I’m Mark Homer, co-founder of the UK’s largest property education company, Progressive Property and an author of multiple best-selling property books. I’ve developed thousands of property units and built a portfolio worth millions by focusing on data and smart systems.
There has been loads and loads of speculation in the last few months. The Treasury, Rachel Reeves, Rachel from Accounts, have been flying a kite. They have been issuing lots and lots of leaks to the public and to the newspapers about what tax rises are coming. They’ve been testing their proposed tax increases to see what the response is likely to be from the general public and probably from Labour voters.
The Cost of Uncertainty: Inaction and Economic Activity
It has caused inaction. Lots of people have put off making investment decisions. They haven’t bought businesses. They haven’t invested in properties.
Lots and lots of people who were buying homes, especially over £500,000, have put that off because they don’t like the uncertainty. They’re not sure what the tax rates are going to be. Is there going to be an increased council tax surcharge on bigger properties? All of this stuff has created inaction.
I think part of this strategy is also to flood the zone so that when the budget comes, potentially, they introduce less of these taxes and everyone sort of thinks, Oh God, that wasn’t quite as bad as we thought. A bad strategy. I think it has put a real cap on economic activity. I think it has cost the country and the government lots of money, but it doesn’t look like Labour cares about that.
So let’s get stuck into this. Let’s find out what’s happened and let’s see how it impacts you.
Key Tax Changes Impacting Property Owners and Investors
So what is it that they have changed?
1. The Unearned Income Surcharge
The first biggest change that will impact landlords, people with shares, investors who take dividends, and savers is that they are adding 2% onto the basic rate of tax for income from those sources. So it’s almost like an unearned-income surcharge, which we’ve not had for a long time.
It’s typically Labour. It’s going to increase the tax that you pay on any properties you hold, any investment income, and any business income you take. This will increase basic, higher, and additional taxpayer rates to 22%, 42% and 47% respectively from April 2027.
I would say that’s probably the biggest wide-ranging increase for most of the population.
2. Fiscal Drag & Frozen Tax Thresholds
In addition to that, the Chancellor has frozen tax thresholds, the amount at which you start paying higher or additional rate tax. This fiscal drag is a stealth tax.
Lots of people think, The Chancellor hasn’t increased my rate of tax, but if inflation rises while thresholds stay the same, more of your income gets pushed into higher tax bands. This has been going on for a number of years and is now being extended for several more.
3. New High-Value Council Tax Surcharge
The next big tax increase for property owners is the new high-value council tax surcharge applying to properties over £2 million, hitting from April 2028.
They’re going to increase council tax by £2,500 to £7,500 a year, depending on how far over £2m the property value is. This will largely affect properties in London and central London, where prices have already been falling.
Below £2m, they will also re-evaluate council tax bands F, G and H, which is another stealth move that will push many properties into higher bands.
4. Changes to Capital Allowances
Another huge shift for landlords with HMOs, commercial buildings, and business owners is a reduction in capital allowances:
- Writing down allowance reduced from 18% to 14% (Apr 2026)
- First-year allowances restricted to 40% on some assets (Jan 2026)
The Wider Economic Impact
This budget marks a new high, the highest overall tax level in UK history.
Government debt is now over £2.7 trillion, and the UK spends over £110 billion per year just on interest.
Labour are hammering the people and the businesses that generate the income and taxes which the government uses to run the economy. Lots of wealth creators are leaving. Loads of people are heading to Dubai, and I’m not sure how this budget helps stem the flow of entrepreneurs, non-doms, and high-net-worth employers.
Opportunity in Soft Markets: What to Do Now
So what’s the strategy? What do we do now?
Well, it has made lots of properties cheaper and lots of investments cheaper. I think it’s a good time to buy.
It’s a good time to go into the marketplace to generate income:
- commercial conversions
- residential rentals
- taking on commercial tenants
All this uncertainty has made the market very soft. I would use it to your advantage. Bid hard, negotiate aggressively, and secure more deals because more are available. If you find it hard to navigate the property market, join one of our property events.
