STAMP DUTY, COUNCIL TAX and LANDLORD LEVIES. HOW THE BUDGET COULD RESHAPE THE PROPERTY MARKET

Thursday September 18, 2025

As the Autumn Budget approaches, property owners, investors, landlords, and home-buyers are bracing for major potential changes. The new Labour government has made clear that property taxation is up for review, with several proposals being studied that could reshape how we buy, sell, own, and profit from homes. Below is a detailed look at the leading proposals, the details emerging so far, and what the implications might be.

  1. Replacing Stamp Duty: A New National Property Tax?

Stamp Duty Land Tax (SDLT) has long been criticised for distorting the housing market. Labour is considering scrapping or significantly reforming it, particularly for owner-occupied homes.

One option being studied is a national property tax that would apply to higher-value properties, potentially levied when the property is sold rather than as an upfront cost. Suggestions include thresholds starting around £500,000, with higher rates for homes above £1 million.

Pros:

  • Reduces the upfront barrier to moving, which could help downsizers and families trading up.
  • Provides a more stable revenue stream for government, less tied to transaction volumes.

Risks:

  • Owners of high-value homes, especially in London and the South East, would face higher ongoing costs.
  • Thresholds could create “cliff edges” where values just above a tax band are penalised.
  • Questions remain about fairness for those who recently paid large sums in stamp duty.

  1. Council Tax Reform

Council tax is still based on property values set in 1991. A revaluation or even full replacement is on the table. Proposals include moving to a value-based property tax, with higher-value homes paying a fixed percentage each year.

Design questions include how frequently properties should be revalued, whether local councils or central government should set rates, and how to protect “asset-rich but cash-poor” households such as pensioners.

Any reform would hit the South East hardest, where property values have grown fastest, while many lower-value regions may see little change.

  1. Capital Gains Tax (CGT) on Homes

At present, the sale of your main home is exempt from capital gains tax. Labour may change this, particularly for high-value properties. One suggestion is to keep relief for modest homes but remove it for sales above £1.5 million.

This would be a dramatic change, raising billions in new revenue, but risks discouraging mobility and trapping people in properties they no longer want or need.

  1. Rental Income and Landlord Taxes

Landlords should prepare for extra costs. One of the strongest rumours is that rental income will become subject to National Insurance contributions, cutting into rental yields. Further restrictions on allowances and reliefs are also under discussion.

This could push some landlords to raise rents, while others may decide to exit the rental market altogether. Supply may tighten, adding more pressure to tenants.

  1. Wealth Taxes, Land Value Taxes & Second Homes

Labour is also exploring ways to tax property wealth more broadly. Options include:

  • An annual wealth tax on homes above a set threshold, possibly replacing top council tax bands.
  • A land value tax, targeting agricultural or undeveloped land above a certain value.
  • Higher charges on second homes and empty properties.

All are politically sensitive, but the direction of travel is clear: those with larger property holdings are likely to contribute more.

  1. Support for First-Time Buyers

To balance tougher taxation, the government is expected to announce measures for first-time buyers and affordable housing. These may include targeted reliefs on property purchases, government-backed schemes, or incentives for developers to build lower-cost homes.

This aligns with Labour’s broader pledge to improve affordability and widen access to the housing market.

  1. Regional Impacts

The impact of reforms will vary across the country. London and the South East, where house prices are highest, will likely bear the brunt of new property taxes. Lower-value regions may be largely unaffected, and some first-time buyers could even benefit if reliefs are expanded.

There is also talk of giving local councils more power to vary property tax rates, which could create further regional differences.

  1. Likely Market Reactions

Uncertainty itself is already shaping behaviour:

  • Buyers are delaying transactions until after the Budget.
  • Sellers of high-value homes may rush to complete before changes take effect.
  • Landlords are reassessing portfolios, with some planning to exit the market.

Thresholds will be particularly important. Buyers may avoid homes that tip them over into higher tax bands, putting downward pressure on certain price ranges.

  1. Political Balancing Act

The Chancellor must raise revenue without stalling the property market. Labour has promised fairness, which suggests protections for average homeowners. At the same time, property owners are a vocal group, so reforms must be carefully phased and clearly explained.

Administrative challenges also loom large: revaluations, enforcement, and transition rules will all need to be managed carefully.

  1. What’s Most Likely

While not all proposals will make it into law, the most likely changes include:

  • Replacing or reducing stamp duty with a national property tax on high-value homes.
  • Reforming council tax to reflect modern values.
  • Extending National Insurance to rental income.
  • Introducing targeted reliefs for first-time buyers.

Capital gains tax on main residences and wealth taxes remain more speculative but cannot be ruled out.

Our Conclusion

The Autumn Budget could bring the most significant changes to property taxation in decades. For homeowners, landlords, buyers and investors, the key message is clear: reform is coming.

At Auckland Estates, we are monitoring developments closely. As soon as details are announced, we will provide clear updates and advice tailored to our clients. If you are planning to buy, sell, or invest in the coming months, now is the time to review your options and seek guidance.