The latest UK Budget has delivered some major shifts for property owners, landlords, and anyone planning to purchase a home.
Below is a clear breakdown of what’s changing, how the market has reacted, and what buyers should be thinking about over the next few months.
1. UK Budget Impact on Property
Buy-to-Let Landlords
Landlords with properties in their personal names will feel the most immediate impact. From April 2027:
- Basic rate tax on rental income increases to 22%
- Higher rate moves to 42%
- Additional rate rises to 47%
Importantly, mortgage interest relief will also rise to 22%.
This measure, combined with the existing 5% additional property stamp duty, signals a strategic push away from individual private landlords and towards large corporate ownership.
New “Mansion Tax” from April 2028
A new annual charge will apply to properties valued above £2 million. This is how the bands will work:
- £2M - £2.5M: £2,500 per year
- £2.5M - £3.5M: £3,500 per year
- £3.5M - £5M: £5,000 per year
- £5M+: £7,500 per year
High-value homes will now carry an ongoing tax burden that buyers should factor into long-term affordability.
2. Mortgage Market Outlook
Immediate Buyer Response
The property market reacted quickly after the Budget. Purchase enquiries jumped sharply, with many buyers who had paused their plans now resuming them. This surge reflects growing confidence and the expectation that borrowing costs will continue to ease.
Fixed Rates Are Falling
Following the Budget announcement, the bond market responded positively. Yields fell by around 5 basis points (0.05%), reducing funding costs for lenders:
- 2-year fixed funding costs: ~3.3%
- 5-year fixed funding costs: ~3.63%
As a result, the lowest 2-year fixed mortgage rate now sits at approximately 3.55%, making shorter-term fixes more attractive again.
Bank of England Rate Expectations
- Next BoE Meeting: 18 December
A rate cut below 4% is possible if market conditions remain stable. - Looking Ahead to 2026:
Forecasts suggest the base rate could fall to around 3.5%, approximately 0.5% lower than today. This would continue easing pressure on both residential and landlord borrowing.
3. Key Advice for Borrowers
Whether you’re buying or remortgaging, one strategy remains essential:
Secure Your New Fixed Rate Up to Six Months Early
Most lenders allow mortgages to be secured six months before the end of your existing fixed rate. Doing this gives you two major advantages:
- Protection if rates rise - you’re locked in.
- Flexibility if rates fall - you can switch to a lower rate with the same lender.
Given the pace of market movement, this approach offers the best of both worlds.
Final Thoughts
The Budget has created a mixed landscape: tougher conditions for landlords but improving opportunities for homebuyers. With fixed rates edging down and the potential for further Bank of England cuts, the next few months could offer strong value for those prepared to act early.
If you’d like tailored guidance or want to review your upcoming remortgage window, we’re here to help.
