Budget uncertainty is sending fresh jitters through the housing market, with buyers pausing purchases, sellers delaying listings and agents reporting a sharp dip in confidence as the chancellor prepares her statement tomorrow.
Months of speculation over potential tax changes – from a possible mansion tax to reforms of council tax and stamp duty – have left homeowners and would-be movers unsure of what comes next, slowing activity across the country, and there could yet be worst to come. And with decisions still pending, the worst may yet be to come.
Paula Higgins, CEO of HomeOwners Alliance, said: “This Budget process has been chaotic. Six months of public brainstorming has drained confidence from the housing market, paralysing activity and leaving homeowners anxious. The housing market thrives on confidence and it’s clear to us that confidence has been the silent casualty.”
On inheritance tax proposals, Higgins believes that Reeves must face reality.
She explained: “For millions, the Bank of Mum and Dad is the step up to homeownership. Restricting gifting won’t level the playing field – it will pull the ladder up and lock more young people out of owning a home.
“Our recent research shows 54% of homeowners with adult children have or expect to help them buy; half wish they could do more; and one in four already feels guilty they can’t. This proposal will make this situation worse.”
If a mansion tax is introduced, in the form of a 1% levy on properties worth at least £2m, with an annual charge of 1% of the amount over that threshold, there must be a long lead-in time, according to Higgins.
“Homes are people’s security, often their pension,” she continued. “Many people have prioritised owning a home over all else and are asset-rich and income-poor; they would struggle to afford a sudden new annual charge. A ‘mansion tax’ also hits ordinary family homes in London and the South East far more than the rest of the UK.”
On proposals to hike council tax for bands F, G and H, “homeowners feel like sitting ducks”, she went on. “Homeowners in those bands are already paying significant amounts, and any further tax hikes risk punishing people whose incomes haven’t kept pace with property values, hitting families who are asset-rich but cash-poor.”
Most importantly, any attempt to raise council tax or introduce a mansion tax cannot be fair without a full, nationwide revaluation of homes.
Higgins added: “Council tax bands are still based on 1991 values. Trying to bolt new charges onto a 34-year-old valuation system risks huge distortions — punishing some households purely because their area has risen in value or they have invested in their home, while others with equally valuable homes escape. If the government wants fairness, it must first face up to the need to revalue the vast majority of the housing stock.”
“We welcome plans to replace stamp duty. We’ve campaigned scrapping stamp duty for over a decade because it’s a tax on aspiration and movement. But any replacement must be consulted on properly, with winners and losers clearly understood, so people can plan their finances. This toxic cycle of SDLT fiddling, with tweaks, holidays, exemptions etc with all the unintended consequences, needs to stop.”
Our clear ask to the chancellor is this: homeowners need stability, predictability and fairness. That means a full and transparent consultation on any changes to property taxation; a long-term, consistent framework that households can plan around; and if the government wants a fairer system, it must start with a modern revaluation rather than layering new taxes onto an outdated one. The country needs a housing tax strategy — not more policy made on the hoof.”
What does Rachel Reeves have planned for the property market ahead of the Budget?
