Autumn Budget 2025: UK proposes radical shift in property taxes for homeowners and landlords
Chancellor Rachel Reeves is weighing a seismic overhaul of how Britons pay for homes, with the Autumn Budget 2025 set to reveal whether Stamp Duty Land Tax will be scrapped entirely. The move, driven by findings from the centre-right thinktank Onward, could replace the current upfront buyer’s tax with an annual charge paid in one lump sum by sellers — a radical flip that could reshape mobility in the housing market. The goal? To free up stalled homeowners, especially those stuck in oversized homes after their children leave, and to generate billions for public services without raising income or national insurance taxes.
How the new property tax would work — and why it’s controversial
The proposed national property tax would apply only to homes valued above £500,000. Rates would start at 0.54% for properties between £500,000 and £1 million, rising to 0.81% for those over £1 million. Crucially, unlike today’s SDLT — which hits buyers hard at purchase — this new levy would be paid by the seller when they move. That means a £1.5 million home would trigger a £6,790 charge under one model, versus the current £153,750 SDLT bill. But here’s the twist: under another version floated by the Institute for Fiscal Studies, the buyer pays only on the amount over £500,000, making a £600,000 home cost £540 and a £1.5 million home £6,790. Both models aim to simplify a system critics call broken.
“Helen Miller, director of the IFS, called SDLT ‘awful’ — not because it’s unfair, but because it’s a brake on the market,” says one insider familiar with Treasury briefings. “People don’t downsize because they can’t afford the tax hit. Grandparents stay in four-bed houses. Young families can’t get on the ladder. It’s a bottleneck.”
Stamp duty receipts are soaring — but the system is creaking
Despite its flaws, SDLT remains a cash cow. According to Coventry Building Society’s analysis of HMRC data, the government collected £12.3 billion in the ten months leading up to October 2025 — a 21% jump from the same period last year. October alone brought in £1.5 billion, the highest monthly total ever recorded. That’s not just a windfall; it’s a trap. The Treasury is addicted to the revenue, but the market is gasping. The number of transactions has dropped 18% since 2022, and first-time buyers are now waiting an average of 7.3 years to save a deposit — up from 4.8 years in 2019.
Enter Aldermore. The financial services provider surveyed 2,000 aspiring homeowners and found overwhelming support for intervention. Their proposal? An 18-month stamp duty holiday on all new builds under £500,000, paired with a revived Help to Build scheme — where the government takes a 20% equity stake if buyers put down just 5%. “That’s why we’re calling for it,” said Maria Soto, Aldermore’s housing policy lead. “It’s not charity. It’s investment. We’re unlocking supply.”
The mansion tax looms — and so does a political minefield
Even more explosive is the rumored ‘mansion tax’ — a 1% annual charge on homes worth more than £2 million. That’s £10,000 a year on a £3 million property. The London Standard reported that 68% of all UK property sales above £2 million occur in Greater London, with Kensington and Chelsea alone accounting for nearly a quarter of them. Westminster and Camden follow closely. The tax would hit these areas hardest — and raise questions about fairness.
Then there’s the alternative: scrapping the capital gains tax (CGT) exemption on main residences over £1.5 million. That would mean someone selling a £2 million home after 20 years could owe tens of thousands in CGT — even if they’ve lived there their whole life. But here’s the catch: Labour leader Sir Kier Starmer explicitly promised during the 2024 election that no one would pay CGT on their main home “over the next parliament.” Breaking that pledge could cost Labour dearly in swing constituencies.
“A mansion tax sounds fair on paper,” says Richard from Zupler in a November 2025 YouTube analysis. “But houses above £2 million? They come in all shapes and sizes. A £2.5 million detached cottage in Devon might be worth less than a £2.2 million flat in Canary Wharf. How do you value that fairly? It’s a nightmare.”
Who wins? Who loses? And what happens next?
Under the new models, younger buyers might breathe easier — but older homeowners could be trapped. Imagine a 70-year-old in a £1.8 million house in Surrey, with £1.2 million in equity but only £22,000 a year in pension income. Paying £10,000 a year in property tax? Impossible. They’d be forced to stay put, reducing housing supply. That’s the irony: the very people the policy wants to help — those looking to downsize — might be the ones it locks in.
Meanwhile, smaller developers could benefit from Aldermore’s proposed stamp duty holiday. With 32% of new builds in England priced below £500,000, a temporary reprieve could revive cash flow for firms that have seen profit margins shrink to 4.1% — down from 7.8% in 2021.
The Autumn Budget 2025 is scheduled for October 30. If the Chancellor moves forward, changes would likely take effect in April 2026. But the Treasury is still debating: should the tax be paid by buyer or seller? Should it be annual or lump-sum? And should the £2 million threshold be adjusted for inflation? The answers will determine whether this reform unlocks the housing market — or breaks it further.
Why this matters to every UK household
This isn’t just about rich people in London. It’s about the entire housing chain. When one person can’t move, no one else can either. A retiree staying put means fewer three-bed homes for young families. A developer going bust means fewer new builds. A buyer stuck in a rental means less spending in local shops, fewer children in schools, and more pressure on social housing. The tax system isn’t just a revenue tool — it’s a housing lever. And right now, it’s stuck.
Frequently Asked Questions
How would the new property tax affect first-time buyers?
First-time buyers would likely benefit if the new system replaces SDLT with a seller-paid levy — removing the upfront £10,000 to £50,000 tax burden. Under Aldermore’s proposal, an 18-month stamp duty holiday on new homes under £500,000 could cut entry costs by up to 8%, making deposits more achievable. But if the tax shifts to buyers on the portion over £500,000, those buying in London or the South East may still face steep charges.
Would landlords be affected by these changes?
Yes. While the proposals focus on owner-occupied homes, landlords are likely to face similar changes. The government may extend the national property tax to buy-to-let properties, especially those over £500,000. With 1.7 million buy-to-let homes in England, any new levy could reduce investor appetite — potentially lowering rental supply and pushing rents higher, especially in high-demand areas like Manchester and Birmingham.
What happens if the mansion tax is introduced?
A 1% annual tax on homes over £2 million would raise an estimated £1.2 billion a year, but only affect about 120,000 properties — mostly in London and the South East. The real impact? Many owners might sell to avoid the tax, flooding the market with luxury homes. But if they can’t sell, they might under-declare value, hire expensive valuers, or even move assets offshore. Enforcement would be costly and contentious.
Could this lead to more affordable housing?
Potentially — if mobility improves. If older homeowners downsize because they can afford to, more three- and four-bed homes become available for families. Aldermore’s Help to Build revival could add 15,000–20,000 new homes annually. But without building more homes overall — especially in the £250,000–£400,000 range — the tax changes alone won’t solve the shortage. The real test is whether this reform is paired with a national housing construction drive.
Why is the government targeting sellers instead of buyers?
Sellers are typically wealthier and more likely to have the cash to pay a lump sum. Buyers — especially first-timers — are often stretched thin. Shifting the burden to sellers also reduces the psychological barrier to moving, which could unlock supply. It’s a behavioral nudge: if you’re not hit with a tax when you buy, you’re more likely to upgrade or downsize. The Treasury hopes this will create a domino effect across the market.
What’s the timeline for implementation?
The Autumn Budget 2025 on October 30 will reveal the government’s final plan. If approved, legislation would need to pass through Parliament before taking effect — likely April 2026. Transitional rules are expected for homes already on the market, and HMRC is already preparing new valuation systems to handle the shift from transaction-based to annual-based assessments.
