As the Chancellor prepares to deliver the Autumn Budget, the property investment market is on high alert. With rising public finances pressures and a priority on housing, tax and growth reforms, there are several possible changes that could influence your property portfolio.
Key Areas Under Pressure
Several policy options are already being flagged by analysts and think-tanks:
1. Potential Replacement or Reform of Stamp Duty Land Tax (SDLT)
There is speculation about replacing the transaction tax (SDLT) with a new national property levy, potentially based on current market value or levied only upon the seller. The existing SDLT is widely criticised for “clogging up” the property market by deterring necessary property moves and sales.
2. Capital Gains Tax (CGT) on Primary Residences
A major proposal involves ending or significantly reducing the Capital Gains Tax (CGT) exemption (Principal Private Residence Relief – PRR) on main homes. This measure would typically target properties valued above a high threshold, signalling the government’s willingness to target property wealth as a revenue stream.
3. Council Tax & Local Property Tax Reform
The government is considering replacing the fundamentally outdated Council Tax system (based on 1991 valuations) with a new, market value-based Local Property Tax. This would necessitate a full national property revaluation, resulting in higher bills for properties in areas that have experienced rapid price growth since 1991.
4. National Insurance (NI) on Rental Income
There is talk of introducing a levy—structurally similar to National Insurance (NI) contributions—on income derived from residential property rentals. As rental income is currently classified as investment income, this move would impose a substantial new tax burden on individual landlords, seeking to equalise the tax treatment of ‘earned’ and ‘unearned’ income streams.
Implications for Investors with Property Portfolios
What does all of this mean in practical terms for you as a property investor?
- SDLT Replacement (Seller-Paid Tax): Signals that the tax on disposal is about to increase. This may create a rush to sell assets now to beat the future higher cost, ultimately reducing the final net capital received when you sell.
- Location and property type will matter more: With higher taxes on higher-value homes and more scrutiny on premium segments, growth potential may lie in well-selected regeneration zones or rental assets that aren’t in the highest value tiers. This cements our strategy of not targeting areas that are already expensive, like several areas of London.
- Exit strategies may need revisiting: If CGT on main homes is extended or other taxes apply on disposal for investors, your hold period, refurbishment strategy, and the timing of sale become even more critical. It’s probably too early to tell what this might mean for property investors, though.
- Compliance and cost control will increase in importance: Any new local property tax or landlord-tax will make running costs higher — so entering new builds or low-maintenance assets may become more attractive as they are less likely to have rising maintenance costs.
- National Insurance (NI) on Rental Income: This is a direct tax increase, estimated to reduce net yields by 1% to 2% for personal landlords. This pressure forces landlords to increase rents or sell off marginal properties due to unviability. It looks like this will only be for investors who own property in their personal name, again focusing on professionalising the sector.
What Frater Recommends Right Now
At Frater, we’re advising our clients to:
- Don’t make any knee-jerk reactions. This could all just be rumours right now. Wait until we have all of the information so we can make informed decisions.
- Stay informed and work with experts- These policy changes are still speculative, but could happen. Having a trusted advisor (like Frater) keeping track of updates gives you a strategic edge.
Final Word
The Autumn Budget may bring sweeping reforms for property — from taxes on selling, to local levies, to how landlords are taxed. While none of these are confirmed yet, the signals are clear.
For property investors, the message is simple: do not assume nothing will change, but avoid making decisions without thought through planning. Instead, review your plan, act strategically, and choose assets and locations that will perform in the new environment.
At Frater Property Partners, we continue to monitor policy shifts closely and will guide clients through how to adapt portfolios for the future.
If you’d like to discuss how your current portfolio might be impacted or explore future-proof opportunities, feel free to get in touch. https://fraterpropertypartners.com/contact/
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