With Chancellor Rachel Reeves’ Budget now unveiled, Will Watson, Head of The Buying Solution, assesses its implications for the property market – and specifically what it means for buyers.
Clarity in policy underpins everything in our industry, and after weeks of fevered speculation, Chancellor Rachel Reeves’ second Budget has at last delivered it. Within minutes of the OBR’s unprecedented “technical error” that leaked the headlines before she had even taken her place at the despatch box, my phone lit up. One long-standing client messaged simply: “Good news, let’s get going.” Moments later came another: “Let’s make this deal happen now.” The deal in question is just shy of £20 million.
For all the noise surrounding this Budget, the immediate reaction from clients suggests one thing above all: they have not been spooked. In fact, in several cases, the announcements appear to have provided precisely the sense of direction they have been waiting for.
At the centre of the property debate, of course, is the introduction of a so-called ‘mansion tax’ on homes valued above £2 million. It is a politically charged policy that had been hotly debated in the press, and now that it has arrived, its design is both predictable and consequential. The surcharge is structured to mirror council tax bands: £2,500 per year for properties valued between £2 million and £2.5 million, rising in stages to a maximum of £7,500 for homes worth £5 million or more. Implementation will not begin until April 2028, following a revaluation of high-value homes.
It is no surprise that this measure disproportionately affects London and the South-East. In many central postcodes, £2 million buys not extravagance but a decent, if unremarkable, family home. The threshold captures a broad and complex picture – from global investors to retirees who bought their property decades ago and have seen their local markets soar far beyond what their incomes reflect.
Yet for our clients purchasing at the upper end – £5 million and above – the annual levy of £7,500 is unlikely to be a deterrent. To be candid, many had been bracing for more severe measures. In this sense, the Budget may even be received as a relief. But while some buyers may take this in their stride, the behaviour of sellers remains the greater unknown. Some may feel newly emboldened to hold their price, reasoning that the long run-up to implementation removes any inclination to negotiate.
And that long run-up raises another question – one several clients have already put to me directly: has the Chancellor been bold enough? By pushing implementation of the surcharge to 2028, Reeves has given herself and the market time, but she has potentially also created a two-year window for uncertainty to accumulate. If revenues fall short, or if political winds shift, she may be forced to revisit property taxation in next year’s Budget, potentially with sharper measures. The market absorbs a single shock far more cleanly than a series of speculative tremors.
We should also expect some behavioural shifts. Owners of high-value homes who had been weighing whether to downsize may now see clear motivation to transact before 2028, avoiding a recurring annual levy that might otherwise chip away at their financial planning. A wave of such sales could release supply at the top end and, in turn, cool prices that have remained stubbornly insulated from the broader market slowdown. For buyers seeking large family homes or prime assets, this could finally unlock opportunities that have been scarce for several years.
But there is a less discussed and potentially overlooked group: asset-rich, cash-poor owners who cannot or do not wish to sell. For them, the so-called mansion tax may land less like a wealth surcharge and more like a second inheritance tax. While the option to defer payments until a sale provides relief in the short term, it shifts the burden onto heirs, altering the long-term economics of holding high-value property. This group forms part of the “squeezed middle”: owners whose homes have risen dramatically in value, often through no strategic decision of their own, but whose incomes do not match their postcodes.
Despite these complexities, the Budget’s broader impact on market sentiment should not be underestimated. Our economy depends on a housing market that moves – one that allows people to change jobs, start families, downsize, invest and plan. Transactional activity stimulates dozens of industries: construction, architecture, design, removals, retail, finance and more. When sales volumes rise, developers build more. When developers build more, the ladder becomes climbable again.
It is worth remembering, too, that the top end of the property market contributes disproportionately to the wider economy. Encouraging movement here is not an indulgence of the wealthy; it is an economic strategy. High-value transactions generate tax receipts, but they also create liquidity and confidence – two ingredients the housing sector has been sorely lacking.
The Reeves Budget is not radical. It is not without flaws. But after a year defined by hesitation and speculation, it offers clarity – and for many buyers and sellers, this will be enough for them to re-enter the market with purpose. The Chancellor may yet find that her mansion tax has done more to energise the market than to inhibit it.
For now, the early signals are encouraging. Clients who had paused are now progressing. Negotiations have restarted. And if sentiment continues to stabilise, 2026 may be the year the prime property market regains its momentum – not in spite of the Budget, but because of it.
Will Watson is Head of The Buying Solution
For news, expert commentary and invaluable property insight, subscribe to The Insider, our quarterly newsletter, here.
