bands with the cut-off value at £2m would ‘essentially [be] a tax on living in London and the South East, rather than coupling how much people pay in Council Tax to their incomes.’ ‘Since productivity is higher in the South East and highest in London’, Cheshire continued, ‘it is a tax on our most productive regional economies.’
All these concerns point to the fundamental issue that these measures are expected to raise the average costs for landlords. The Autumn Budget coincides with the recent ratification of the Renters’ Rights Act, a bill that is set to impose additional legal obligations and costs on the average landlord. Such measures are expected to influence market activity.
Market Expectations
Of those RICS surveyed, respondents witnessed new buyer enquiries fall in November by a net balance of –32%, down from –24% in October. Sales agreed posted a net balance of –23% in November, compared to the –24% in October. Although partly influenced by seasonal fluctuations in demand and speculation over the provisions expected to be implemented in the Autumn Budget, these figures nevertheless signal a fall in sales activity over the past quarter.
Looking ahead, respondents were generally cautious regarding the future performance of the property market. Near-term expectations received a net balance of –6%, though it should be emphasised that a net balance of +15% anticipates overall volume of sales to increase over the next year. In what would be the weakest level since April 2020, the monthly tenant demand dropped to a net balance of –22%.
What is alarming is that the landlord instructions in the lettings market stand at a net balance of –39%. Concurrent with this negative perspective is a net balance of –19% expecting overall house prices to decline.
This view is exacerbated when respondents were asked about London, with a net balance of –44% forecasting a decline in London’s average property prices. By the same token, Jefferies London observed that there have been 444 properties listed in the capital above £2m since the Autumn Budget, accounting for approximately 1 in 10 properties valued above £2m across the market.
Damien Jefferies, the founder of Jefferies London, pointed out that ‘those with the means to buy at the upper end of the London market are unlikely to be deterred by the new surcharges announced during the recent Autumn Budget.’ On the contrary, Jefferies added, what the property market is seeing ‘is an immediate reaction to the Budget, as the announcement of higher ongoing property taxes appears to have nudged a number of would-be sellers off the fence, prompting a wave of new prime stock hitting the market.’
General Thoughts
Continued discourse is still being held regarding the latent impact the Autumn Budget will bring to the property market. Although the high-end sector continues to perform well in prime London, there is an underlying sentiment that the short-term impact of the Autumn Budget will leave the property market subdued. This is reflected in the general outlook provided by RICS that landlords expect overall demand and prices to decline over the next quarter.
As Emma Cox, the managing director of Shawbrook, observed: ‘A decline in buying activity and cooling tenant demand could pose challenges for landlords heading into the New Year. With little in the way of incentives or much-needed support for first-time buyers in the recent Budget, this looks set to continue as we close out 2025.’
