Autumn Budget 2026: what it means for Real Estate

The Budget provided further support for housing delivery and first-time buyers but also higher taxation for individual landlords and targeted changes to property taxes, capital allowances and business rates. Several measures will not take effect until 2027 or later and remain dependent on implementing legislation. 

What does the Budget mean for housing delivery?

The headline housing announcement is an additional £1.5 billion for the Social and Affordable Homes Programme. The government expects this to support around 10,000 additional homes in England, with funding prioritised towards social rent and, in particular, council housing. This takes total capital investment in social and affordable housing to more than £40 billion over ten years.

The package is supported by a one-year extension of preferential Public Works Loan Board (PWLB) borrowing for council housebuilding, at 40 basis points below the normal rate. This should provide some additional headroom for local authorities, although delivery will continue to depend on land availability, planning capacity, construction costs and the viability of individual schemes.

Following representation from the industry, a new VAT zero rate will apply from 1 April 2027 to qualifying land supplied to registered social housing providers. By removing the need to structure disposals around the ‘golden brick’ stage, the measure should reduce funding and cashflow friction and is welcomed by the industry.  Care will need to be taken regarding mixed-tenure developments, onward disposals and any change in intended use.

A new route onto the housing ladder 

A new £4.7 billion ‘Your First Home’ equity loan scheme will provide government equity loans of up to 20% for eligible first-time buyers in England. The scheme is intended to support around 70,000 households and an estimated 20,000 new homes.

• Household income caps will be £110,000 outside London and £140,000 in London.
• Property price caps will be set by reference to local authority median prices, with caps of £650,000 in inner London and £500,000 in outer London.
• Buyers will generally need a deposit of at least 2.5%, with a maximum deposit of 15%.
• The equity loan will be interest-free for five years, with interest increasing gradually after that period.

Pre-registration is expected by the end of December 2026, full applications from February 2027 and the first loans from April 2027. Developers will be expected to contribute towards the scheme, with the contribution set on a sliding scale intended to protect smaller developments. That contribution will need to be factored into scheme appraisals and sales strategies.

From April 2029, a new First Time Buyer ISA will replace the Lifetime ISA for new savers. It will provide a 25% government bonus on qualifying withdrawals, capped at £20,000, for homes worth up to £450,000. Existing Lifetime ISA holders will remain within the current regime. From 29 October 2026, where a first-time buyer withdraws Lifetime ISA savings to buy a property costing more than £450,000, the withdrawal charge is reduced from 25% to 20%. The £450,000 property price cap itself is unchanged, and the reduced charge does not apply retrospectively. These measures should assist with the viability of new housing developments and  further support the government’s housing objective. 

High Value Council Tax Surcharge: more detail, but no retreat

The High Value Council Tax Surcharge will apply from 1 April 2028 to owners of residential properties in England valued at £2 million or more by reference to 2026 values. Annual charges will range from £2,500 for properties valued between £2 million and £2.5 million to £7,500 for properties valued above £5 million. At this stage, there is no proposed non-resident surcharge.

However, a 100% premium will apply where an in-scope property has been left empty and unoccupied for at least 12 months. Owners of high-value residential property should therefore start considering how the surcharge interacts with vacancy periods, refurbishment programmes, probate situations and properties that are difficult to sell or occupy. The detailed eligibility criteria for deferral and relief will be critical for owners who are asset-rich but have limited liquidity. Further consideration may also be required regarding the payment of this tax where complex structures exist, such as trusts and leasehold interests.
Higher tax rates for individual landlords

From 6 April 2027, each rate of income tax applying to property income will increase by two percentage points. The property basic, higher and additional rates will become 24%, 44% and 49%, respectively, across England, Wales and Northern Ireland.

The change increases the pressure on individual landlords already managing financing costs, regulatory change and Making Tax Digital obligations. It may renew interest in incorporation, but incorporation is not a simple tax-rate comparison. Capital gains tax, Stamp Duty Land Tax, refinancing, existing losses, interest deductibility and the commercial terms of moving properties into a company all need to be considered before any restructuring.

For non-resident landlords and registered letting agents, current legislation dictates that withholding tax is applied (unless clearance has been provided to pay gross) at the basic rate of income tax, which will remain at 20%. However, it is not currently clear whether the property income tax rate will need to be applied from April under the non-resident landlord scheme. This should be confirmed once legislation is published. 

Business rates: targeted support rather than wholesale reform

The Budget provides further relief for parts of the retail, hospitality and leisure sector in England from 1 April 2027. The main measures include:

• increasing relief for pubs, social clubs and all but the largest live music venues from 15% to 35
• increasing the rateable value threshold for 100% Small Business Rates Relief for qualifying retail, hospitality and leisure properties from £12,000 to £18,000, with tapered relief extending to £21,000
• capping qualifying retail, hospitality and leisure bill increases at CPI for 2027-28 and 2028-29, subject to specified exclusions
• removing the £150 and £300 Valuation Tribunal appeal fees for the 2026 rating list and future lists, with fees already paid for 2026-list appeals to be refunded.

These measures will help some occupiers, but they do not remove the wider concern that business rates remain a significant fixed cost linked to property occupation. Landlords and tenants should continue to model the allocation of rates risk carefully when negotiating rents, incentives, service charges and vacant possession strategies.

What Stamp Duty Land Tax changes were announced?

The Budget makes several targeted SDLT changes rather than changing the headline residential or non-residential rates.

First, SDLT on the rent element of assured tenancies in England will be removed with effect from 1 May 2026, following the Renters’ Rights Act 2025. The requirement to file an SDLT return solely because rent is payable under an assured tenancy will also be removed. Transitional rules preserve the SDLT treatment of tenancies entered before 1 May 2026, including SDLT already due, while preventing further SDLT on rent from arising as those tenancies continue.

Second, the SDLT group relief rules will be amended for transactions from 29 October 2026. The change is intended to ensure that relief can still be withdrawn where a purchaser leaves a group within the normal three-year clawback period, even if the vendor has been wound up.  This follows a recent tribunal case in which HMRC lost. Groups undertaking property reorganisations should therefore retain clear records and monitor post-transaction group changes notwithstanding the vendor’s subsequent liquidation or dissolution.

A separate SDLT relief has been introduced for the pooling of land and property into Local Government Pension Scheme (LGPS) asset pool companies. It applies to acquisitions by qualifying collective investment vehicles established or managed by LGPS asset pool companies for transactions with an effective date on or after 28 October 2026 and before 1 April 2032.

The Budget also provides a new process for regularising historic land transactions that were subject to stamp duty before SDLT was introduced in December 2003. Following the abolition of stamp duty to be replaced with Securities Transfer Tax, taxpayers will be able to make a return to HMRC and, once any stamp duty, interest and penalties due have been paid, obtain a certificate confirming that the relevant instrument is treated as duly stamped.

Capital allowances and development expenditure

Full expensing and Annual Investment Allowance remain unchanged. However, from 1 April 2027 (for Corporate Tax)/6 April 2026 (for Income Tax), the rate on the main pool will be reduced from 14% to 12%. In addition, for expenditure incurred on or after 1 January 2027, the first-year allowance introduced last year will increase from 40% to 50%. This will slightly increase the upfront deduction but slow down the rate at which the balance is given. 

The government will widen the capital allowances anti-avoidance rule in section 228G of the Capital Allowances Act 2001 for certain lease and leaseback arrangements. The amendment expands the relevant finance lease concept so that the rule can also apply where the lessee holds a relevant right-of-use lease. The change applies from 28 October 2026 and is designed to prevent the statutory restriction from being sidestepped because the accounting classification is not a traditional finance lease. Property groups entering sale-and-leaseback or lease-and-leaseback structures should review the capital allowances position at the term-sheet stage. Businesses should not assume that the commercial accounting treatment determines whether the tax anti-avoidance rule applies.

The government has also published its response on the tax treatment of predevelopment costs. Based on the response, HMRC is not looking to amend the legislation, with the next steps focussed on possible HMRC guidance and further consideration of capital allowances barriers affecting some infrastructure investment. Businesses should therefore continue to analyse predevelopment expenditure by reference to the existing rules, with particular care over abortive costs, capitalised professional fees and expenditure incurred before a qualifying activity is established.

For more information, visit our Autumn Budget 2026: Changes to capital allowances and land remediation relief insight.

Planning, brownfield land and regulation

Residential brownfield developments on sites of up to 1.5 hectares in England are to be exempted from Biodiversity Net Gain requirements. The government will publish the full consultation response, impact assessment and implementation timetable separately. This should reduce cost and complexity for smaller brownfield schemes, although developers will need to wait for the final rules before treating the exemption as available.

Following an earlier consultation, HMRC has confirmed it is not currently looking to make further reforms to Land Remediation Relief (LRR), but will provide updated guidance in due course and continue to work with interested stakeholders. 

The government has also said that it will avoid major changes to building regulations for the remainder of this Parliament, other than changes required for building safety and implementation of the Grenfell Tower inquiry recommendations. In addition, local planning authorities are to digitise and publish key planning documents as open data by the end of 2027, with the government’s PlanAssist AI tool intended to be available to all English councils by the same date, subject to testing.

Other points for the sector

Annual Tax on Enveloped Dwellings (ATED) charges will increase by 3.5% from 1 April 2027, in line with the September 2026 CPI. It is worth noting as well that FY27/28 will be the last year that the valuation undertaken for April 2022 will apply. New valuations will be required based on the April 2027 market price for FY28/29.

The government is also reforming the tax treatment of foreign sovereign investment. A new sovereign tax status regime will be introduced for states, heads of state and emanations of states, while bringing certain income and gains into direct taxation. Transitional provisions will include a time-limited SDLT relief for restructuring certain existing property holdings ahead of the reforms taking effect from 1 January 2029. Sovereign investors with UK real estate should therefore review existing holding structures well before the new regime begins.

Finally, the Budget confirms continued movement towards greater property-data transparency. HMRC is consulting on the collection and use of third-party property income data, while the UK remains committed to international exchange of readily available real estate information from 2029-30. Data quality, beneficial ownership records and consistency between tax filings and third-party reporting will become increasingly important.

Conclusion

Budget 2026 is more supportive of housing delivery than the previous year’s package, particularly through social housing funding, the VAT zero rate for qualifying land sales and first-time buyer support. However, it also increases the recurring tax burden on individual landlords and confirms the direction of travel towards greater taxation and transparency for high-value residential property.

For developers and investors, the key practical point is that many of the measures depend on detailed legislation or secondary regulations. Appraisals and transaction documents should therefore distinguish clearly between announced policy and reliefs that are already in force. Early review will be particularly important for social housing land sales, group reorganisations, leaseback structures and developments seeking to rely on the new proposed brownfield exemption.

To discuss how these measures could affect your business, please contact your usual Crowe advisor.