Autumn Budget 2026: key messages for homeowners, landlords and first-time buyers

The Savills Blog

Autumn Budget 2026: key messages for homeowners, landlords and first-time buyers

Even though it only applies to first-time buyers purchasing a new-build property, from a housing perspective by far the most important element of the Budget was the clarification of how the Your First Home scheme will operate.

Your First Home (but not until April)

The Chancellor announced that £4.7bn of funding has been set aside with the aim of helping around 70,000 first-time buyer households buy a new-build home in England. 

Income caps are higher than initially indicated, being set at £140,000 in London and £110,000 elsewhere.

Price caps are more nuanced: £650,000 in inner London, £500,000 in outer London and by reference to median local authority house prices elsewhere.

And the fact that the scheme will only come into play in April 2027 means the effect will not be immediate.

Some of those households will put off their decision to buy until then, leaving housebuilders with an uncomfortable period of low sales rates in the interim.

Less jam today with the promise of more jam tomorrow.

 

More pressure on landlords

Investors will have been particularly disappointed to see the income tax surcharge on property income increased from the previously announced 2% to 4% from the 2027-28 tax year.

Data from HMRC tells us that in the 2024-25 tax year there were 2.88m individuals and partnerships paying tax on property income, who could be affected. Those taxpayers were making an average pre-tax profit of £8,417 after total property expenses of £12,066, including £4,451 of residential finance costs. 

And with tax relief on those finance costs restricted for those holding property personally, it means that a normal 40% rate taxpayer would see the effective rate of tax on their net property income go from 50.6% to 54.6%.

That will further test their resolve to stay in the sector, particularly coming on top of the Renters’ Rights Act earlier in the year.

As such, it runs the risk of further restricting rental supply, adding to the upward pressure on rents and reducing the choice available to those looking for somewhere to rent.

 

High Value Council Tax Surcharge: Some Clarification

In the prime property market, we saw some clarification on the way the High Value Council Tax Surcharge will operate, though there was no change to the bands or the headline charges.

That means it will start at £2,500 for properties valued at between £2.0m and £2.5m, rising to £7,500 for £5m+ homes. 

Proposals for a non-UK resident surcharge have been shelved. Instead, the government has opted for a premium on homes which are “substantially unfurnished or unoccupied” for a period of 12 months or more, building on the approach already used for the empty homes Council Tax premium.

And the ability to defer payment among the “asset rich, income poor” will be limited to cases where:

    • The owner has a household income of £35,000 or less; or
    • the owner has capital savings of £16,000 or less; or
    • a member of the household meets disability criteria.

A test of economic credibility

Perhaps the biggest impact on the housing market will come from how the money markets respond to the new Chancellor’s pitch for financial responsibility.

What that means for gilt yields and the cost of mortgage debt will determine how much prospective buyers can borrow, whether they are able to move and their inclination to do so. That is only likely to become clear over the coming days and weeks, with little immediate change so far.

For what it is worth, the OBR has changed its outlook for house prices very little, forecasting average growth of 11.6% over the next four years. However, it has scaled back its projections for activity in the housing market by around 4% from the beginning of next year.

 

Further information

Contact Lucian Cook

 

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