Hermione Homes Insight: What the 2025 Budget Means for Landlords and the PRS

The Autumn Budget 2025 has landed, and with it, one of the most significant fiscal shifts for the UK housing market in over a decade. While the Chancellor’s package includes measures aimed at easing pressures on households, it also introduces substantial tax changes that directly affect property owners, investors, and the wider Private Rented Sector (PRS).

At Hermione Homes, we believe it is important to share this information to clarify the new measures. Here’s our breakdown of who gains, who loses, and how professional landlords can adapt and thrive.

1.      Key Budget Measures at a Glance

Support for Households

The government introduced several measures designed to ease the cost-of-living burden, including:

• Freezing transport costs

• Reducing household fuel bills

• Removing the two-child benefit cap

• Increasing the minimum wage

• Increasing state pensions

• Maintaining frozen income tax thresholds

• Keeping the Stocks & Shares ISA allowance

These moves aim to support lower-income households and pensioners, consistent with a redistributive fiscal approach.

Tax Rises Targeting Wealth and Assets

However, the other side of the Budget focuses on raising revenue through taxation on wealth and property. According to reporting from Sky News and other outlets, the Chancellor announced £26bn in tax rises, including:

• With effect from April 2028 a new high value council tax surcharge – dubbed a “mansion tax” will affect homes worth over £2 million.The annual surcharge will cost between £2,500 and £7,500, depending on the property value. The government says fewer than 1% of properties will pay this tax.

  The levy is estimated to raise about £430 million of revenue per year from 2028.2

• A 2-percentage-point increase in tax rates for property income, savings, and dividends from April 2027

• Continued inheritance tax (IHT) rules for landowners

• New levies affecting drivers across all vehicle types

This combination places a significant share of the fiscal burden on higher-value property owners and investors.

2. Winners and Losers: A Clearer Picture

Who Gains

• Low-income households: through wage increases, benefit reforms, and energy support

• Pensioners: through state pension rises and ISA protections

• Families: through the removal of the two-child benefit cap

Who Loses

• Landlords and property investors: due to higher property income tax and mansion tax exposure

• High-value homeowners: especially in London and the Southeast

• Drivers: with new charges across all vehicle types

• Savers and investors: facing higher taxes on financial income

This aligns with what many analysts expected from a Labour government: a shift toward redistribution.

3. The PRS Under Pressure, But Not Without Opportunity

The combined effect of:

• A challenging macroeconomic outlook

• Higher taxation on landlords

• The Renters’ Rights Act (RRA) is coming into force by May 2026

  
  

  is contributing to a mass exodus of landlords, reduced rental stock, and sharp increases in rental prices.

But this is not the end of the story.

Professional landlords will survive, and many will thrive.

To do so, they must:

• Upskill in compliance, property management, and financial planning

• Seize opportunities created by sell-offs in certain regions

• Explore specialised property demand, such as social housing

• Consider expanding outside London, where yields and conditions may be more favourable

• Use rental guarantee insurance, especially with enhanced tenant protections

• Review business structures, including the growing shift toward Ltd company ownership

4. The PRS Still Has a Mission

Despite the turbulence, one truth remains:The Private Rented Sector provides a vital service — homes for millions.

This must be the starting point of every narrative. Landlords are not simply investors; they are housing providers. The sector’s stability is essential to the UK’s social and economic well-being.