The Autumn Budget on 28 October 2026 delivered a clear message to the property market: landlords will pay more, while first-time buyers get new help to get onto the ladder. Chancellor John Healey left stamp duty unchanged, as the Prime Minister had promised in the summer, but announced a further rise in tax on rental income, a large new equity loan scheme and fresh details of the surcharge on high-value homes.
Landlords: a second rise in property income tax
From 6 April 2027, the tax rates on income from property and savings will rise by a further two percentage points, to 24% for basic-rate, 44% for higher-rate and 49% for additional-rate taxpayers, according to Propertymark. Tax on employment and dividend income is unchanged. It is the second successive Budget to increase the tax on rental income, as Property118 noted.
For a higher-rate landlord with £20,000 of taxable rental profit, the extra two points add around £400 a year compared with the current rates. Combined with mortgage rates of around 6% and the new obligations of the Renters’ Rights Act, the change will push more individual landlords to review their portfolios.
Options landlords are likely to consider include:
- Incorporation: profits inside a limited company are subject to corporation tax rather than income tax, although moving existing properties can trigger Capital Gains Tax and stamp duty, so specialist advice is essential.
- Rent reviews: within the limits of the Renters’ Rights Act rules on rent increases.
- Portfolio rationalisation: selling lower-yielding properties, particularly in London, where yields are thinnest.
- Ownership structure: where appropriate, sharing ownership with a spouse or partner who pays a lower rate of tax.
The Budget also confirmed that tenants in England will no longer face stamp duty on rent paid under assured tenancies, with effect from 1 May 2026, following the introduction of the Renters’ Rights Act.
First-time buyers: the new Your First Home equity loan
The most significant measure for buyers is a new £4.7 billion equity loan scheme. Under the details summarised by Propertymark:
- Buyers can borrow 20% of the property price as an equity loan, interest-free for the first five years.
- The minimum deposit is 2.5%, and the maximum 15%.
- Household income must be no more than £140,000 in London or £110,000 elsewhere.
- Price caps follow local median prices, at £650,000 in inner London and £500,000 in outer London.
- Pre-registration opens by the end of December 2026, full applications from February 2027 and the first loans from April 2027.
The scheme echoes Help to Buy, but with a lower minimum deposit and London-specific thresholds. With a 2.5% deposit and a 20% equity loan, buyers would need a mortgage of 77.5% loan-to-value, which tends to attract better rates than high-LTV products. Separately, from 29 October 2026, the Lifetime ISA withdrawal charge for buying a home above the £450,000 price cap was reduced from 25% to 20%.
High-value homes: the council tax surcharge takes shape
The Budget set out further detail on the High Value Council Tax Surcharge for homes in England worth £2 million or more (based on April 2026 values). It will start in April 2028, with owners liable:
- £2m to £2.5m: £2,500 a year
- £2.5m to £3.5m: £3,500
- £3.5m to £5m: £5,000
- £5m and above: £7,500
A 100% premium will apply to properties left substantially unfurnished and unoccupied for at least 12 months. Draft bands are expected in autumn 2027 and charges will rise with CPI from 2029–30. The surcharge will fall disproportionately on prime London, a market already under pressure.
Affordable housing
An extra £1.5 billion was allocated to the Social and Affordable Homes Programme, supporting around 10,000 homes with priority for social rent and council housing, and land sold to registered social housing providers will be zero-rated for VAT from 1 April 2027.
The bottom line
The 2026 Budget continues the shift in property policy away from private landlords and towards owner-occupiers. For investors, net yields will tighten again from April 2027, making structure and location more important than ever. For first-time buyers in London, the new equity loan could make a meaningful difference from next spring, provided mortgage rates do not climb much further.
This article is for general information and does not constitute tax, legal or financial advice.