On October 28, UK Chancellor of the Exchequer John Healey presented the 2026 Autumn Budget in the House of Commons.
The answer to the most pressing question for homebuyers has been revealed: Stamp Duty remains unchanged, and Capital Gains Tax (CGT) will not increase, bringing certainty to residential transaction costs.
Combined with recent buy-to-let mortgage rates dropping to 3.49% and the confirmed rollout of the "Your First Home" scheme, these developments send positive signals to prospective London homebuyers.
[Stamp Duty and CGT Both Kept On Hold]
This budget made no adjustments to Stamp Duty or Capital Gains Tax. Current first-time buyer relief (in England and Northern Ireland) remains effective.
Data indicates:
· First-time buyers purchasing residential properties up to £500,000 pay 0% Stamp Duty on the first £300,000 (HMRC);
· The portion between £300,001 and £500,000 is taxed at 5%;
· For a £400,000 property: a first-time buyer pays only £5,000 in Stamp Duty, whereas a non-first-time buyer pays £10,000;
· Second-home buyers face an additional 5 percentage point surcharge; non-UK residents may face an extra 2 percentage point surcharge.
Regarding Capital Gains Tax, UK personal CGT rates remain at 18% and 24%. The annual tax-free allowance for the 2026/27 tax year stays at £3,000 (HMRC), with no increase announced in this budget.
For real estate investors, transaction taxes on both buying and selling are unlikely to increase. Against a backdrop of widespread government revenue-raising measures, residential property tax treatment remains relatively stable.
[Mortgage Rates Drop to 3.49%: A "Policy Dividend" Beyond the Budget]
Even prior to the budget release, positive signals were emerging in the mortgage market.
According to a Mortgage Solutions report on October 19, specialist lender Fleet Mortgages launched a one-year fixed-rate Buy-to-let mortgage starting as low as 3.49%; another lender, Molo, offered a two-year fixed rate as low as 3.66%.
HSBC also announced rate cuts bringing select mortgages below 5%: a two-year fixed rate at 4.99% (requiring a deposit of over 40%, with a £999 fee).
The key signal is clear: while the average fixed mortgage rate across the UK market remains close to 6%, leading banks and specialist lenders have begun competing for clients, signaling a potential price war.
A simple calculation: on a £400,000 mortgage, monthly repayments at a 6% interest rate are approximately £2,398, compared to £1,791 at 3.49%—a monthly saving of around £607, or roughly £7,284 per year. This amount can cover about six months of living expenses for an international student.
[Electricity VAT Relief Extended to July 2027: Easing Living Cost Pressures]
The budget confirmed that the 0% VAT relief on household electricity bills is extended until July 1, 2027, saving households approximately £50 per year starting in April 2027 (GOV.UK). Additionally, standing charges on gas bills will be eliminated, and a £100 energy rebate will be provided to roughly 20 million households in Council Tax Bands A to D in England.
However, energy price pressures persist: Ofgem's energy price cap rose by 4% in October, with further increases expected in January next year.
Rising living costs will inevitably impact the rental market: higher heating costs for landlords, squeezed profit margins driving some landlords out of the market, and a reduced rental supply will continue to exert upward pressure on rents.
[Landlords Note: Tax Rate on Rental Income to Increase by 2 Percentage Points in April 2027]
The budget does not bring exclusively good news for landlords: starting April 2027, tax rates on savings and property income will increase by 2 percentage points, raising rental income tax brackets to 24%, 44%, and 49%.
For Buy-to-let investors, this signifies higher holding costs. However, falling mortgage rates are partially offsetting this pressure. Combined with rental growth, actual returns on prime assets in core locations still have room to hold steady.
[Bank Corporation Tax Surcharge Increased from 3% to 6%: Residential Transactions Unaffected]
One key target of government revenue generation is the banking sector: the Bank Corporation Tax Surcharge will temporarily rise from 3% to 6% for a 15-month period (January 1, 2027 to March 31, 2028), generating an estimated £1.5 billion (GOV.UK).
Despite multiple tax hikes at the macroeconomic level, none have targeted residential real estate transactions—a key takeaway from this budget for homebuyers.
[Your First Home Confirmed: Deposits for First-Time Buyers as Low as 2.5%]
The budget officially confirmed the "Your First Home" equity loan scheme. Designed for first-time buyers in England purchasing new builds from participating developers, the scheme allows buyers to put down a deposit as low as 2.5%, with the government offering equity loans of up to 20%.
Launching next spring, backed by £4.7 billion in government funding, the scheme is expected to help around 70,000 buyers step onto the property ladder.
[lansha Insights: The Transaction Cost Window Remains Open — Time to Bring Decisions Forward]
· With Stamp Duty and CGT unchanged, transaction cost uncertainties are cleared—removing a major reason to wait;
· Falling interest rates paired with the equity loan scheme ease both deposit and monthly payment burdens, making it an opportune time to advance homebuying plans;
· Rising tax rates for landlords make property selection critical: prioritize prime locations with convenient commutes and strong rental demand resilience.
[About lansha]
Lansha Property has been deeply rooted in the UK real estate market for over a decade, achieving a cumulative transaction volume exceeding £1.5 billion. Its core team brings over 80 years of combined property industry experience, delivering one-stop services in London property purchasing, letting management, and asset allocation for high-net-worth families and international students.
If you are considering buying property in London or wish to evaluate holding strategies for your portfolio, feel free to contact a lansha consultant for a one-on-one consultation.
[Data & Sources Note]
Data sources: UK Government Official Announcement (GOV.UK) on the 2026 Autumn Budget, HMRC, Mortgage Solutions (October 19, 2026), Ofgem. Monthly repayment estimates are based on an amortized repayment calculation for reference only.
[Disclaimer]
This content is based on publicly available information regarding the budget and does not constitute investment, legal, or tax advice. Please consult professional advisors based on your personal circumstances for specific transaction decisions.
