Spades in the ground? Cranes in the sky? The real impact of the Autumn Budget on real estate

The speculation and rumour mill ahead of the Budget injected a layer of uncertainty at a time when many in the real estate sector were hoping for clarity and momentum.  Despite Rachel Reeves’ pledge to ‘put spades in the ground and cranes in the sky’, the anticipated lift-off hasn’t quite materialised.

Investors / landlords

From April 2027, property income will be taxed under a new set of standalone rates, separate from savings and dividend income:

• Basic rate: 22%
• Higher rate: 42%
• Additional rate: 47%

From April 2026, dividend income rates will also rise by 2%, with the exception of the additional rate, which remains unchanged:

• Ordinary rate: 10.75%
• Upper rate: 35.75%
• Additional rate: 39.35% (unchanged)

Over the past decade, landlords have faced a growing list of financial and regulatory pressures—from the SDLT surcharge and reduced CGT allowances to changes in mortgage interest relief. The introduction of the Renters’ Rights Act is the latest challenge for the sector. The forthcoming increases to income tax will add yet another layer of financial strain at a time when operating costs continue to rise.

As returns are squeezed further, more landlords may choose to exit the market. This could reduce rental supply and, ultimately, contribute to higher rents for tenants.

Development / Planning

The Budget sets out a series of planning and development measures aimed at accelerating delivery and strengthening local capacity across the system.

A headline £48 million has been allocated to boost resources in the planning system, including expansion of the Pathways to Planning Graduate Scheme and the creation of a new Planning Careers Hub to retrain mid-career professionals, with the ambition of bringing 1,400 new recruits into the sector by the end of the Parliament.

Broader Budget and OBR context tempers the headline announcements. The OBR expects the impact of planning reform to emerge only gradually, with most uplift in housing delivery not materialising until the late 2020s. Productivity forecasts have been revised down, and the message is clear: real-world delivery will depend heavily on capacity within both the public and private sectors, not simply on policy announcements.  Alongside this, the Government has reiterated its ambition to deliver 1.5 million homes this Parliament, supported by the £39 billion Social and Affordable Homes Programme, the £16 billion National Housing Bank and the commitment to deliver three new towns.  NPPF reforms could increase annual housebuilding by up to 30% by the end of the decade, though only if site release and build-out can keep pace.

A significant shift towards regional autonomy also continues to shape the landscape. Flexible funding via integrated settlements worth at least £13 billion, a new £902 million Local Growth Fund and around £7 billion through the successor to the Affordable Homes Programme give mayoral authorities far greater influence over strategic development decisions. For promoters and housebuilders, early engagement with these bodies will become increasingly important. At the same time, viability pressures persist. Although the Government has avoided measures that would push development costs higher, ongoing financing pressures, construction inflation and labour shortages continue to challenge delivery. Even with projected regulatory savings of £300 million under the forthcoming Planning and Infrastructure Bill, the OBR notes that shortages of deliverable sites remain a material barrier to growth.

The Budget also confirmed the roll-out of the £500 million Mayoral Revolving Growth Fund, which will be allocated to the Mayoral Strategic Authorities across Greater Manchester, the West Midlands, Liverpool City Region, the North East, West Yorkshire and South Yorkshire. Designed to tackle one of the greatest barriers to regeneration (access to finance) the fund enables central government and elected metro mayors to share financial risk on major local projects. By providing flexible investment for schemes that might otherwise struggle to get off the ground, the fund is intended to accelerate development, unlock stalled sites and support long-term economic growth across key city-regions.

Additional infrastructure commitments include an extra £891 million for the Lower Thames Crossing, one of the country’s most significant transport schemes, and £4.2 million to bring brownfield land in Port Talbot back into productive use, supporting the emerging Harbourside Innovation District, aligned with the Celtic Freeport, and is intended to unlock further private and public development in the region.

Finally, tucked away at the end, the Government signalled a forthcoming consultation on reforming the VAT treatment of land intended for social housing, aimed at incentivising development and reducing barriers to delivering much-needed affordable homes.

Homeowners

Homeowners selling properties over £500,000 will welcome the fact that the rumoured annual property tax has not appeared in this year’s budget. With hopes that long-term interest rates will stabilise and support mortgage affordability, this may help stimulate renewed interest and greater resilience in the mid-market.

The Budget did, however, introduce the anticipated “Mansion Tax.” From April 2028, homeowners with properties valued at over £2 million will face a £2,500 surcharge, rising to £7,500 for those with homes worth more than £5 million. This could influence mid-market dynamics, as some high-end buyers may choose properties that fall below the surcharge threshold. In turn, this may trigger a domino effect on the availability and demand for homes in price brackets below £2 million.

Retail and leisure

The Budget confirmed long-term support for the retail, hospitality, and leisure sectors by making lower business rates permanent. With a higher value multiplier applied to distribution centres and warehouses, alongside the introduction of a new customer duty on parcels of all sizes, the measures signal a clear intent to protect the high street from the dominance of online giants.

While these changes will be welcomed by bricks-and-mortar retailers, consumer behaviour has shifted significantly—and only time will tell whether these interventions will generate meaningful, lasting impact.

Conclusion

For investors and housebuilders, the Chancellor’s initial rhetoric signalled intent and ambition, but the reality was more muted. In terms of property, the Budget offered limited substantive policy change.  The practical needs of the real estate sector were pushed down the agenda, leaving the market caught somewhere between expectation and disappointment.  That said, the measures announced — particularly those focused on boosting planning capacity and supporting long-term development — may still have meaningful implications for our clients.  Additional resourcing in the planning system has the potential to unlock stalled sites, speed up decision-making and create more certainty for landowners, developers and investors. If effectively implemented, these changes could stimulate renewed investment activity and bring forward opportunities that have been constrained by capacity issues. From a legal perspective, we anticipate increased demand for strategic planning advice, land promotion structures, development agreements, and estate-wide legal strategies as the sector responds to a system that may finally gain some much-needed momentum.

How we can help

If you’d like to discuss anything in this article further, please get in touch with our real estate team.