The 2025 UK Budget introduces some of the most significant changes to property taxation in recent years. While many of the reforms are focused on high-value homes and landlords, they are already capturing the attention of homeowners and investors across London including in Islington.
New Mansion Tax
The most headline-grabbing change is the introduction of a new annual surcharge on properties valued at over £2 million. Owners of such properties will pay a High Value Council Tax Surcharge on top of existing council tax.
The surcharge will vary depending on the value of the property:
|
Property value (2026 valuation) |
Annual surcharge (from 2028) |
|
£2.0m – £2.5m |
£2,500 |
|
£2.5m – £3.5m |
£3,500 |
|
£3.5m – £5.0m |
£5,000 |
|
Over £5.0m |
£7,500 |
With Islington being a high value market the surcharge will affect properties in the area especially and it represents an ongoing additional cost.
“Anyone who owns a high-end home – especially £2 million+ houses or large-apartment conversions – needs to factor in the extra annual charge.
“This changes the long-term cost equation for luxury homeownership and could influence both buying and selling decisions in our borough.” says Robert Hamlyn, branch manager for Islington Properties.
Increased Tax on Rental / Property Income
The Budget also raises the tax burden for landlords with income from residential property which will be taxed at higher rates, with the basic rate set at 22%, higher at 42% and additional at 47% – up two percentage points across the board.
Robert Hamlyn offers a cautious note: “This could mean reduced net yields for buy-to-let landlords in Islington and possibly fewer smaller flats being offered for rent. That might lead to tighter supply for tenants and could also deter investors from entering the market.”
The Budget brings both challenges and opportunities. On one hand, high-end homes may lose some of their appeal under heavier taxation. On the other mid-market and well-positioned properties could become more attractive.
Hamlyn concludes: “We’re advising our clients to review their portfolios carefully – especially if they own multiple properties or have buy-to-let flats. For some it might make sense to sell sooner rather than later whilst for others investing in mid-market properties might become the smarter long-term bet.”
