Budget 2025: What Property Owners Need To Know And How Auctions Can Help

Budget 2025: What property owners need to know and how auctions can help

The 2025 Autumn Budget delivered by Chancellor Rachel Reeves has stirred the waters of the property market, especially in London and the South East. Among the headline-grabbing changes are the introduction of a “mansion tax” and a rise in property income tax, measures that promise to reshape investor behaviour and ownership economics in the capital.

A new layer of tax on high-value homes

Dubbed the “mansion tax”, a new council tax surcharge will come into force from April 2028. Properties valued over £2 million (based on 2026 prices) will face annual charges ranging from £2,500 to £7,500, adjusted annually for inflation. This affects an estimated 145,000 homes, the majority of which are concentrated in London’s most prestigious postcodes, including Kensington and Chelsea, Westminster, and Camden.

Landlords face higher costs and shrinking margins

From April 2027, landlords will see their property income tax increase by 2% across the board, aligning the tax treatment of passive income more closely with earned income. The government has framed this as a fairness issue, but for many, this is just the latest in a series of measures that make traditional buy-to-let models increasingly unviable. In regions like London, where yields are already compressed, and mortgage funding is essential, many within the industry worry that it could force landlords to exit the market or pass on the cost to tenants through rent hikes.

Uncertainty clouds the market

The budget’s delayed timing and the lack of clear timelines for several measures have created a fog of uncertainty. Buyers and sellers alike are pausing decisions, resulting in a static marketplace. For portfolio landlords or owners of high-value properties, especially those with limited liquidity, the extended lead-in to 2028 presents a rare opportunity to reassess their holdings.

How auctions offer a strategic exit

In this changing climate, auctions are becoming an increasingly compelling route for divestment. Whether you’re a landlord rebalancing a portfolio or a homeowner seeking to mitigate long-term tax exposure, the auction room offers:

• Speed and certainty: A fixed timeline, transparent bidding, and completion within 28 days.
• Strong demand: A national and international audience of cash-ready buyers looking for opportunities amid tax shifts.
• Market value realisation: Competitive bidding can often yield results as good as, if not better than, private treaty sales, particularly for properties with redevelopment or rental potential.

Looking Ahead

While the Chancellor’s Budget didn’t deliver the structural reform many had hoped for, there are reasons for optimism. Expected reductions in interest rates heading into 2026 could re-energise market sentiment. However, for now, those who are ready to act rather than wait can find momentum through the auction route.

At Auction House London, we recognise the challenges and opportunities presented by these tax changes. If you’re exploring options for a swift, reliable sale, we’re here to help you make your move with confidence.