MARKET UPDATE
UK property market update for august 2025
October 22, 2025 • Author: George Radford
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As Autumn makes its presence felt in the UK, speculation over what Chancellor Rachel Reeves may or may not include in her Autumn Budget rises. In this article, we discuss what measures are being mooted, their plausibility and how - if at all - they might affect the UK property market for overseas buyers.
Autumn Budget Bingo: What might change?
1
Stamp Duty replaced or reformed by a new property tax?
Stamp Duty (SDLT) raised £11.6billion for the UK exchequer in the 2023-2024 tax year with residential receipts accounting for the majority of that at £8.57billion, which sounds a lot but it’s a mere drop in the ocean compared to the +£330billion that income tax generates.
Rumours abound that SDLT may be replaced with a proportional national (or local) property tax that would either be levied on transactions or as an annual charge on properties above a certain threshold (widely agreed to be £500k). It is hard to see how a new tax that will raise the same yield but also be politically acceptable will succeed. The government would be giving themselves a real technical and political challenge; SDLT, which affects four in five homeowners (Zoopla), is a highly sensitive issue that can swing elections. We imagine the government will proceed cautiously and defensively on this one.
2
Capital Gains Tax on primary residences for high value homes?
A tax aimed at the richer echelons of society, the government may choose to remove the main residence relief for CGT on properties above a certain threshold, (perhaps £1.5m). This will have a disproportionate effect on the south, and as a result may lead to some levelling up and further growth in property prices in the UK’s other regions. When considered in tandem with the above changes in SDLT, to have in effect a double tax on certain properties would be untenable. Probably about as popular as the Poll Tax and we all know how that ended up…
3
National Insurance on rental income?
One proposal is to subject income from buy-to-let (rental income) to National Insurance contributions, aligning it more with earned income. This would increase the cost of owning rental property, potentially squeezing yields for landlords. Critics warn that might translate to higher rents or exits from the rental market. Given that Labour had a manifesto promise not to increase National Insurance for “working people” and that every landlord we know is indeed, a “working person” this could be a thoroughly unpopular move that would result in electoral wipeout for Sir Keir and Rachel from Accounts.
4
Additional council tax/a new local property tax?
The Government may consider revaluing properties for council tax (the current system is widely seen as outdated) or gradually replacing council tax with a new local property tax based on current values or scales. New higher bands of council tax for expensive homes might also be introduced, but anyone who has lived in England over the past decade will attest that this is nothing new. English County Councils have been revaluing Council Tax bands for residences for donkey’s years. And, it’s not something that effects new build properties, more older residences in key areas of growth.
Are these changes plausible or not?
The political and economic system is still reeling from Liz Truss and Kwasi Kwarteng’s (remember them?) mini budget of three years ago and parliament’s muscle memory is sensitive. Given the cautious modus operandi of the PM, we anticipate that the budget won’t be as radical as the clickbait headlines will lead you to believe. If you would prefer a more nuanced take on the UK property market in 2025, then read on…We firmly believe that the UK still remains one of the safest ways to generate long-term revenue for property investors.
The RPA View: Is the UK still a good place to invest in?
1
Chronic Undersupply & Strong Demand
UK Housing Crisis
The UK has a long-running housing shortage. Demand, driven by new households, population growth and migration, continues to outstrip new supply. A report published by the Centre for Cities catalogues 6.5million missing homes, a target that wouldn’t be satisfied in half a century – and that’s if you were building 300k houses a year. The actual delivery of UK homes is a lot lower than that, at an all time low since World War II and it’s this that has contributed to the upward pressure on rents, with rental stock remaining tight – a key benefit for landlords and investors.
London has a shortage of 1.1 million homes which is a colossal deficit. Great Britain has the second worst rate of homes per 1000 people in Europe. There are 446 homes per 1,000 people compared to 560 in France and 516 in Germany.
The truth – we’re not even meeting half of our housing demand.
2
Price & Rental Growth Potential
Even with pre-budget uncertainty, property values in many parts of the UK are expected to continue growing modestly, particularly in the sub £500k category – which is prime investor territory. Rental inflation remains strong in many areas, giving stable income returns, particularly in new-build and build-to-rent developments which achieve premium rentals compared to older stock.
The truth – average UK house prices increased by 4% between May 2024-2025, outperforming any forecast.
3
Regulatory & Institutional Support For Property
The UK government (and local authorities) repeatedly highlight affordable housing and residential development as priorities. That creates opportunities for investors in new-build schemes, especially with the proposed planning reforms which are expected to boost the development pipeline. Institutional investment into build-to-rent and residential asset classes remains strong. The build-to-rent market shows the highest rental increase of any property asset class over recent years. Individual landlords can seek to emulate this success by buying in quality new developments that offer the same exclusive resident facilities.
The truth – the UK is no longer a nation of homeowners, but one of renters. The tenant never been so large.
4
Regional Opportunity & Diversification
For the past five years we’ve seen regional growth outpace the UK’s more traditional markets of London and the South East. Many regional cities (Manchester, Birmingham and Newcastle) are benefitting from affordability-driven demand and are showing strong capital and rental yield potential, a trend that may intensify if the government chooses to put higher tax levies on high-value properties that will hit the London market harder. That said, it’s still possible to buy in London under the £500k threshold – and so we may see turbo-charged growth at the lower end of the market. Investors can pick locations with better entry valuations, higher yields and lower purchase price per square metre - and the tenant demand remains incredibly strong.
The truth – regional plays may offer more rapid growth in the shorter to medium term, but London and the south remain a quality long-term investment with enduring global appeal.
5
Stability, Legal Transparency & Global Appeal
The UK property market offers the strongest legal protections with its established conveyancing systems, clear title registration and transparent regulated processes. Its currency, financial infrastructure and regulatory standards make it appealing to overseas investors looking for safer more stable long-term real-asset exposure. And, despite ups and downs, UK property has shown resilience through past shocks (the 2008 financial crisis, Brexit and inflation scares) compared to some less mature markets. This gives investors a lot of liquidity compared with property investment in other markets where market timing is way more crucial to come away with the money you invested.
The truth – the UK’s legal and political system are a lot of the reason the UK market continues upwards in a steady exponential curve, as opposed to the peaks and troughs of less mature nascent markets.
We’ll be producing a full update for our clients and subscribers covering all the ramifications of the 2025 UK Autumn Budget on 4th November. In the meantime, as ever, we’re here to field any questions and conversations you may have about property investing in the UK and beyond.
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About the author
George is the co-founder of RPA Group and Managing Director of the business in the UK and Africa. A qualified chartered surveyor (MRICS) with almost 20 years of property investment experience, George has helped his clients successfully grow and strengthen residential property portfolios in multiple markets and territories.
Managing Director
GEORGE RADFORD
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