The Autumn Budget 2025 arrived with high drama – an unprecedented early leak of the Office for Budget Responsibility’s (OBR) report before the Chancellor even stood up. The OBR quickly pulled the document and apologised for the “technical error,” but not before Reuters and others grabbed the details of £26 billion worth of tax increases and new forecastsreuters.com. (The fiasco was serious enough that the OBR’s chair ultimately resigned over itreuters.com, calling it the worst failure in the OBR’s 15-year history.) In a nutshell, millions of people will end up paying more tax (via stealthy freezes to allowances) while a major welfare cap – the two-child limit on benefits – is set to be liftedreuters.com. The government is using the extra revenue (about £26 billion a year by 2029–30) to build a fiscal buffer, roughly doubling its headroom on borrowing targets to around £22 billionreuters.comreuters.com. We break down what these Budget measures mean for homeowners, property investors, and mortgage borrowers in the UK.

Income Tax Thresholds Frozen Until 2031

One of the most significant changes is the extension of the income tax threshold freeze by an additional three years. Tax-free personal allowances and higher-rate thresholds, which were already frozen in cash terms through April 2028, will now remain unchanged until April 2031 (the end of FY 2030/31). Freezing these thresholds boosts government revenue through “fiscal drag”: as inflation and wage growth push up incomes, more people are dragged into higher tax brackets or start paying tax when they previously didn’t. The OBR confirms this stealth tax increase will raise roughly £8.0 billion extra per year by 2029–30reuters.com. In fact, when combined with other measures, the overall tax burden is now on track to reach about 38% of GDP by 2029–30 – a post-war record highreuters.com.

For households, this prolonged freeze means take-home pay will be tighter in real terms for years to come. As incomes gradually rise, many families will find a portion of their earnings taxed at 20% or even 40%, reducing disposable income. The OBR estimates the extended freeze will result in around 780,000 more basic-rate taxpayers and 920,000 more higher-rate taxpayers by 2029–30 than if thresholds rose with inflationobr.uk. Mortgage affordability could be squeezed, since lenders look at net income – and net incomes will grow more slowly due to the frozen allowances. Prospective homebuyers may need to temper their budgets, and existing homeowners might feel less financial flexibility for maintenance or upgrades as a larger share of pay goes to income tax. (The policy is politically sensitive – the Chancellor herself had previously warned such a freeze would “hurt working people” – but it is now confirmed as a cornerstone of the Budget’s revenue-raising plans.)

Council Tax Surcharge on £2 Million+ Homes (“Mansion Tax”)

After much speculation, the Budget confirms a new “mansion tax” on high-value properties – implemented as a High-Value Council Tax Surcharge rather than a separate levy. Starting April 2028, homes in England valued above £2 million (at 2026 prices) will face an annual surcharge on their council tax billsresearchbriefings.files.parliament.uk. There will be four bands based on property value, with the charge ranging from £2,500 per year (for properties £2.0–2.5 million) up to £7,500 per year (for £5 million+ homes)researchbriefings.files.parliament.uk. These amounts will rise with inflation each year after introductionresearchbriefings.files.parliament.uk. Importantly, the surcharge is payable by the property owner (not the occupier) and will be collected alongside normal council tax. Local councils will remit the revenue to central government (and will be compensated for the admin costs), and the funds – roughly £0.4 billion annually – are slated to support local government servicesresearchbriefings.files.parliament.uk. Fewer than 1% of properties in England (around 100,000 homes, largely in London and the South East) are expected to be above the £2 million thresholdresearchbriefings.files.parliament.uk.

For those homeowners affected, this is a significant new cost to factor into their finances and long-term plans. Industry figures have reacted sharply – critics argue it relies too much on property value as a proxy for ability to pay. Many households in £2 million+ homes are “asset rich but cash poor,” having seen their home values appreciate without a matching rise in income. Treating the property’s value alone as evidence of financial capacity could put pressure on owners whose wealth is tied up in the house. There are also concerns about implementation: the Valuation Office will need to carry out revaluations in 2026 to identify which homes exceed £2 million, and repeat this exercise every five yearsresearchbriefings.files.parliament.uk. Disputes and “cliff edge” issues may arise around the cut-off points (e.g. £1.99M vs £2.01M value), and analysts warn the cost of the valuation program could eat into the tax take.

On the market impact, opinions are divided. Some estate agents believe this measure is “more political than anything” since it will raise relatively little money and its implementation is delayed until 2028. The top surcharge of £7.5k on a £5m+ home equates to only ~0.15% of the property’s value annually, which is modest – arguably, high-end buyers have already priced in some form of mansion tax given the rumors. Crucially, the government has indicated it will allow owners to defer the charges until the property is sold or upon death, to avoid forcing sales (details will be worked out in a consultation during 2026)researchbriefings.files.parliament.ukcountrylife.co.uk. This deferral option means no one should be compelled to sell their home in the short term just to pay the tax bill – a relief that should prevent a sudden rush of high-end homes being dumped on the market in 2027. Indeed, now that the policy is confirmed (and turned out less punitive than some early speculation), it might unfreeze some buying/selling decisions that were on hold. One buying agent noted that when the surcharge details leaked, the first message from a client was one of relief – essentially “good news, let’s get going” on a deal that had been pausedcountrylife.co.uk. With clarity on the bands and the deferral in place, buyers and sellers of £2M+ properties have more certainty and can make plans accordingly, albeit knowing an extra cost is coming in a few years.

Over the longer term, the surcharge could gently incentivise certain owners to adjust their housing choices. Older homeowners in large, valuable houses may feel a bit more push to downsize (to avoid accruing annual charges), and heavily mortgaged owners of high-value homes might consider moving to a less expensive property. In some cases this could free up larger family homes to the market. However, any impact is likely to be gradual. The ability to defer payment removes the immediate financial shock, and if political opposition to the tax grows, some owners may even gamble that a future government could amend or scrap it. It’s also worth noting that because the £2 million threshold is fixed in nominal terms, more properties will creep into the “mansion tax” net over time as house prices inflate. What qualifies as a “mansion” will expand to include more regular family homes in pricey areas – making the nickname somewhat misleading in the future. For now, if you own a property near or above the £2 million mark, keep an eye on this. You won’t feel the effect until 2028, and there may be planning opportunities (or relief schemes) as implementation details are worked out. But by that time, expect an added line on your council tax bill – one that, in high-value markets, could be several thousand pounds a year.

Higher Taxes on Landlords and Property Investors

Property investors will feel a pinch from multiple angles in this Budget. A headline measure is a 2 percentage-point increase in income tax rates on property rental income, dividends, and savings interest – taking effect from April 2027propertymark.co.uk. In practice, this means if you’re a landlord currently paying 40% tax on your rental profits, you’ll pay 42% from 2027; basic-rate taxpayers’ rental income will be taxed at 22% instead of 20%, and additional-rate landlords will go from 45% to 47%. (Dividend and savings tax rates will similarly rise by 2 points.) The government’s strategy is clearly to target “unearned” and investment income for extra revenue, rather than raising headline rates on employment income. According to the OBR, these non-labour income tax hikes will raise about £2.1 billion a year by 2029–30 across those three income categoriesreuters.com. The portion attributable specifically to property income tax is relatively small – roughly £0.5 billion per year on average from 2028–29 onwardobr.uk – but it adds to the cumulative squeeze on landlords.

For landlords, this tax hike effectively reduces net rental yields and could influence decisions about holding or expanding property portfolios. It comes on top of a raft of tax changes over the past decade that have already trimmed rental profits. Recall that in late 2024 the Stamp Duty Land Tax surcharge on second properties was increased from 3% to 5% (meaning any additional home purchase incurs a 5% extra stamp duty on the entire price), and mortgage interest relief for individual landlords has since 2020 been limited to the basic 20% rate. Capital gains tax allowances have been cut, and new energy efficiency and compliance costs loom on the horizon. All told, the tax burden on being a buy-to-let landlord or second-home owner is far higher now than it was even five years ago.

Not surprisingly, the industry’s response to the latest tax grab has been furious. “Yet another hammer blow to the private rented sector,” is how one lettings agency head described the 2% landlord levy. The National Residential Landlords Association (NRLA) slammed the policy, pointing out that the OBR itself has made clear it will “reduce the supply of rental property over the longer run”, risking “a steady long-term rise in rents if demand outstrips supply.”nrla.org.uk The NRLA warns that almost one million new rental homes are needed by 2031, but this Budget is “clobbering tenants with higher costs while doing nothing to improve access to the homes people need”nrla.org.uk. Likewise, property analysts at Rightmove note that while landlords might seem an easy target politically, over-taxing the rental sector ultimately tends to hurt tenants. If investor margins shrink, some will exit or pass costs on, and “in order to provide tenants with much-needed homes, landlord investors need to be able to make the sums add up.”rightmove.co.uk With mortgage rates for buy-to-let loans higher than they were a couple of years ago and many regulatory changes in motion, this tax rise simply “makes it even harder for some landlords to make investments viable,” Rightmove’s housing expert saidrightmove.co.uk.

From a housing market perspective, higher taxes on landlords could have mixed effects. The OBR expects that raising property income tax rates will slightly slow house price growth – by around 0.1% lower growth per year from 2028 onward, all else equalobr.uk. The logic is that investor-buyers will factor in lower after-tax rental yields, so they may bid less aggressively on properties, softening prices a touch. In the long run, fewer amateur landlords in the market could ease competition for first-time buyers, potentially tilting the balance a bit toward owner-occupiers. However, if many landlords sell off properties or stop investing, the rental supply could tighten and push rents up further – exactly what landlords’ groups are warning about. It’s a delicate balance. We may see more landlords consider holding properties via company structures (where profits are subject to corporation tax at 25%, though dividend extraction would then face the higher dividend tax) or other vehicles to mitigate personal tax rates. Others with slim margins or looming refurb costs might decide to trim their portfolios. For property investors, the message is clear: the Treasury is looking to you for revenue, so it’s time to recalculate your post-tax returns and strategy. Some marginal buy-to-let investments may no longer be worthwhile, and the emphasis should shift to maximizing efficiency – whether that’s through incorporation, refinancing at better rates, or investing in higher-yield areas to offset the tax drag.

Market Outlook: Interest Rates, House Prices, and Housing Supply

Beyond the specific tax and policy changes, the Budget also delivered an updated economic forecast that is directly relevant to the housing market. The OBR has trimmed the UK’s growth prospects, now projecting average annual GDP growth of about 1.5% over the next five years – which is 0.3 percentage points lower than forecast back in Marchreuters.com. This downgrade is largely due to a gloomier view on productivity growth (the OBR has essentially conceded that the post-2008 productivity slowdown is likely to persist, citing headwinds including Brexitreuters.com). Meanwhile, inflation is running higher than previously expected: the OBR now forecasts CPI at 3.5% for 2025 and 2.5% in 2026, reflecting stickier food and service prices than anticipatedresearchbriefings.files.parliament.uk. In fact, inflation is not expected to get back to the Bank of England’s 2% target until early 2027 – about a year later than hopedresearchbriefings.files.parliament.uk. In short, the economy will grow modestly, and price pressures will ease only slowly, creating a challenging backdrop for household finances.

Crucially for homeowners, interest rates are expected to remain elevated in the near term. The OBR notes that the average interest rate on outstanding mortgages (the “mortgage stock” rate) is set to rise from roughly 3.7% in 2024 to about 5.0% by 2029obr.uk. This doesn’t necessarily mean the Bank of England base rate will be 5% that whole time – rather, as homeowners gradually refinance out of older low-rate deals into newer higher-rate deals, the effective average mortgage rate in the economy climbs toward the new normal. (With around 90% of mortgages now on fixed rates, changes in Bank Rate feed through only slowlyobr.uk.) The forecast implies that many borrowers coming off 2–3% fixed deals in the next few years will refinance at rates in the 5%+ range, driving up their monthly payments. Even if the Bank of England starts cutting rates in 2024 or 2025 (as markets currently expect), it may not be enough to bring mortgage offers back down to the ultra-low levels of the late 2010s. The OBR does assume monetary policy will loosen later in the decade – indeed, they see the average mortgage rate peaking around 2027 and then stabilising – but in their forecast, mortgage costs in 2028–29 are still significantly above pre-2022 levels. We’re unlikely to revisit the era of 0.5% base rates and 1.5% mortgage deals. The takeaway: interest rates may have peaked, but they’ll plateau at a higher level than homeowners were used to. Plan accordingly – and new buyers will find that lending affordability tests (which consider stress rates around 6–7%) remain a hurdle.

What about house prices? The OBR foresees relatively modest price growth ahead. After the noticeable dip in 2023–24 (nationwide prices fell around 5% from their 2022 peak), the OBR expects a return to growth but at subdued levels: house prices are forecast to rise just under 3% in 2025, then average about 2.5% annual growth from 2026 onwardobr.uk. In concrete terms, the average UK house price (roughly £260,000 in 2024) is projected to reach just under £305,000 by 2030obr.uk. That growth is roughly in line with earnings growth or slightly above inflation – a far cry from the double-digit yearly gains seen during the pandemic boom. Essentially, the OBR expects a stable, unspectacular housing market: prices growing moderately, not crashing, but not skyrocketing either. In this scenario, affordability gradually improves for buyers who have seen wages rise (since prices won’t outrun incomes by much), but that improvement is tempered by the higher interest costs on mortgages. By 2030, mortgage rates are expected to be down a bit from their mid-decade highs, yet the benefit of slower house price growth could be offset by those financing costs. For existing homeowners, modest price growth means slower accumulation of equity – your property values might only be keeping pace with general inflation. For prospective buyers, it means you shouldn’t count on a big price correction to make homes markedly cheaper, but you also don’t need to panic about prices running away from you as they did in 2020–2021. It’s a more balanced outlook, with regional variations likely persisting (areas with strong local economies or limited housing supply may outperform the averages, while others lag).

On housing supply, an important tidbit was buried in the OBR’s analysis: housebuilding is projected to slow in the mid-2020s before picking up later. Net additions to the housing stock (new builds minus demolitions, etc.) are running around 260,000 per year in the early 2020s, but due to recent weaker housing starts and tougher development economics, the annual figure is expected to drop to ~215,000 in 2026–27obr.uk. This dip reflects the lagged impact of higher construction costs, planning delays, and cautious builder sentiment when house prices softened. However, the government’s planned planning reforms (though not detailed in the Budget, they have been hinted at elsewhere) are anticipated to then boost supply in the later 2020s. The OBR expects net new housing additions to rise sharply to about 305,000 in 2029–30obr.uk. If achieved, that would be the highest level of housebuilding in decades – approaching the government’s erstwhile target of 300k a year. Cumulatively, between 2024–25 and 2029–30, the OBR projects about 1.49 million new homes will be added, which is only ~10k fewer than they projected beforeobr.uk. For the market, a dip in construction in the mid-term could constrain supply and help prevent any oversupply-driven price falls. But by 2030, if 300k+ new homes are being delivered annually, that could gradually ease housing pressure and improve affordability (especially if that supply is concentrated in high-demand areas). Of course, this relies on those planning reforms truly taking effect and local communities accepting more development – which remains to be seen.

Property transaction volumes have also been volatile and are expected to recover only slowly. The OBR noted a striking pattern in 2025: transactions spiked in Q1 2025 and then slumped in Q2obr.uk. Why? Because a temporary stamp duty cut expired on 1 April 2025, prompting many buyers to rush their purchases to complete before the deadline (and avoid higher stamp duty). After the reset of stamp duty thresholds in April, the market experienced a hangover with lower activity in mid-2025. Going forward, the OBR forecasts transactions will bounce back from that dip and then gradually rise to around 1.3 million per year by 2029obr.uk. However, they downgraded this outlook – 1.3m a year is about 155,000 fewer transactions annually than the OBR expected in their previous (March) forecastobr.uk. The reasons are structural: with higher stamp duty now baked in (the nil-rate band for house purchases dropped back down, and the 5% extra duty on second homes remains), there’s a bit more friction in moving. Add to that higher mortgage rates, which make it more expensive to upsize or relocate, and an aging population that typically moves less frequently (older homeowners staying put longer in their houses). All these factors imply a somewhat lower “churn” rate in housing. For the property industry – estate agents, mortgage brokers, conveyancers – fewer transactions can mean a leaner environment, as there are simply fewer deals to go around compared to ultra-busy years like 2021. For buyers and sellers, a calmer market with fewer frenzied bidding wars might be a relief, but it also suggests less overall mobility. We may see a continuation of recent trends: people stay in their homes longer on average, and when they do move, it’s driven by life events (family changes, job relocations) more than by speculative or investment motivations.

Bottom line: The housing market outlook is one of cautious stability. There’s no indication of an imminent crash, nor any reason to expect another sustained boom – rather, a slow grind. Prices are creeping up, not sprinting; transaction volumes will recover, but not to past peaks; and mortgage costs, while likely past their absolute peak, will remain a headwind. As a homeowner or investor, you should base decisions on your personal circumstances and long-term goals, not on hoping for rapid gains or fearing dramatic collapses. Remember that regional and local differences will persist – some areas will outperform the national average, others will underperform, depending on local supply-demand dynamics and economic conditions. In this environment, realistic expectations and a focus on fundamentals (the quality of the property, sustainable rental yields, your own budget constraints) will serve you better than any attempt to time the market.

Final Thoughts – Navigating the Changes

This Budget was a big one. It raises significant revenues – about £26 billion more per year by 2029–30 – largely through stealthy freezes and targeted tax increasesreuters.comreuters.com. In return, the government’s books look healthier: the OBR says the Chancellor now has £21–22 billion of fiscal headroom against her fiscal rules in 2029–30reuters.com, roughly double what it was before. In theory, that buffer improves economic stability and gives the UK more resilience against future shocks (and perhaps even room for pre-election tax cuts down the line). For the property sector, the implications are mixed. On one hand, a commitment to fiscal stability and lower government borrowing can be good for interest rate outlooks and overall economic confidence – factors that support the housing market. (We already saw gilt yields fall and the pound strengthen after the Budget, suggesting investors were comfortable with the planreuters.comreuters.com.) On the other hand, many individual households and investors will be paying more to the Exchequer, which could weigh on housing activity at the margins (less disposable income for home improvements or saving a deposit, higher costs for landlords, etc.). As ever, policy changes create winners and losers.

Affluent homeowners with £3 million houses and multiple buy-to-lets will undoubtedly contribute more in tax and might see their property plans constrained. Typical first-time buyers might find the playing field a tad more even – if fewer landlords are competing for starter homes and prices only rise modestly – but they’ll still need to clear the hurdles of high mortgage rates and incomes eroded by tax drag. Renters in low-income families should benefit from the removal of the two-child benefits limit (effective April 2026), which is projected to lift about 450,000 children out of poverty by 2029–30researchbriefings.files.parliament.uk – improving those households’ ability to pay rent or move to suitable larger homes. (Though notably, the Budget did not unfreeze Local Housing Allowance rates for housing benefit – a point of contention raised by housing groupspropertymark.co.uk – so in high-rent areas, government support will still fall short of market rents.) And while it’s outside the property sphere, it’s worth noting electric vehicle owners will lose their road-tax advantage: by 2028 they’ll be paying per-mile road charges (about 3p/mile for full EVs)obr.uk, ending the “free ride” on fuel duty and adding a new running cost for those households.

If you’re a homeowner or property investor, now is a good time to take stock of your finances and plans. Ask yourself: Do I understand how these tax changes (both immediate and coming years) will affect my cash flow? For instance, if you own high-value property, have you budgeted for the 2028 surcharge (or considered downsizing or transferring ownership in advance)? If you’re a landlord, have you accounted for the higher income tax in 2027 – and is your portfolio still profitable under those rates? It might even be worth bringing certain plans forward: for example, some owners of £2M+ homes are considering selling before 2028 to avoid the new tax (though with deferral in place, that’s less urgent than it initially sounded). Meanwhile, if you’ve been mulling an exit from the buy-to-let market (or switching your properties into a company structure), the clock is ticking before the tax hike bites. For those with mortgages, it’s prudent to review your rate exposure – many clients are looking into remortgaging early or locking in longer fixes, essentially bracing for that drift toward ~5% average mortgage rates that the OBR predictsobr.uk. Even if interest rates might fall in a couple of years, the deals available now (especially on longer fixed terms) might offer peace of mind against future volatility. Having a clear plan can turn these looming changes from a source of anxiety into something you’re proactively managing.

At Willow Private Finance, we’re monitoring these developments closely. Our team specializes in helping homeowners and investors navigate complex financial landscapes. Whether it’s finding a mortgage that fits your budget in a higher-rate world, or advising on portfolio strategy under the new tax regime, we’re here to offer guidance. The rules may be changing, but with careful planning you can still achieve your property goals. Feel free to reach out if you want to discuss how the Budget changes might affect your situation or explore financing options tailored to the new environment.

Despite the noise around the leak, the core message of Autumn Budget 2025 is clear: we’re entering a period of adjustment. Higher taxes and steadier (not drastically falling) interest rates are the trade-off for shoring up the economy’s resilience. By staying informed and being proactive, homeowners and investors can adapt to these changes rather than be caught off guard. Property remains a long-term game, and with the right strategy – and maybe a bit of professional help – you can weather this new chapter and even find opportunities in the midst of change.

Frequently Asked Questions

Will my mortgage payments go up because of this Budget?

Not directly, but quite possibly indirectly. The Budget itself doesn’t force an immediate interest rate hike, but the OBR’s forecast assumes that average mortgage rates will climb to around 5% by 2029 as borrowers gradually refinance into higher-rate dealsobr.uk. In other words, even if the Bank of England isn’t prompted by the Budget to raise rates further, many homeowners will feel like rates “go up” when their current mortgage deal expires and they have to refinance at the new normal rates. Also, the squeeze on after-tax income (from frozen allowances and higher taxes) can indirectly affect how lenders assess affordability – your net pay might end up lower than it would have been, which could reduce the amount you’re able to borrow. So while your existing mortgage won’t suddenly change, when you go to remortgage or get a new loan, you may qualify for a bit less, and the rate offered could be higher than what you’re used to. It’s wise to plan for higher monthly payments and talk to a broker about your options. In some cases, we’re helping clients secure rate holds or even remortgage early to lock in deals before any further market changes. Essentially, budget as if you’ll be paying a higher rate, and if the cuts come sooner or deeper than expected, that’ll be a bonus.

What is the “mansion tax” and who will it affect?

It’s informally called a “mansion tax,” but it’s implemented as a High-Value Council Tax Surcharge on homes worth over £2 million (in England). Starting April 2028, owners of properties valued above £2M will pay an extra levy each year on top of their normal council tax. The surcharge has four bands: £2,500 per year for homes valued £2.0–2.5M; £3,500 for £2.5–3.5M; £5,000 for £3.5–5.0M; and £7,500 for £5M+researchbriefings.files.parliament.uk. These amounts will increase annually with inflationresearchbriefings.files.parliament.uk. Roughly <1% of UK homes fall in this category (on the order of 100k properties)researchbriefings.files.parliament.uk, mostly in London and the Southeast. The key points are: it’s charged to the owner (not the occupier) and will be collected alongside council tax bills, then funneled to central government to fund local servicesresearchbriefings.files.parliament.uk. If you own (or plan to buy) a property above £2M, you’ll see a new recurring tax from 2028. However, there will be provisions to help those who are “asset rich, cash poor” – notably, the government has said you can likely defer the charge until you sell the home or until your estate is settled, so that people aren’t forced to sell just to pay the taxcountrylife.co.uk. In summary: it primarily affects wealthy homeowners on paper (and over time, as property prices grow, more homes will cross the £2M mark), and the annual cost will range from £2.5k to £7.5k+ depending on your home’s value.

How does the income tax threshold freeze affect homeowners?

The freeze in personal tax thresholds (now extended to 2031) is a classic stealth tax. As your salary or pension income rises with inflation or career progression, more of it gets taxed – because the tax bands aren’t rising to keep pace. For homeowners, this means your take-home pay might grow more slowly than your gross pay. That reduction in disposable income can impact your ability to save for a deposit, afford monthly mortgage payments, or budget for upkeep costs on your home. Lenders also consider your net income when deciding how much you can borrow. If inflation pushes you into a higher tax bracket (or from paying no tax to paying basic-rate tax), your net pay doesn’t go as far, potentially reducing the mortgage amount you’d qualify for. Over time, the effect is significant: by 2030, millions more people will be paying tax (or paying at 40%) than would have if thresholds kept up with inflation – the OBR projects about 780k additional new taxpayers at 20% and 920k additional at 40% due to the freeze by 2029–30obr.uk. In short, the threshold freeze squeezes household budgets, which might mean making more modest home-buying plans or delaying renovations, simply because a bigger slice of your income is going to HMRC rather than your bank account.

Are buy-to-let landlords worse off after this Budget?

Yes, unquestionably. From April 2027, landlords will pay 2% more tax on their rental profits (so 22% basic rate, 42% higher rate, 47% additional rate)propertymark.co.uk. This comes on top of years of tax changes that have already hurt landlord finances – higher stamp duty on second homes, the reduction of mortgage interest relief to 20%, cuts to capital gains allowances, proposed new energy efficiency requirements, you name it. The consensus is that being a landlord has become significantly less profitable, especially if you have a mortgage on your rental. Many landlords will try to pass on some of the cost by raising rents, and the OBR itself has warned that these measures will likely reduce the supply of rental homes and put upward pressure on rents in the long termnrla.org.uk. Industry bodies like the NRLA are furious; their chief executive called it “despite claims of tackling cost of living, the Government is pursuing a policy that… will drive up rents”nrla.org.uk. The NRLA pointed out that almost 1 million new rental homes are needed by 2031, yet “this Budget will clobber tenants with higher costs while doing nothing to improve access to the homes people need.”nrla.org.uk In practice, if you’re a landlord, you’ll need to factor in the higher tax when calculating your yields. It may push some into loss-making territory or at least make the return on investment too slim for the risk/hassle – prompting some to sell properties or stop expanding their portfolio. We also might see more landlords incorporate (using a company structure) to shelter profits at the 25% corporation tax rate instead of up to 47% personal tax, though extracting the money then has its own tax costs. Bottom line: yes, landlords are being squeezed yet again, and many will feel worse off – which, unfortunately for renters, tends to result in higher rents and fewer rental options as the sector shrinks.

Will lifting the two-child benefit cap affect housing demand?

Potentially, at the margins. The Budget removes the two-child limit on Universal Credit (effective April 2026) – meaning low-income families will no longer lose out on benefits if they have a third (or fourth) child. This will put some extra money in the pockets of larger families on benefits (roughly an additional £3,000 per year per child beyond the second). It’s estimated this change will reduce child poverty by about 450,000 children by 2030researchbriefings.files.parliament.uk, which is a significant boost to those households’ finances. In terms of housing, families that previously hit the cap might now be able to afford slightly bigger accommodations – for example, moving from a two-bedroom to a three-bedroom home to fit the kids, or simply being more able to cover the rent on their current home rather than downsizing. So we could see some increased demand for larger rental properties among the low-income segment, and generally better stability (fewer rent arrears, less overcrowding). However, the effect on overall house prices or rents will likely be small. The number of affected households is not huge in the grand scheme of the market, and the extra income (a few thousand pounds a year) improves housing affordability for those families but doesn’t create new households. Another important point: housing benefit (Local Housing Allowance) remains frozen despite the Budget changespropertymark.co.uk. That means in high-rent areas, even though families might get more Universal Credit from the cap removal, the housing benefit portion still might not cover market rents, limiting their ability to actually upgrade to a larger home. In summary, lifting the cap will improve housing stability and living conditions for larger low-income families (a positive social outcome), but it’s not going to move the needle on house prices or rents in a broad way.

I drive an EV. What does the new mileage charge mean for me?

The Budget introduced a plan to charge electric and plug-in hybrid vehicles per mile, starting in April 2028. Essentially, this is the beginning of EVs being subject to “road pricing” similar to fuel duty for petrol/diesel cars. The announced rates are £0.03 per mile for fully electric cars and £0.015 per mile for plug-in hybridsobr.uk, with the rates indexed to inflation each year after launch. For context, £0.03/mile is roughly half the per-mile fuel duty that petrol drivers pay (since petrol duty is ~£0.53 per litre, which works out to around £0.06 per mile for an average car). So, if you’re an average EV driver doing say 10,000 miles a year, you’d be looking at about £300 per year in road charges (the OBR calculated about £255 for an 8,500-mile/year EV driver in 2028obr.uk). This effectively ends the free pass EVs have had on fuel duty – the government is shifting to a system where EV owners contribute to road tax by the mile, as petrol drivers do (because as EV adoption grows, fuel duty revenue was plunging). It’s worth noting this comes on top of the fact that EVs will also start paying Vehicle Excise Duty (road tax) from 2025 (that was announced previously). So, if you’ve been enjoying very low running costs on your electric car, plan for that to creep up. It will still likely be cheaper per mile than running a petrol car (electricity cost + 3p tax is usually less than petrol + fuel duty), but the gap is narrowing. In short: by 2028, EV owners will have a new bill to consider – about £20–30 per month for average usage, and collected probably via some kind of tracking or annual MOT reading. It’s a reminder that as EVs become the norm, they’re going to be taxed more like petrol cars for road use.

Is it a good time to remortgage or buy property?

It depends on your situation, but there are a few considerations post-Budget. On the remortgage side: if you’re currently on a fixed rate that’s expiring in the next 6–12 months, it could be wise to start looking at options now. Mortgage rates have come off their 2023 highs a bit, but the OBR’s outlook suggests they won’t fall dramatically for some time – the average mortgage rate is expected to be ~5% for the rest of the decadeobr.uk. Many lenders allow you to lock in a rate up to 6 months in advance, so you could secure a deal now for mid-2024, for example. That protects you if rates creep up again. Also, with tax thresholds frozen and living costs still rising, your future disposable income might not go as far – which affects how much you can borrow. There’s something to be said for locking in a mortgage while you still show a higher net income on paper, rather than waiting a year or two when inflation (with no tax bracket adjustment) might have quietly eroded your affordability. On the buying side: there are pros and cons in the current climate. On the plus side, house price growth is slow and the market is cooler than it was – you’re not facing 20 buyers in a bidding war like in 2021. In fact, with many buy-to-let investors holding back due to all the tax changes, first-time buyers and home movers may find less competition for starter homes. You might be able to negotiate a bit on price or get the seller to cover some extras, which was unheard of during the boom. Also, a lot of “what if” uncertainty (e.g. will there be a mansion tax, will there be a big rate hike) has now been resolved post-Budget, which could give the market a more stable footing going into 2026. On the downside, of course, mortgage rates are relatively high, so your monthly payments on a given loan will be larger than they’d have been a couple years ago, and you might not qualify for as large a mortgage as before. It really comes down to your personal finances and plans: if you have a stable job and a decent deposit, and you find a home you love, there’s an argument for going ahead – you can refinance later if rates drop, and you’ll have gotten on the property ladder at a time of subdued prices. If you’re stretching your budget to buy right now, though, you might wait and save more, or see if mortgage rates ease a bit in 2024. We often advise clients that time in the market beats timing the market – meaning, if you buy a home you plan to keep for many years, the exact timing matters less than your readiness and the suitability of the property. Ultimately, it’s a good idea to talk to a mortgage adviser who can run the numbers for your specific scenario (rent vs buy cost, or the impact of a 5.5% rate now vs a hopeful 4.5% later, etc.). In summary: there’s no one-size-fits-all answer, but the current environment offers opportunities (less competition, motivated sellers) as well as challenges (higher rates). Make sure any decision aligns with your long-term plans and comfort – and if it does, acting sooner can often save money versus waiting, as long as you’ve built in a safety margin for those mortgage payments.

Sources: The analysis above is based on official data from the Office for Budget Responsibility and extensive news coverage of the Autumn Budget 2025, including reports from Reuters, the House of Commons Library and industry publications (e.g. Propertymark, NRLA, Rightmove), as cited throughout the text. Key details – such as the tax rates, forecasts, and expected impacts – have been confirmed by the OBR’s Economic and Fiscal Outlookreuters.comobr.uk and reputable news outletsreuters.comreuters.com. By staying informed via these reliable sources, we ensure that our insights and advice reflect the latest facts and figures from the Budget.

Wondering how these Budget changes affect your plans? – Let’s talk. Feel free to fill out our contact form and one of Willow’s specialists will be in touch to help you navigate your next steps in this new landscape. Whether it’s refinancing your mortgage, strategising your property investments, or simply budgeting for the years ahead, we’re here to help you make sense of it all.