News

Budget Transparency Sparks Optimism in London Property Market

15.12.25

Share article

London’s property market holds a distinctive position within the worldwide stage: highly regarded for its enduring appeal, prestige and long-term value.  

However, it’s been a challenging year for property in London, driven by increased uncertainty and caution stemming from wider economic challenges, the build up to Labour’s Autumn Budget and the market already adjusting to previous tax changes. Many buyers chose to delay their purchases and adopt a “wait-and-see” approach, with rumours of new policies disproportionally affecting the London market resulting in a slowdown of activity and transactions.

Here, we assess the statistics and what the budget means for property in London.

UK Property Market and The Autumn Budget

The Budget saw Labour introduce a 2% increase in tax for landlords as well as a High Value Council Tax Surcharge – dubbed “mansion tax” – which will impact the property landscape.

However, despite changes to tax policies within the property sector, many homebuyers are breathing a sigh of relief as the long-rumoured “mansion tax” threshold emerged far higher  than initially speculated, sparing approximately 210,000 homes from the new tax, according to Zoopla. Many within the property industry believe this will help stimulate the market moving forward, with several factors indicating that the UK’s property market still makes a compelling investment choice.

In fact, latest data from eXp UK found that 73% of homebuyers surveyed admitted putting their plans to purchase on hold prior to the Budget. However, now that some clarity has been provided, 98% of these buyers say they are looking to move forward with purchasing property. Additionally, 86% of those surveyed say they intend to arrange in-person viewings for January to get ahead in the 2026 market, indicating renewed confidence as we head into the new year.

Additionally, Hamptons data shows that international investors accounted for one-fifth of all new buy-to-let businesses established in the first eight months of 2025 – up from 13% in 2016 and an increase of 8% from 2024 alone. This highlights that, despite changes to policies affecting the international homebuyer market, the UK – and London in particular – continues to offer strong appeal as an investment destination on the global stage, with India and Nigeria recorded as the highest shares of these overseas investors.

London Property Market

The London property market has long demonstrated a notable resilience to economic and market pressures, and it continues to attract investors – both domestically and internationally – who view the capital as a stable location for long-term growth. As the city continues to expand and clarity around the budget eases a key obstacle for many homebuyers, those seeking property for sale in London and the South East are set to benefit the most from a more subdued Budget.

The “mansion tax” was rumoured to apply to property valued at £500,000 and above, which would have encompassed a significant portion of properties for sale in London and the South East. In reality, however, the threshold was far higher – applying to homes valued upwards of £2 million.

According to Rightmove data, this elevated threshold means that the mansion tax is likely to affect less than 1% of properties in the UK, with Zoopla estimating  51% of London property for sale falling between the £500,000 – £2 million threshold.

This presents a somewhat more optimistic outlook for the months ahead, as we anticipate a boost to buyer confidence as they return to the market.. Property for sale in London below the £2million threshold accounted for 66% of annual transactions according to JLL data – a 4.2% annual increase – testament to how integral the lower end of the Prime market is to the Capital.

So, what can we expect from the property market in 2026?

Property Market Predictions

Despite a more subdued level of activity in anticipation for the Budget, Land Registry data indicated a +2.6% annual price change for the UK property market. Much of the slowdown was felt in London and the South East, where the widely speculated “mansion tax” would disproportionally impact homebuyers, but regional activity saw sustained levels of activity across the year which helped alleviate a cautious market.

Meanwhile, wider economic factors show signs of improvement, which will act as an incentive for homebuyers to re-enter the market in the new year. Many experts anticipate inflation to continue its downward trajectory, resulting in numerous base rate cuts, better mortgage offers and increased affordability for homebuyers to stimulate the market throughout 2026.

Hamptons expects the Base Rate to settle at around 3.25% by the end of 2026, with average mortgage rates steadying at around 4.0%. This would entice lenders to offer more sub-4% deals even to those with lower deposits – and this is positive news for borrowers, price growth and activity. They forecast modest growth of 2.5% across Great Britain by Q4 2026.

Savills expects both demand and price growth to stabilise through early 2026 and anticipate a moderate rate of recovery for the UK property market. Their pre-budget forecast predicted that average UK house prices will increase by 22.2%, over the next five years, with growth of 2% in 2026 before rebounding to stronger levels thereafter.

Additionally, despite lower levels of growth for the properties for sale in London, Savills estimates that prices in the Capital will be 33% above the UK average, with the potential to return to outperforming the rest of the UK market in the 2030’s.

JLL’s pre-budget forecast predicted 20% growth over the next five years with Central London growth at 10% by 2029.

However, now that the Budget and its implications have been announced, we expect to see a revision in forecasts moving forward, along with a period of adjustment, particularly at the higher end of the London market. Traditionally, January and February see an uptick in activity as people aim to make crucial property decisions early. We hope this will be paired with homebuyers who held off for the Budget re-entering the market, adding a much needed boost to activity in the coming months to support recovery in the market.

London Property for Sale

London’s Royal Borough of Kensington encapsulates the prestigious lifestyle offered by the UK’s Capital city and provides buyers with a way of life envied across the globe.

100 Kensington, situated just minutes from Kensington’s coveted high street, exemplifies the grandeur than property for sale in London offers homebuyers. The landmark residential development benefits from private gardens, a gym, cinema and meeting rooms as well as great connectivity to London’s key employment hubs, educational institutions and leisure activities.

We are pleased to announce that both of our highly sought after penthouses at 100 Kensington have been sold off plan, after an increased amount of interest from the international market.

Prices start from £895,000.

To find out more or to book a viewing at our Marketing Suite, click here.