The UK housing market is delicately balanced in 2025, and landlords are watching closely as Chancellor Rachel Reeves looks to potentially raise billions from property taxes. With income tax, VAT, and national insurance ruled out, rumour has it that her focus has turned to stamp duty, capital gains, and even council tax reform. The next year could bring higher costs and tough decisions for landlords and property owners.
What stamp duty changes mean for landlords
Reeves has already raised the surcharge on additional homes from 3 percent to 5 percent, a move she expects will raise £1.2 billion by 2030. For landlords, this extra cost makes new buy-to-lets more expensive and can discourage portfolio growth.
The impact of stamp duty changes on UK house prices is already being felt. Savills reports that prime coastal second home values dipped 1.4 percent in the final quarter of 2024 as higher taxes cooled demand. If Reeves raises stamp duty further or lowers thresholds, landlords will need to think carefully before expanding.
Could a new national property tax arrive?
One idea that is apparently gaining traction with a resident of Number 11 Downing Street is a national property tax on homes worth more than £500,000. In practice, this would affect a large share of London and South East properties. For landlords, it could mean paying an annual levy or a charge at sale, reducing profitability and freezing some transactions altogether. Critics say such a measure would jeopardise the UK property market and deter investment.
Capital gains tax and the sale of property
Landlords currently pay up to 28 percent capital gains tax when selling a second home. Reeves is said to be exploring whether the private residence exemption could be reduced or capped for high-value homes. This would be a huge political gamble, but even small changes to CGT rules would alter the timing of sales. Landlords may choose to hold onto rental income for longer, but that exposes them to future tax hikes.
Plan Insurance can accommodate your Property Owners & Landlord Insurance needs. Just fill in our short call back form, and our professional brokers will be in contact to arrange your insurance.
Will council tax finally be overhauled?
The current council tax system is based on 1991 property valuations. Many analysts argue that it is outdated and unfair. The Guardian recently reported that Reeves could look at modernising the bands or replacing council tax with a proportional property tax. This would hit landlords with properties in fast growing areas hardest. Even modest changes could raise annual costs significantly, especially for those with multiple properties.
Why the UK housing market is cooling in 2025
Affordability remains stretched, mortgage rates are high, and the uncertainty around taxation is weighing heavily on sentiment. The RICS July 2025 housing market report highlights subdued sales and falling buyer enquiries. The UK house price growth forecast for 2025 suggests little or no growth, with the latest house price index showing regional variation but no strong upward momentum.
For landlords, this environment means relying on steady rental demand rather than rapid capital growth. Rising taxes may reduce the number of landlords in the market, which could push rents higher, but profitability is still being squeezed.
Landlords adapting to new pressures
According to the Financial Times, many landlords now earn under £10,000 annually from their properties, and a quarter are planning to exit the market. Others are restructuring their portfolios, with more than 400,000 buy-to-let firms now active in the UK as landlords move properties into company structures to manage tax more efficiently.
The Rightmove results underline the tension. Online interest remains strong, but transactions are down. These Rightmove revenues and housing demand trends show that while tenants and buyers are browsing, the uncertainty around taxes is potentially resulting in them holding back on decisions.
What should landlords be considering?
The UK property market is shifting from a question of prices to a question of policy. For landlords, preparation is key:
- Review the potential impact of higher stamp duty surcharges before expanding.
- Consider the risks of a national property tax or higher CGT.
- Factor in possible council tax changes when budgeting any annual costs for unlet periods.
- Focus on rental yields rather than short-term price gains.
Policy will drive the market
Speculation over Rachel Reeves’s potential property market shakeup is just the start of a wider debate about how property is taxed in Britain. From stamp duty surcharges to the possibility of a proportional property tax, the choices made in 2025 will shape landlord returns for years to come. For now, the message is clear: The UK housing market remains turbulent, and landlords’ contingency plans should include forecasting for a future where tax policy, not rising prices, might define profitability.
Find out why 96% of our customers have rated us 4 stars or higher, by reading our reviews on Feefo.