The Budget delivers a strong pro-growth message for the property sector, with significant measures aimed at increasing housing supply, supporting first-time buyers and accelerating development activity. An additional £1.5bn has been allocated to affordable housing, helping fund around 10,000 new homes, taking total government investment in social and affordable housing to more than £40bn over ten years. The Government has also announced a £4.7bn equity loan scheme intended to support approximately 70,000 first-time buyers, alongside reforms to Lifetime ISAs and the introduction of a new First-Time Buyer ISA, designed to improve access to home ownership.
Developers and housing associations are likely to benefit from a package of measures intended to improve viability and accelerate delivery. This includes a new zero rate of VAT on land sold to registered social housing providers from April 2027, an exemption from Biodiversity Net Gain requirements for smaller brownfield residential sites of up to 1.5 hectares, and the rollout of AI-enabled planning tools aimed at reducing delays in the planning process. Together, these measures should help unlock development opportunities and support the Government’s wider housing ambitions.
The high street also continues to receive government support. Small Business Rates Relief thresholds will increase, with qualifying retail, hospitality and leisure properties eligible for 100% relief rising from a rateable value of £12,000 to £18,000, while other qualifying properties will benefit from a real-terms freeze in business rates over the next two years. Additional relief for pubs, social clubs and music venues will also increase to 35% from April 2027, providing further support for town centre businesses.
However, the outlook is more challenging for landlords and property investors. From April 2027, property income tax rates will increase by a further 2 percentage points, taking rates to 24%, 44% and 49% depending on the taxpayer’s marginal tax band. The Government is also introducing measures that increase the cost of holding underutilised residential property. The new High Value Council Tax Surcharge will include a 100% premium on properties left empty and unoccupied for more than 12 months, while Annual Tax on Enveloped Dwellings (ATED) charges will rise by 3.5% in line with inflation for the 2027-28 charging period.
Further changes reinforce the Government’s focus on tax compliance and the integrity of property-related reliefs. Amendments to Stamp Duty Land Tax (SDLT) group relief will ensure relief is withdrawn where a purchaser leaves a corporate group after an intra-group transfer, even where the vendor company has subsequently been wound up. This tightening of the rules is aimed at preventing unintended SDLT advantages and is likely to be of particular relevance to groups undertaking corporate restructurings and property transfers.
Overall, the Budget presents a positive backdrop for housebuilding, regeneration and owner-occupation, supported by significant investment, planning reforms and targeted development incentives. Nevertheless, landlords and property investors face a more demanding operating environment characterised by higher taxation, increased charges on vacant and high-value residential property, enhanced compliance requirements and tighter anti-avoidance rules. As a result, investors will need to carefully evaluate the impact of these changes on portfolio performance, transaction structuring and long-term investment strategy.
