Autumn Budget 2026: Highlights

Below, we feature two perspectives on the Autumn Budget 2026:

• Living – by Huseyin Huseyin, Partner, Real Estate
• Business Rates, the High Street and Hospitality – by Jason Tann, Partner, Real Estate

Living:

When the Government delivered its long-anticipated November Statement last week, the property sector waited to see whether its call for genuine reform would finally be answered. The hope was for a framework capable of shifting the dial on supply, affordability and long-term development viability. Instead, what emerged was a narrow suite of measures aimed squarely at wealth at the top end of the market. Changes that will have an impact on the economics of prime residential and rental-led schemes but leave the broader structural issues entirely untouched. While this may raise additional revenues and attempt to level perceived inequalities in tax burdens, it does little to address underlying challenges in housing supply or the economics of housing development.

Those operating in or considering high-end residential development and luxury homes must now factor in new long-term costs. Projects will need tighter financial modelling, with greater stress-testing for yield, resale demand and holding costs. 

On the positive side the Statement avoided any additional developer taxation. Volume developers, affordable housing providers and SME house builders will likely find their business models remain broadly unaffected.  Instead, the Government chose to focus on: 

• An annual surcharge on homes valued above £2m.

• Higher taxation on rental income.

These are changes designed to be visible, easily explainable and politically motivated but they do not constitute the structural reset that the housing market requires.

A missed opportunity for genuine reform

What is most notable is the absence of measures addressing the practical barriers to housing delivery. With the Government still expecting 1.5 million homes to be delivered in this Parliament we did not see any policies to:

• Clarify how long-term housing targets will be met.
• Introduce any delivery mechanisms to achieve these targets.

A Budget that nudges

• The Government has delivered a Statement that is targeted, politically symbolic and fiscally sound but not one that fundamentally grapples with the housing crisis.
• Developers will recognise this Statement as yet another instance in which the Government chose politically palatable adjustments over meaningful reform.
• Developers specifically in the luxury and rental-led sectors will feel the impact most acutely, while national house builders and developers may find the landscape largely unchanged.

Sadly, the question of how the UK will meaningfully boost supply, support delivery, unlock land and create a modern planning system remain unanswered. Attention now turns to the Planning and Infrastructure Bill currently progressing through Parliament with royal assent expected imminently. Will this Bill provide the structural reform and catalyst to deliver the Government's ambitious housing targets?

Other living highlights

Luxury Homes Face New Annual Surcharge

From April 2028, England introduces a “Mansion Tax” on properties valued above £2 million. Charges start at £2,500 per year for homes between £2.0–£2.5 million and rise to £7,500 for those over £5 million. For housebuilders, this adds a recurring cost for buyers of ultra-prime homes, potentially softening demand for high-end new builds, second homes, and luxury schemes. 

Rental Tax Hike Hits Yields

From April 2027, rental income will be taxed at higher rate; 22% for basic, 42% for higher, and 47% for additional taxpayers, up two points across the board. This erodes net yields for landlords and could dampen appetite for small-scale buy-to-let purchases, reducing demand for developer-built rental units. Expect investor focus to shift toward large-scale build-to-rent projects, where professional management and economies of scale can better absorb tax pressure. Potentially creating new opportunities and partnerships for housebuilders aligned with institutional investors.

Stamp Duty Stays Put

The November Statement leaves stamp duty land tax unchanged, meaning upfront costs for buyers remain high. An unchanged landscape will provide stability but with no fiscal boost to affordability transaction volumes are unlikely to increase. 

No Big Push for Supply

Despite speculation, the November Statement did not deliver any sweeping measures to tackle housing supply. There are no new grants or tax reliefs to accelerate volume building or ease systemic constraints. Strategic land, partnerships and private funding will remain critical levers for growth.

Business Rates, the High Street and Hospitality:

The Budget set out the new business rates multipliers first provided for in the 2024 Budget and which will take effect from April 2026.  There will be 5 new multipliers taking the place of the current 2 with reduced rates for smaller retail, leisure and hospitality (RHL) premises.  All of the rates, including the high-value multiplier for all properties with rateable values above £500k, which Reeves hopes will target the large sheds of on-line retail, are lower than the current applicable multiplier.  However, as the new rates will coincide with a revaluation of rateable values next April (with some anticipated substantial increases) and the end of post-Covid reliefs for hospitality there are likely to be significant tax increases across the board.  There are some reliefs (including for some of the largest ratepayers whose tax is calculated on a different basis) and short-term caps on the potential increases but even the smallest RHL business could find its bill increasing.

A call for evidence was announced on certain aspects of business rates that were identified in the "Transforming Business Rates Interim Report" for the Government of September this year.  This is welcome in looking further at some of the problems with business rates including its impact on investment particularly on the high street.  However, as there has been little more than tinkering in its first two budgets resulting in an increased tax burden for most of the sector the policy direction overall seems a far cry from the Labour manifesto promise to replace business rates.

For the hospitality sector a further preliminary blow was struck just before the Budget by the announcement of the introduction of the right for England's mayors to introduce a tourist tax on overnight vistor stays.  Coupled with no response whatsoever on the calls to bring back a scheme to enable VAT free shopping to attract overseas tourists and next year's business rates hikes will leave hospitality wondering whether the sector is part of the Government's stated growth agenda.