Property professionals are reassured that the Autumn Budget has given the industry some certainty – by not making any seismic changes.
The budget saw the planned introduction of a ‘council tax surcharge’ (mansion tax) from 2028, on properties worth over £2 million. The surcharge will be £2,500 for a property worth between £2m to £2.5m, eventually rising to £7,500 for those worth more than £5m.
The government also looked to increase taxation of rental income by 2% from 2027.
Tom Adams, chief executive at property consultancy RedBook Agency, said: “This budget is more reassuring than many anticipated. Yes, the new mansion tax introduces an additional annual cost, but at the level announced, it should have a limited practical impact on the luxury project market we operate in.
“The latest RBi shows that 82% of projects are refurbishments rather than new builds, motivated by long-term lifestyle decisions rather than short-term financial considerations, meaning the modest annual levy will not materially change plans already in motion.
“Overall, this is a Budget that introduces some friction but avoids the kind of heavy-handed measures that could have materially undermined confidence. It provides a degree of clarity, and in our world, clarity goes a long way.”
The Chancellor decided against changing stamp duty despite reports the government was considering switching it to a sellers or annual tax.
Jonathan Turner, partner at law firm Morr & Co, said: “Stamp duty land tax (SDLT), a lever pulled by nearly all chancellors, seems to have been left alone on this occasion.
“It is a relief that the SDLT regime isn’t being changed which would create yet another unnecessary artificial bubble, but it is also a missed the opportunity to simplify this tax, which used to be simple, but now very often needs specialist tax advisors to ascertain the correct rate payable, with penalties should HMRC not agree that that their often woolly guidance has been met.”
Turner added: “Like the monster under the bed, the prospect of mansion tax or high value council tax surcharge from April 2028 is unwelcome, but less terrifying when you know whether it is really there and what it looks like.
“This recurring annual charge for properties over £2m has been widely anticipated and has been lurking since the Corbyn years.”
“…This tax will trigger a surge in downsizing, which will saturate the market with valuable properties. In turn this will likely depress values overall, thus decreasing the ‘mansion tax’ income to the government.”