'You simply would not move unless you had to': All the rumours about what The Budget could do to the property market in Britain — and what they'd mean for buyers and sellers

The last month or two have produced a constant stream of speculation about what Chancellor of the Exchequer Rachel Reeves has up her sleeve for the upcoming Autumn Budget. Some of it is educated guesswork. Some is wild speculation designed to stir up trouble. And quite a lot of it is — or appears to be — what's referred to as 'kite flying': the intentional leaking of the Treasury's back-of-the-envelope policy ideas, in order to gauge the strength of any potential backlash.

What seems pretty clear is that tax rises are on their way as Reeves attempts to plug a black hole in the public finances that could be as much as £40 billion. And it's equally clear that property is very likely to be an area where we see meaningful changes.

The results is that the market is being destabilised by uncertainty, prompting some house buyers to push ahead as quickly as possible to avoid any surprises, while encouraging others to sit back and wait to see what pans out.

We spoke to agents across the country about the situation, the rumours that are flying around, and the impact they could have. Where does the truth lie? And what are the things causing concern?

Hold off until things are clear, or rush through before any unpleasant changes?

The Budget is exactly two months away — it's happening on 26 November — and the thought of what might be coming next is taking its toll across the housing market. As Jamie Freeman, a buying agent at Haringtons UK, puts it, the ‘steady drip of rumours has brought activity grinding to a halt’.

Another buying agent, Ed Sainter, of Middleton Advisors, largely agrees. ‘The problem isn’t tax in itself,' he says. 'It’s the steady leak of speculation. With no certainty about the Autumn Budget, activity has slowed and pricing is under pressure, with many pausing decisions.’ At the same time, Sainter adds, some estate agents are rushing properties on to the market, due to the potential Capital Gains Tax on main residences (more on this later).

Jonathan Hopper, CEO of Garrington Property Finders, sees things slightly differently, identifying a two-speed market among buyers. ‘Those who need to move are pressing ahead, but negotiating hard to de-risk themselves from potential tax changes in the November Budget,' he says, 'while discretionary movers are adopting a wait-and-see stance, using the uncertainty as an excuse to pause.’

And in some areas, anecdotal evidence suggests that the market is actually speeding up. In south west London, ‘the picture is far from one of complete paralysis’, reports Geoff Wilford, founder of Wilfords London.

In his experience, committed buyers are continuing to transact. ‘Opportunistic purchasers are using the uncertainty to negotiate harder, but realistic sellers are still achieving results,’ he says.

Rumour 1: Capital Gains Tax to be payable on primary residences

One of the rumours that has attracted a lot of attention is centred around Capital Gains Tax (CGT). The tax is paid on any profit made from selling any asset, and while this tax has always always been due on property, ‘primary residences’ have long been exempt.

Now, though, the government is said to be considering abolishing the exemption for main homes above a certain price point. The Times have reported that houses worth over £1.5 million could be hit by the tax.

It's hard to pin down how many houses would be affected, but Rightmove data from earlier this summer suggested that 5% of homes in the UK are worth more than £1 million. But the picture is very different in London and the south of England, where house prices tend to be higher: there are thought to be 350,000 properties in London alone that are worth over the £1 million mark, so it's clear that there will be hundreds of thousands of houses across Britain valued at £1.5 million or above.

The CGT rate for residential property is currently set at 18% for basic rate taxpayers and 24% for higher rate taxpayers, but it's important to note that — unlike Stamp Duty — the tax is only paid on profit made, not on the entire sale price.

For those who have bought their house in the last few years, and done little to them, there is not likely to be much liability. But those who bought decades ago and are looking to downsize could be hammered with huge bills that could deter them from moving at all.

Peter Stimson, director of mortgages at MPowered Mortgages, explains: ‘Firstly we may see lots of creative pricing at the £1.5m mark, but more worryingly there’s a risk that many people who’ve lived in their home for decades just won’t sell.

‘If thousands of empty nesters, who would normally be looking to downsize, stay put it will cut off the supply of larger homes that new parents typically want to buy.’

According to Marc Schneiderman, director at Arlington Residential, 35% of its client base would stay put and not move if this proposal was implemented.

He adds: ‘Some of these clients are ‘asset rich and cash poor’. They own and live in valuable homes, which they may have purchased decades ago and are now retired without access to large sums of money. So any 'mansion type' tax will be challenging.’

Similarly, Will Vaughan, director at House Collective, says: ‘If you knew selling your home would trigger an additional tax bill on top of the cost of moving and buying, you simply would not move unless you absolutely had to. That means fewer transactions, less choice, and a market that grinds to a halt.’

Rumour 2: Replace Stamp Duty — and shift the burden to sellers

Also under the microscope is Stamp Duty, which buyers in England and Northern Ireland pay when buying a home worth more than £125,000. (Equivalent tax systems are in place in Scotland and Wales.)

According to the Guardian, the government is considering scrapping Stamp Duty and replacing it with a new national property tax. It would be paid by sellers rather than buyers, and levied on homes that are sold for more than £500,000.

Freeman believes that while Stamp Duty reform is overdue, shifting the tax from buyers to sellers risks creating more problems than it solves. Wilford agrees, arguing that it could prevent downsizers from moving out of their family homes — and that could freeze property chains at every level.

‘While first-time buyers might gain from the removal of Stamp Duty, unless the ripple effects are managed carefully, the rest of the market could seize up just when we need more mobility, not less,’ he says.

Jason Corbett at Rowallan Buying Agents, points out that if the new tax is ‘structured as a recurring liability over several years, it may deter all but the very wealthy’.

‘Buyers who stretch to afford their homes would simply be priced out, forcing many either into cheaper areas or even abroad,’ he explains.

‘A one-off cost like the current system can be planned for, but an ongoing tax eats into salaries and introduces huge uncertainty, especially if jobs or incomes change.’

Rumour 3: Overhaul Council Tax

The government is also rumoured to be looking at swapping Council Tax in the longer term for a new local property tax that would be paid by homeowners rather than residents.

According to the same Guardian report, the Treasury is, in part, drawing on the findings of a report by the think tank Onward, which outlined a national and local ‘proportional property tax’, linked to the value of a property. A similar system is in place in much of the United States.

This could represent a significant shake-up, with the Council Tax system in England and Scotland using valuations from the early 1990s.

Jonathan Potter, CEO of HomeNow, says: ‘There’s been discussion for years about modernising Council Tax bands, but wholesale reform is politically very difficult. If anything is done here it’s more likely to be incremental changes rather than a full overhaul.’

Rumour 4: Levy National Insurance on rental income

A fresh tax hike for landlords has also been mooted. According to The Times, the government is considering levying National Insurance on landlords' rental income.

Some speculate that this could prompt landlords to sell up amid rising costs and legislative changes in the pipeline.

Ben Beadle, chief executive of the National Residential Landlords Association, argues that ‘further punitive tax hikes on the rental sector will lead only to rents going up’.

He adds: ‘It would come on top of last year’s increase to stamp duty on homes purchased to rent and proposals expecting landlords to pay up to £15,000 on energy efficiency improvements to properties.’

That said, there’s an argument to suggest that more rental homes hitting the sales market could boost choice for aspiring first-time buyers.