The Chancellor’s latest Budget delivered a series of announcements with clear implications for those operating in prime and super-prime London. While sentiment has been dominated by speculation in recent weeks, today’s statement brings clarity across taxation, lettings, and investment activity, all of which will shape the conversations agents are having with buyers, sellers, landlords and tenants over the months ahead.

1. Higher tax on rental and property income (from April 2027)
Income tax applied to property income (e.g., rental income) will rise by 2 percentage points across all bands from April 2027:
Basic rate on property income rises from 20% to 22%

• • • • • Higher rate rises from 40% to 42%
        • Additional rate rises from 45% to 47%

The OBR expects this to place downward pressure on house prices (around 0.1 percentage points annually from 2028) and to contribute to a reduction in rental supply over time.

2. New annual surcharge for properties valued over £2 million (from April 2028)
A significant announcement for the prime and super-prime market is the introduction of a new high-value council tax surcharge, impacting properties valued at over £2 million (in 2026 prices) by the Valuation Office.

The surcharge will be recurring annually and charged as follows:

• • • • • £2,500 for homes valued between £2m–£2.5m
        • Rising to £7,500 annually for homes valued at £5m+ (uprated each year by CPI)

3. House prices and transactions: steady growth, structurally lower turnover

The OBR expects:

• • • • • UK house prices to rise from £260,000 in 2024 to just under £305,000 by 2030, with just under 3% growth in 2025.
        • Transactions to increase from just under 1.1 million in 2024 to around 1.3 million by 2029, but 155,000 fewer per year than forecast in March.

What This Means for Prime London
This Budget reinforces a landscape of higher holding costs and greater fiscal pressure on property owners, particularly landlords and owners of homes above £2 million. But it also removes some of the uncertainty that has muted activity in recent months.

For agents operating in prime and Prime Central London, clear, data-driven advice is more important than ever. LonRes will continue to provide the real-time market intelligence, transaction insights and postcode-level analysis you need to guide clients with confidence.