By 6th November
For most people, I suspect this was a relatively uneventful Budget. Overall, I’d describe it as ‘OK’. There was some good news for households struggling with everyday costs, more money for social housing and, probably the best news for the property market, some much-needed help for first-time buyers.
Unfortunately, landlords were hit again with another tax increase, although I don’t think this alone will lead to the mass exodus some are predicting, and to be honest always predict when there is bad news!
However, for me, the biggest issue for the property market may not be what was announced in the Budget at all. It’s what happens to interest rates next.
With yesterday’s interest rate rise, there’s now even more pressure on buyers, sellers and landlords alike. The real question is whether rates will continue to climb and, if they reach higher than 4%, what impact that could have on confidence and activity in the property market.
Only time will tell, but it’s certainly something worth keeping a close eye on.
The economy is doing OK, but what happens next?
The good news is that the economy is still expected to grow, with the Treasury reporting forecast growth of 1.2% in 2026. That’s reassuring, particularly given the continued economic pressures from the Middle East conflict
However, I think it’s fair to say we’re doing OK rather than seeing the growth we need, and sadly there is a risk things could get worse if interest rates rise.
For the property market, the reality is that what matters most is whether people can afford to buy, move or continue paying their mortgage or rent. To date, it’s survived a lot of economic hits well and the volatility of the global situation isn’t having the effect it would have been in the past.
And although the Bank of England, not the Chancellor, sets Bank Rate, the Budget can still influence mortgage costs through its impact on the economy, government borrowing and financial markets.
That’s why I suspect the next interest rate decisions could have a bigger impact on the property market than many of the announcements made in this Budget.
A little extra help with bills is good news
It’s easy to look at some of the announcements aimed at helping households with everyday costs and think they’re not going to make much difference.
But I don’t think we should underestimate how important even an extra £10–£15 a month can be to someone who is struggling to pay their rent, heat their home or put food on the table.
The Budget includes a £100 Household Energy Payment from January 2027 for households in England living in council tax bands A–D, as well as an extension of the temporary reduction in VAT on electricity.
Of course, these measures aren’t going to solve everyone’s financial problems. However, anything that helps those who are really struggling to make ends meet is welcome in my view.
Landlords hit again. But will it really lead to a mass exodus?
Unfortunately, landlords have once again found themselves on the receiving end of a tax increase.
The Budget proposes a further two percentage point rise in tax on property income from April 2027, on top of the increase already planned.
This would take the proposed property income tax rates for individual landlords in England, Wales and Northern Ireland to 24%, 44% and 49%, depending on their tax band. The changes still need to be legislated for. It’s worth remembering that these are rates for individual landlords, rather than those operating through a limited company, where different tax rules apply.
Now, a further 2% might not sound like much, but when you consider everything landlords have had to deal with over recent years, it’s another unwelcome cost. For some landlords, particularly those with mortgages and relatively small profits, this could be the final straw that encourages them to sell.
However, I’m not convinced this announcement alone will cause another mass exodus of landlords. Yes, some will undoubtedly decide they’ve had enough. But that doesn’t mean we’re suddenly going to see thousands more landlords putting their properties up for sale purely because of this announcement.
My advice to landlords would be to review their figures carefully, taking account of tax, mortgage costs, maintenance and any periods when the property might be empty.
And we shouldn’t forget the potential impact on tenants. In areas where there are already too few rental homes, losing more landlords or rents rising due to the increased tax, isn’t going to help people looking for an affordable place to live.
More money for social housing is very welcome
One of the more positive announcements was an additional £1.5 billion for the Social and Affordable Homes Programme, bringing the total investment to more than £40 billion over ten years.
For me, this is definitely good news. We desperately need more homes for people who simply can’t afford to rent or buy through the private market.
And increasing the number of social homes could also help take some of the pressure off the private rented sector, which is currently expected to house many people who would be better supported through social housing.
Of course, announcing funding is one thing. What really matters is whether it results in homes being built and people being able to move into them. But it’s certainly a step in the right direction.
Probably the best property news – Your First Home
For me, the most interesting announcement for the property market was the new Your First Home scheme, albeit announced well before the budget.
Not only could it help first-time buyers get onto the property ladder, but it could also give developers a much-needed boost by helping them sell existing new-build homes and potentially encouraging more development.
Under the scheme, eligible first-time buyers in England would need a minimum deposit of just 2.5%, with the government providing a 20% equity loan that’s interest-free for the first five years.
Applications are expected to open in February 2027, with the first sales planned for April, and the hope is that this doesn’t mean FTBs put off their purchase as a result and worsen the current market, especially for flats down south and in London.
However, as with most government buying schemes, the detail matters. There will be local property price caps, which means buyers won’t be able to use the scheme to purchase any new-build home they like.
For example, the published caps include:
- Reading – £375,000
- North Devon – £320,000
- Manchester – £355,000
- Middlesbrough – £220,000
- Inner London – £650,000
- Outer London – £500,000
A full list of local authority price caps is still to be published.
This is important because it means developers will need to check which of their properties qualify. It could help them sell some of their existing stock, but it certainly won’t apply to every new home.
And for first-time buyers, although getting onto the ladder with a smaller deposit sounds fantastic, it’s essential to understand what happens after the first five years, especially if property price growth is non-existent or minimal. Interest will become payable on the equity loan, and the amount buyers eventually repay will depend on the value of their property.
So, while I welcome the scheme, buyers will need to make sure they understand the longer-term costs and don’t just focus on how little they need to save initially.
Overall, though, I think this is potentially one of the most helpful announcements for the property market, particularly if it encourages more first-time buyers to purchase and helps developers get building again.
So, was this a good Budget for property?
Overall, I’d say it was an OK Budget.
There was some welcome help for households struggling with their bills, more funding for much-needed social housing and a potentially useful scheme for first-time buyers.
For landlords who don’t hold their properties in a company, unfortunately, it was another disappointing announcement, although I don’t think the additional tax rise on its own will trigger the widespread sell-off some are suggesting.
The Your First Home scheme is probably the biggest positive for the property market, particularly if it helps developers sell more homes and gives first-time buyers a realistic opportunity to purchase.
However, the reality is that the property market still depends on people’s confidence and, most importantly, their ability to afford to buy, sell, move or rent.
And that’s why yesterday’s decision by the Bank of England to raise interest rates to 4% is such a concern. With the property market already relatively quiet, higher borrowing costs could make things even more challenging for buyers, sellers and landlords alike. And with the possibility of further rate rises ahead, there’s even more uncertainty.
For me, that’s potentially a much bigger issue for the property market than anything announced in this Budget and something we
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