Post-Autumn Budget 2025: The “stealth” squeeze on homeowners

The chance of any fireworks in the 2025 Autumn Budget for the housing sector was remote. And, on the surface, it was exactly the damp squib we feared it would be.

However, while the headlines weren’t sensational, the details in the “small print” tell a different story. It appears the government is redesigning the future of property ownership, both in and around the capital, where we are, and across the UK.

What’s worse is that they’re not using headline-grabbing announcements to tell you about it. Rather, there’s an element of attrition building beneath the market through “fiscal drag” and stealth taxation.

For homeowners, homemovers, and landlords, the landscape is shifting. Here’s what the 2025 Autumn Budget actually means for your mortgage and your wallet.

1. The “silent squeeze” on mortgage affordability

The biggest blow to the housing market wasn’t about property. It concerns your pay packet.

The Chancellor has confirmed that Personal Tax Allowances will remain frozen until April 2031. So, what’s that got to do with your mortgage?

Freezing tax allowances is almost the very definition of “fiscal drag.” That’s because, as your wages rise with inflation over the next few years, you won’t actually be getting any better off.

The higher your income, the higher tax bands you’ll find yourselves in. The net effect is that your real-term take-home pay will gradually erode.

When you apply for a mortgage, lenders look at your net disposable income. If the taxman takes a larger slice of your pay rise, your mortgage affordability will increase at a slower rate than house prices. This will make it harder for families to trade up the ladder, even if their gross salary feels healthier.

2. Stamp Duty: The tax rise that wasn’t announced

The government has stuck to its target of building 1.5 million homes. They’ve even promised a further 170,000 above target by the end of their term in government. But what they’ve failed to do is make it easier to buy those new properties.

By refusing to raise Stamp Duty thresholds, the Chancellor has effectively raised the tax on moving home. As house prices rise, more modest family homes in areas like Pinner and North West London are drifting into higher Stamp Duty brackets.

This won’t just potentially hurt first-time buyers. It will penalise both growing families looking to upsize and downsizers looking to release equity. The net effect? Friction in the market, discouraging people from moving.

3. The Landlord Shock: April 2027 is the deadline

If you own a buy-to-let property in your personal name, the clock is now ticking. And we know that a lot of our contractor clients invest in property to shore up their futures. This is a real concern.

From April 2027, HMRC will introduce a new, separate tax system for property income. The basic rate on rental income is set to jump from 20% to 22%, and the higher rate from 40% to 42%.

It’s only 2%. But you also have to factor in the disappearing margins of owning investment property. In recent years, we’ve seen the disappearance of tax relief on mortgage payments. And just last year, there was the change to the Stamp Duty on second homes and investment properties to consider. So, this latest surcharge could mean the difference between making a worthwhile profit and not.

The strategic shift: why it matters

The Treasury’s own forecast suggests this will push thousands of landlords to “incorporate”. That means they will move their properties into a Limited Company structure.

Corporate landlords don’t pay Income Tax. Instead, they pay Corporation Tax, which is often more efficient for higher earners. Some of our clients will find being held over a barrel like this beneficial. For others, it will just mean too much hassle, and they’ll vacate the market.

Our Advice: From the date of this publication, you have an 18-month window before this tax hike hits. If you’re a landlord with properties in your personal name, you need to review your portfolio now. Waiting until 2027 could be an expensive mistake.

4. The “Mansion Tax” & the wealth trap

For our clients in the South East, the “High Value Council Tax Surcharge” (dubbed the Mansion Tax), which arrives in April 2028, is a genuine concern.

Currently, it affects properties valued over £2 million. However, just like the frozen Income Tax bands, the danger lies in the threshold.

There’s nothing to suggest that property prices won’t continue to rise. So, if the £2m threshold stays frozen, more and more “normal” large family homes in our area will eventually be dragged into this tax net over the next decade.

5. A window of opportunity?

Despite the gloom in the Budget small print, the immediate market is actually quite buoyant.

Uncertainty is the enemy of the property market. Now that the Budget is done, buyers who were “waiting to see” are flooding back. We’re seeing pent-up demand released.

People who were holding out to remortgage now have little choice. So, with the Bank of England holding the Base Rate at 4%, lenders are fighting for business.

The “Mortgage War” is good news for you.

Lenders are slashing rates to get business on their books before year-end. This has nothing to do with the government or the Budget. Rather, it has everything to do with bank targets.

We’re currently in something of a “sweet spot” window. The major tax changes (landlord tax and mansion tax) don’t hit until 2027 and 2028. The market activity is showing signs of picking up now. Every new property listing continues to generate multiple enquiries on its first day.

If you’re planning to move home, you will face competition. Don’t drag your feet.

If it’s a remortgage you’re after, don’t wait for your lender’s SVR to kick in. You can lock in a new deal up to six months in advance with our Rate Monitoring Service (via Freelancer Financials, irrespective of how you work).

And, if you’re looking to restructure your buy-to-let portfolio into a Limited Company, do not wait for 2027. The next 12–24 months are the time to act before the new tax framework bites.

Need to review your position?

Whether you are a homeowner or first-time buyer worried about affordability or a landlord looking to incorporate, Mortgage Quest can help. Contact our team in Pinner today to ensure your next step on the property ladder is on solid footing before the year is out.

Author: John Yerou

John Yerou is the owner and founder of the award-winning Mortgage Quest Ltd and its subsidiary brands.

In 2004, John began his career in financial services as an independent mortgage advisor and broker. He's since been instrumental in negotiating bespoke mortgage underwriting criteria for professional contractors with many high street lenders.

As such, John's one of the most respected and recognisable names in securing mortgages for the UK's flexible workforce, incorporating independent professionals and the self-employed.

His recognition as the go-to mortgage expert has grown exponentially, reflected in citations and his own publications in both national and contractor-oriented press.

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