Autumn Budget 2025: much anticipated, but more detail awaited

As is not unusual, the Chancellor's Autumn Budget sets out measures aimed at achieving fiscal stability and supporting its growth agenda.  Also unsurprisingly, in the coming days we can expect significant commentary on the Budget statement (and related issues) to be published in the press and other usual sources – however, we wanted to take a moment to set out some of the headlines as we see them, especially for the Social Housing and wider Living and Real Estate sectors.

Before the Chancellor had even spoken… 

The inherent drama of the Budget announcement was enhanced this year.  Just before Rachel Reeves stood to speak, the deputy speaker, Nusrat Ghani, dealt out a lengthy reprimand to the Government over the level of speculation which had preceded the formal Budget statement – inferring that ministers may have broken the ministerial code.  What is perhaps more symbolic is that this admonishment had been prepared before the mistaken publication (also made prior to the Chancellor’s budget speech) by the independent Office for Budget Responsibility of its official analysis of the budget.

Linked to this is the fact that there were several key omissions from the Budget, including the abolition or significant modification of the Stamp Duty Land Tax (SDLT) regime and imposing National Insurance contributions for members of LLPs – the suggestion of changes to the SDLT regime has, it is generally accepted, caused a significantly adverse effect on the overall property market.     

Enough drama, what of the Budget?  

Our summary of some of the key Budget takeaways are set out below:

Housing Benefit and Temporary Accommodation

New earned income disregards - Claimants in supported housing and temporary accommodation will benefit from new earned income disregards in Housing Benefit.  This strategy aims to reduce the financial cliff edge experienced by persons when moving into or progressing in work and therefore remove such disincentives for being in employment.

VAT and development land that is intended for social housing - consultation ahead

Within the formal Budget document is a reference to a forthcoming consultation on VAT treatment of land intended for social housing, designed to incentivise development.  As of now, there are no confirmed dates for the consultation or further details. The most likely direction however, building on previous statements and sector lobbying, is a policy of enabling zero-rating earlier in a transaction process, e.g. to avoid the need for delaying payments being made to a developer in a transaction with a registered housing provider, until after golden brick stage of construction has been reached.  We'll be monitoring this closely and will keep clients updated as details emerge.

Coupled with an additional £48m of investment to increase capacity in the planning system, including to assist in the recruitment of 350 planners, these changes will assist in boosting development plans.

Rent convergence 

The key ask from the sector has been on rent convergence, and the much-anticipated clarity on permitted increase levels for rent convergence has been delayed. The Government has committed to responding on the social rent convergence consultation in full, and to announce a decision about how convergence will be implemented in January 2026 - this will be done before the launch of the Social and Affordable Homes Programme.

Minimum wage increase - construction industry burden?

There has already been some discussion about the announced minimum wage increases adversely impacting upon the construction industry - given that there is a reliance (in some areas) on lower-paid workers, making margins even thinner and increasing the risk of insolvencies in this sector.     

High-value Council Tax surcharge ("Mansion Tax")

An annual Council Tax surcharge for homes worth £2m or more will apply from April 2028 is to be introduced with a Valuation Office ‘revaluation’ exercise to be undertaken to ascertain the properties that will be affected. Our current understanding is that the revaluation exercise is unlikely to affect the banding of properties that (continue to) fall below the £2m threshold (even if, in light of the revaluation, their valuation would be different to the 1991 valuations currently relied upon when applying relevant Council Tax bands).

Separate property income tax rates

From April 2027, property income will be taxed at 22%, 42%, and 47% - this is intended to harmonise with employment income (tax) bands the applicable taxation regime for individuals that derive their main income from property investment/rental. This is likely to have a significant impact on buy-to-let landlords, with a potential knock-on impact on housing demand. 

Public services, social policy and welfare

Child Benefit Cap ended and Value for Money Reviews - the Chancellor announced the abolition of the two-child benefit cap from April 2026 (which means that families will now be able to claim the child element of Universal Credit for all children, regardless of family size). There was also continued focus on NHS care models, homelessness services and youth provision through value-for-money reviews, all of which is hoped will assist with renewing the focus on ending child poverty in the country.

Devolved Governments – there is a continued focus on local growth and devolution, with devolved Governments to continue to receive 20%+ more funding per head than the equivalent Government spending for the rest of UK.  There is also good news for public services with significant funding (£14bn) allocated for technical efficiencies (digital transformation, procurement reform, and shared services). Subject to a satisfactory business case, the Government is supporting West Yorkshire Combined Authority by establishing the Leeds City Fund, allowing the retention of 100% of business rates growth above an agreed baseline for 25 years.  The new National Housing Bank will also be headquartered in Leeds.

Place-based budgets – there are to be trials in five Mayoral Strategic Authorities to pool budgets, with the aim to achieve better taxpayer outcomes.  This is suggestive of a shift towards joined-up funding for health, housing, and social care at local level.

Planning and performance- from Spring 2026, departments must publish funded outcomes (i.e. what taxpayers get for the money spent) and strategic plans (longer-term priorities and metrics).  These measures are part of a wider push for transparency and accountability.

If you would like to discuss any of the Budget announcements and how they may affect you or your organisation, please do get in touch.