How does the Autumn Budget affect property?

The Fiscal Devolution Roadmap shifts greater financial power to the regions. From next year, Mayors will retain a 20% share of locally retained business rates, rising to 100% retention by local and regional government by the end of the decade. This will sit alongside mayoral income tax assignment from 2028, new Business Rates Retention Zones and powers to introduce an Overnight Visitor Levy. Funding baselines will be set at the 2027 Spending Review. The first wave covers Greater Manchester, East Midlands, Hull and East Yorkshire, Liverpool City Region, Tees Valley, West of England, North East, York and North Yorkshire, and London.

For the latter, London remains the UK’s economic engine and a globally important city, underpinned by its transport infrastructure. The Budget aims to support further growth through:

• Euston: A proposed Tax Increment Financing mechanism, using retained business rates to fund London Underground upgrades and unlock wider development.

• Stratford: A Business Rates Retention zone to address station capacity and support regeneration, alongside plans to enable international rail services at Stratford International.

• Buses: Greater coordination with strategic authorities to create a reliable procurement pipeline, deliver value for money and support UK manufacturing.

• Future transport: Powers for the Mayor to introduce a successor to the Elizabeth Line Business Rates Supplement, helping fund projects including the West London Orbital and Bakerloo Line Extension.

• Infrastructure funding: Exploring greater use of Mayoral Community Infrastructure Levy revenues to support borrowing for strategic infrastructure.

• Growth and productivity: A joint government-GLA global city productivity plan focused on attracting talent, investment and tourism.

Funding and planning decisions will become increasingly place-led. Areas able to align mayoral priorities, infrastructure investment and development could gain a competitive advantage in attracting investment and accelerating regeneration. For developers and investors, understanding local political priorities will become increasingly important to identifying where growth is likely to be supported.

The National Wealth Fund (NWF) will receive an additional £15.4bn, taking total capitalisation from £27.8bn to £43.2bn, including £2bn for the Energy Wealth Fund. The funding is intended to stimulate UK growth and create or support 100,000 jobs.

A significant boost to investment in energy, infrastructure and growth projects could unlock development and regeneration opportunities, increasing demand for land, industrial and logistics space, and supporting schemes in locations benefiting from new infrastructure.

£285 million will launch Good Growth Funds across England from 2027-28, giving local leaders greater flexibility to combine devolved funding with public, pension fund and private capital to unlock regeneration and development, of which £165 million will support places with a mayor in place and £120 million of incubator capital funding for areas transitioning towards a devolution deal or strategic authority status.

This investment could accelerate locally prioritised regeneration, infrastructure and development, helping de-risk schemes and usher in private investment. For developers and investors, this could create new opportunities around strategic sites and place-based partnerships, while making local political priorities increasingly important in determining where capital is deployed.

10 new final stage devolution agreements have been announced covering mayoral strategic authorities for Devon, Plymouth and Torbay; Hertfordshire; Lancashire; Leicester, Leicestershire and Rutland; Stoke and Staffordshire; Surrey; Thames Valley; Wessex; Cornwall; Kent and Medway. These will then bring over 90% of England’s population under be under a devolution agreement.

Government procurement through a new National Procurement Policy will increasingly favour genuine UK suppliers, local jobs and skills, including a 3% apprenticeship target on major infrastructure and construction projects, alongside targeted support for UK steel, energy, AI and other strategic industries.

This could strengthen UK construction supply chains and regional economies, supporting demand for industrial, logistics and employment space. For developers and contractors, however, UK sourcing, social value, apprenticeships and local skills commitments will become increasingly important when competing for public-sector development and infrastructure work.

A new scheme to support first-time buyers has been announced for England. Buyers will need a deposit of just 2.5% and will be able to access a loan worth 20% of the value of a new-build home, with the scheme limited to new developments.

Full eligibility criteria will be published before applications open, but pre-tax household income caps have been confirmed at £110,000 outside London and £140,000 in London. Property price caps will be set at local authority level, with the full list still to be published. We do know that in London, the cap will be £650,000 for properties in Inner London and £500,000 in Outer London, figures that are higher than expected and could provide some much-needed stimulus for the new build flats market in London.

Overall, the scheme should stimulate demand for new-build homes by making home ownership more accessible to first-time buyers. The previous Help to Buy scheme demonstrated how targeted support can help drive new-build sales, and its withdrawal left a notable gap in the market. There could also be a knock-on effect for the private rental sector, with more renters able to move into home ownership, potentially easing some of the pressure on tenant demand and helping to rebalance that market.

The First Time Buyer ISA is a new savings product designed to help first-time buyers purchase their first home. It will launch in April 2029, replacing the existing Lifetime ISA. The account will be available to anyone aged 18 or over who has never previously owned a property and, unlike the Lifetime ISA, there will be no upper age limit. Savers will be able to contribute up to £4,000 a year, with the government providing a 25% bonus on the final balance when the funds are used to purchase a first home.

The new ISA has several important advantages over the existing Lifetime ISA. Firstly, the upper age limit has been removed. The previous limit of 39 was becoming increasingly restrictive, particularly as the average age of first-time buyers in many parts of the country is now approaching the late 30s. The 25% withdrawal charge has also been removed, which previously applied when savings were withdrawn for an ineligible purchase. Finally, while the property price cap has yet to be announced, if, as expected, it is set above the current £450,000 Lifetime ISA limit, the new product could prove more useful to first-time buyers in higher-value markets such as London and the South East, where the existing cap has limited the scheme’s usefulness.

From April 2027, landlords will face higher income tax rates on property income, rising by 2% from the increase announced in the 2025 Budget (also due to apply from April 2027). The rates rise to 24%, 44% and 49% for basic, higher and additional-rate taxpayers, respectively. This will apply across England, Wales and Northern Ireland. Companies are unaffected by the change, with rental profits instead remaining subject to corporation tax. The change could therefore influence ownership structures and further weigh on investment in the private rented sector.

In the 2025 Autumn Budget, the government announced the HVCTS, an annual charge on residential properties in England valued at £2 million or more, taking effect from April 2028. In the 2026 Budget, it confirmed further details, including a deferral scheme, discounts and exemptions, and a 100% premium on the surcharge for properties left empty and unoccupied for 12 months or more. This is separate from the existing Council Tax regime, under which local authorities can already impose premiums on long-term empty homes. The new measure therefore further increases the cost of leaving high-value residential property vacant.

The Budget identifies substantial investment in science and life sciences facilities, including £424 million for the John Innes Centre and Sainsbury Laboratory at Norwich Research Park, more than £85 million for facilities in Blyth, and more than £75 million for the CoSTAR creative technology laboratory network. Separately, government-backed company investments include more than £500 million from Convatec for a Manchester R&D hub, more than £300 million from Vertex for an Oxford facility, and £200 million from Kindeva for manufacturing in Loughborough. Work also continues towards agreeing a Business Rates Retention Zone supporting the Cambridge Biomedical Campus and wider Cambridgeshire development from 2028.

These announcements identify specific locations for investment in research, laboratory and specialist manufacturing facilities, alongside a proposed development financing mechanism in Cambridge. Their relevance is concentrated in the named projects and clusters; the Budget does not quantify additional demand across the wider laboratory market. The company investment figures include private capital, the Cambridge zone remains subject to agreement, and Convatec’s investment is subject to final terms and conditions.

From January 2029, a new statutory regime will bring certain real estate income and gains of foreign sovereign investors into UK tax, alongside bespoke access to Real Estate Investment Trusts (REITs). The government intends to improve certainty over sovereign investment taxation while maintaining a competitive UK investment offer.

The significance is the change in the tax treatment of affected investors’ rental income and disposal gains, together with the proposed arrangements for investing through REITs. These are relevant to the assessment of investment structures and after-tax returns. The Budget forecasts that the overall reform will raise £690 million in 2029/30, but this is a revenue estimate rather than a forecast of changes in property investment activity. The document does not specify the applicable tax rates or fully describe the bespoke REIT arrangements. Consequently, the impact on individual investments will depend on the detailed rules, and the Budget does not establish how the measure will affect sovereign capital flows or property pricing.

The Budget confirms a two-year real-terms freeze in business rates bills for qualifying retail, hospitality and leisure (RHL) properties in England, with increases capped at CPI inflation in 2027/28 and 2028/29, subject to exceptions. From April 2027, the threshold for full Small Business Rates Relief for qualifying RHL properties rises from £12,000 to £18,000 rateable value, with tapered relief extending to £21,000. Relief for eligible pubs, social clubs and live music venues increases from 15% to 35%, excluding music venues with rateable values of £1 million or more from the additional relief.

The measures reduce or limit eligible occupiers’ rates liabilities, providing greater certainty over an important component of occupation costs. The government estimates that the higher thresholds will remove around 70,000 additional businesses from paying rates. The immediate benefit accrues to the ratepayer, including tenants and owner-occupiers. Offices and industrial premises do not receive equivalent sector-wide support, while the existing 1p Transitional Relief Supplement is extended for two years to help fund the package. The Budget does not quantify resulting changes in rents, values or vacancy.

The Budget proposes Business Rates Retention Zones across nine strategic authority areas. Subject to approval and legislation, relevant billing authorities will retain 100% of rates growth above an agreed baseline within the zones for 25 years. Alongside this, £285 million in transitional funding will support Good Growth Funds and areas moving towards devolution in 2027/28, with a separate £1.5 billion mayoral borrowing facility operational by April 2028.

These measures provide mechanisms intended to finance regeneration, infrastructure and development, allowing local leaders to align public and private capital around local growth priorities. The retention zones establish a long-term framework for reinvesting growth in the business rates base, while the borrowing facility will include mechanisms for concessional lending. Their practical effect will depend on approved projects, funding allocations and delivery. The zones remain conditional on full business case approval, and the wider move towards local rates retention will replace some central government grants. Retained revenues should therefore not all be treated as additional funding.

The government will seek to attract greater private and international investment into UK defence, including up to £5 billion from the National Wealth Fund and British Business Bank over four years, alongside new private finance and public-private partnership opportunities. It will also unlock surplus defence land for housing and growth, with capacity identified for more than 100,000 homes, supported by closer working with Homes England, local and Mayoral authorities and reform of the Crichel Down Rules. Alongside this, the Defence Investment Plan is expected to create around 60,000 new jobs by 2029-30.

A potentially significant pipeline for the industry, spanning housing-led regeneration of defence land, infrastructure, specialist industrial and logistics space, and defence manufacturing and research facilities. Faster land release and greater availability of public and private finance could unlock major strategic sites, particularly around established defence clusters, while employment growth could support wider housing and commercial demand.

The National Wealth Fund will provide £2bn for the Energy Wealth Fund (EWF), taking its total capitalisation from £27.8bn to £43.2bn. The funding will support investment and lending across the UK over the longer term, with an estimated 100,000 jobs created or supported. The EWF is linked to future North Sea revenues to invest in UK renewable energy infrastructure.

The additional capital should help unlock major energy, infrastructure and regeneration projects, creating opportunities for development and investment around supported schemes. For property markets, this could translate into increased land requirements, development activity and occupier demand, particularly in locations benefiting from new infrastructure and energy investment.

The government is consulting on reforms to weaken the link between electricity and volatile international gas prices, including a new Wholesale Contract for Difference (WCfD). This could move existing low-carbon generators, which currently supply around a third of UK power, onto fixed-price contracts, allowing lower-cost renewable generation to be better reflected in consumer electricity prices. Further Contracts for Difference reforms are also planned, alongside a review of responsibilities across the energy system.

While the WCfD is primarily focused on existing generating assets, greater stability and predictability in electricity prices could have wider benefits for real estate, improving operational cost certainty and investment confidence. This could be particularly relevant to energy-intensive sectors such as data centres, advanced manufacturing and logistics, as well as strengthening the viability of electrification and low-carbon development.

The government has asked Ofgem to abolish the average £108 annual gas standing charge by the end of 2027, shifting costs into unit rates. Electricity standing charges will also be reformed, with details to follow next year.

Greater emphasis on energy use and unit costs could further strengthen the value of energy-efficient homes and buildings and strengthen the case for ‘private wire’ connections for high energy use businesses, while adding pressure on landlords and developers to reduce occupiers’ energy consumption.

The government is targeting the UK’s high energy costs through lower levies, tighter cost controls, electricity market reform and faster grid connections. From April 2027, the British Industrial Competitiveness Scheme will support 10,000+ manufacturers, cutting eligible electricity bills by up to 25%. From April 2028, the Climate Change Levy on electricity will be frozen and Carbon Price Support removed, while £2bn will support renewable and low-carbon infrastructure through the Energy Wealth Fund. Investment in nuclear, hydrogen and grid capacity will also be accelerated, this comes as the government restates its unshakeable commitment to net zero by 2050.

Lower energy costs and improved grid access could strengthen the investment case for manufacturing, logistics and other power-intensive property, while helping unlock sites currently constrained by electricity capacity. Investment in grid, nuclear and low-carbon infrastructure should also create new development and investment opportunities around the UK’s emerging energy and industrial clusters.

The government plans to accelerate grid upgrades and connections through Great British Grid, a new Ministerial Control Centre and powers to prioritise strategically important projects, particularly data centres. Measures include reserving and reallocating capacity, transferring connection contracts, identifying additional capacity before 2030 and, exceptionally, allowing temporary on-site generation.

However, the reforms also introduce greater uncertainty for existing data centre projects. Pre-2030 connections could potentially be reallocated to priority schemes, while post-2030 projects may face regional capacity limits, with important eligibility and protection criteria still to be confirmed.

Access to power is becoming a critical determinant of development viability, land value and investment risk. Faster connections could unlock constrained sites and support data centres, advanced manufacturing and other power-intensive uses. Conversely, uncertainty over connection dates and capacity allocation could delay transactions, complicate valuations and increase development risk.

The Budget introduces a Data Centre Covenant setting requirements for strategic projects seeking enhanced government support. These include covering the energy costs they generate, agreeing a Local Benefit Plan that involves substantial community investment, protecting water supplies, publishing annual energy and water consumption reports, and supporting employment, apprenticeships and security. Projects should also recover waste heat for nearby buildings wherever practical. Further details on the definition of strategic projects remain outstanding.

The Covenant adds the following requirements:

• Site selection tightens: power, water, grid capacity and heat reuse become more important.

• Costs rise: community, environmental and infrastructure commitments will feed into development appraisals.

• Power-rich sites gain value: strong grid connectivity could command a greater land premium.

• Regeneration opportunities grow: community investment and waste heat could support housing, transport and wider development.

• Planning gets tougher: schemes will need to demonstrate clear local benefits and stronger environmental credentials.

The Budget offered some relief to rural businesses facing elevated input costs, although the overall benefit is likely to be modest, with other cost pressures eroding its impact.

Extending the 3.7p red diesel duty cut to July 2027 will help offset some of the pressure from higher operating costs, while the temporary suspension of fertiliser tariffs until the end of 2027 could provide some additional relief. However, the impact is likely to be limited, as many UK fertiliser imports already enter tariff-free. AHDB notes that, so far in 2026, all ammonium nitrate imports and 57% of granular urea imports have come from the EU and were therefore not subject to import duties. The introduction of the Carbon Border Adjustment Mechanism from January could also temper the overall impact of the measure.

Diversified rural businesses could also benefit from increased Small Business Rates Relief, particularly qualifying farm shops, cafés and leisure enterprises. Conversely, the 3.9% increase in the National Living Wage from April 2027 will add to labour costs across farming and the wider supply chain.

“Sentiment in the farmland market remains closely tied to farm profitability, support payments and longer-term business confidence.” We have already seen some correction in arable land values as weaker profitability and tighter margins constrain farmers’ purchasing power and investment appetite. While the Budget may provide cost relief for some, it is unlikely to materially change these underlying pressures. In the near term, we therefore expect farmer demand for land to remain price sensitive.

As highlighted in our our Q3 Farmland Market Update

The Budget announced a new BNG exemption for residential development on brownfield sites of up to 1.5 hectares. While the outcome is not unexpected following the earlier consultation, it introduces further uncertainty for the natural capital market. The full implications will depend on the detail of the revised guidance, including how brownfield land is defined, how sites supporting priority habitats will be treated, and how the exemption will apply to mixed-use schemes.

More positively for the market, the Budget confirmed that BNG will be extended to Nationally Significant Infrastructure Projects (NSIPs) from November 2026, introducing a potentially significant new source of demand for biodiversity units. Infrastructure developers and utility providers are already considering how best to secure units, with procurement frameworks being established and supplier panels appointed as the market prepares for implementation.

An additional £1.5 billion has been announced to support the delivery of around 10,000 homes in England over the next ten years, with a focus on social and affordable housing, with funding prioritising Social Rent tenure units, particularly council homes. This comes on top of the £9.6 billion allocated earlier this year and takes total investment in the programme to more than £40 billion over the next decade.

Any additional investment in social and affordable housing is welcome, particularly given the significant pressures on housing waiting lists and homelessness across the country, and it would enable Council’s and Housing Associations to deliver tens of thousands of much-needed new social homes faster to those most in need. The commitment recognises the important role that affordable housing can play in addressing these challenges. What’s more, the benefits of this investment extend beyond the affordable housing sector. Increased delivery should support economic activity across a range of industries, not least construction and development. It could also help ease pressure on the private rented sector by enabling households who are eligible for affordable housing but currently renting privately while they wait for a suitable home, or to move into more appropriate accommodation.

The Regulation for Growth Bill will allow businesses to test and scale new technologies under temporarily adapted regulations, with successful reforms potentially becoming permanent. Regional leaders will help shape trials around local growth priorities, including defence technology, high-street licensing and environmental regulation.

A more flexible regulatory environment could accelerate development and investment, support innovation-led industrial locations and defence clusters, and reduce barriers affecting high-street uses, rural land and environmental approvals. Greater regional influence could also make local growth priorities increasingly important when assessing where future investment and development opportunities emerge.

A new financing model will be piloted for Cambridge Development Corporation, with potential implications for the delivery of new towns and other large-scale developments. Direct access to government finance for land assembly, alongside the ability to invest with private partners, could help overcome the substantial upfront funding and land constraints that often delay strategic schemes. Importantly, the pilot may provide a model for longer-term, more flexible development corporation financing, with a similar approach being considered for Oxford. If successful and applied more widely, it could strengthen development corporations’ ability to assemble land, fund enabling infrastructure and provide greater certainty for long-term development.

From a planning and development perspective, the proposed BNG exemption for brownfield residential sites of up to 1.5 hectares could help address viability challenges associated with bringing previously developed land back into use. Brownfield sites can be complex and costly to develop, with existing buildings, contamination and ecological requirements adding to delivery costs. Valuable habitats, such as Open Mosaic Habitat, can also result in significant BNG requirements.

Removing mandatory BNG from qualifying sites could therefore reduce costs and complexity, potentially unlocking residential development that may otherwise struggle to come forward. This supports the Government’s wider emphasis on prioritising brownfield development and accelerating housing delivery. However, much will depend on how brownfield sites are defined and ecologically valuable habitats are treated.