The 2025 Autumn Budget has been one of the most anticipated and hardest to predict in recent years, and its potential impacts appear more consequential given the volatile growth the economy has experienced.
This will certainly be a significant moment in setting the path for how the UK government manages growth in the coming years, and our experts at Avison Young have outlined their perspectives on a number of key factors impacting on the real estate market, including business rates, planning reform, housing policy, investment, as well as the broader economic outlook and what it means for our clients.
“However, the government has not reduced the retail, hospitality and leisure sectors multipliers as far as expected, offering only £800 million of help, rather than the £1.8 billion of RHL relief provided in the current 2025/26 rate year. This means that rather than the government push for a 6p increase in the top rate multiplier, paid by all businesses over RV £500,000, the top rate differential is only 2.8p.
We welcome the tempering of the top rate multiplier by government. Many industries are being severely penalised facing some of the largest 2026 valuation increases. This has been tempered through the restriction in the top rate multiplier, although at the expense of the extent that government was prepared to help the retail, hospitality and leisure sectors.”
“Today’s Budget shows that Rachel Reeves is clearly seeking ways to target the cash locked up in some of our most valuable assets – our homes. By revaluing and introducing a council tax surcharge for properties, the ‘mansion tax’ is set to hit homeowners with properties worth over £2m. This may encourage greater velocity of downsizing but is unlikely to shift the dial on residential market activity in the short term.
Landlords are also targeted – with many questioning the need to pay national insurance contributions – and I expect to see many more ‘part time’ landlords (those who have inherited a property, or have upsized/downsized) to sell up, seeing it as simply not worth the hassle.
The funding and ambition for affordable housing, as signified in the June Spending Review announcement of £39bn to support a decade of supply, is very welcome, as are plans for the National Bank, bringing the promise of low-cost debt and equity to support supply. The ambition is to build 300,000 affordable homes over the programme’s lifetime, with 180,000 for social rent.
High grant rates and access to lower cost debt will go some way to creating the financial capacity amongst social landlords and partners to build more homes. However, clarity is still needed on supporting policies such as rent convergence and on standards applying to existing homes, as these have spending implications which will weigh down capacity for new supply.
The continued focus on integrated funding settlements for established mayoral combined authorities is welcome, as many development schemes continue to face viability challenges. The combination of affordable housing grants alongside initiatives like the Brownfield Housing Fund and Local Growth Fund will be vital to unlock stalled sites across all tenures and get more homes under construction.”
DEVOLUTION
“While we welcome Labour’s development first approach, the real impact will be determined by the specifics of the implementation and public and private sector collaboration for housing delivery will be a key”
“This Budget has the potential to reignite regeneration across the UK regions. With billions being invested in transport, New Towns being created, and high streets given vital tax relief, there’s a foundation for long-term placemaking that could transform our towns and cities.
Take Manchester’s Victoria North – a brownfield site now officially named by the New Towns Taskforce – and the South Bank regeneration in Leeds, with the latter given further funding by the Chancellor in the Budget. These are two examples of vital Northern revival, delivering thousands of homes and bringing employment, culture and commercial space into new communities. When you combine this with the funding announced earlier this year for a £2.1bn mass transit system in West Yorkshire and £2.5bn for Greater Manchester’s trams, you start to see the threads of placemaking coming together.
But this won’t happen by accident or by sheer goodwill. The government must back its cash with coherent policy, targeted place-based funding and support for business. The recently announced Green Book pilot in Liverpool, Birmingham, Plymouth and Port Talbot was a step in the right direction, introducing place-based business cases to assess key projects. Likewise, the commitment of £13bn in flexible funding for seven mayors to invest in skills, business support and infrastructure, driving forward devolution across our regions, and specific packages for Northern Ireland, Scotland and Wales, which will encourage private investment in these areas, particularly in sectors outlined in the industrial strategy, such as AI and advanced manufacturing.
Strong placemaking supported by infrastructure gives investors the confidence to back ambitious schemes, revive heritage spaces and bring new life to our streets, and that’s how you can turn the words of the Budget into real economic growth, not just sentiment.”
GREEN PROSPERITY PLANS
“Labour’s Great British Energy is only possible with robust infrastructure to support”
“This is a pivotal moment for retail and hospitality. Our high streets and town centres continue to face intense pressure to drive footfall. The government now has a real opportunity to rebalance the system with a more equitable business rates model, one that eases the burden on businesses with physical premises while ensuring online-only retailers contribute a fairer share, and I was encouraged to see Reeves reference this by introducing customs duty.
Recent increases in National Insurance have placed further strain on already tight margins, and targeted support, such as a reduction in business rates for retail, leisure and hospitality, will provide meaningful relief and stimulate demand.
Taken together, these measures do provide some relief for the shops, pubs and restaurants that sit at the heart of our communities, but more is needed to secure the long-term future of our high streets.
Some of our regional high streets are struggling because of online retailing, loss of key anchor tenants, and the strengthening of city centres. As a result, regional regeneration is now critical – and the government must address this, providing predictable, long-term funding that supports the regeneration of our towns and city centres, creating attractive hubs for businesses to grow.
Ultimately, what the sector needs now is a credible, future-proofed strategy that empowers our regions to prosper, supports high streets and encourages investors to step up."
PLANNING REFORM
“Labour’s planning reform is hoped to boost housebuilding, but it must not overlook the need for an industrial strategy”
“In her scene-setter speech earlier in November, Rachel Reeves promised to rip up the planning rulebook, setting the tone for planning to be a core part of the government’s growth agenda in the Budget. She promised that the first part of planning reforms will add an additional £6.8bn to the economy in the next five years, making it a lever for housing and infrastructure growth.
Early indicators suggest that the March 2025 residential planning reforms have yet to deliver tangible results, with most of the anticipated increase in housebuilding expected from 2027-28 onwards. But before we get ahead of ourselves, the Planning and Infrastructure Bill must cut the red tape to get Britain building again. Already, the government has confirmed it is set to fall short of the target to build 1.5 million homes before the next election.
Planning reform will unlock stalled permissions for major housing schemes, prevent applications being rejected by councils, and allow new developments to be approved more quickly. At the same time, potential amendments to the Bill, such as the introduction of additional environmental safeguards, along with local constraints like a shortage of viable development sites in some areas, could limit land availability and slow progress.
But it's imperative that we join the dots between planning and investment, aligning delivery with viability. It won't be a quick fix, or a one-size-fits-all approach, and increased funding from the Autumn Budget won’t fix delays straightaway.
Local authorities must engage with developers earlier and respond quickly to new metrics. Speed, certainty and scale are what the government is likely to look for, and those who engage early with this new norm stand to gain the early-adopter advantage.”
THE ECONOMY
“Labour’s planning reform is hoped to boost housebuilding, but it must not overlook the need for an industrial strategy”
“I remain confident that the City’s global reach and deep capital markets will underpin its resilience. London is the UK’s fintech capital, and over half of the UK’s financial services economic output is generated through activity here.
This creates a compelling opportunity with London which remains Europe’s leading destination for foreign direct real estate investment. The city’s office market is regaining its strength as an asset class, supported by sustained global interest and the UK’s broad diversity of investment-grade sectors, from logistics and living to life sciences and tech.
This moment should be used to reinforce London’s stability and its position as a gateway for global capital. Attracting both domestic and overseas investors into income-generating UK assets is essential. London has an unparalleled concentration of talent, innovation and sector diversity and we should be bold in showcasing that. The world is watching.”
“Recent business and consumer surveys have shown trepidation over what measures the Budget may contain, prompting a ‘wait-and-see’ attitude that has slowed the economy. The constant back and forth over which taxes will rise has done no one any good. However, at least now everyone knows where they stand, and we have the possibility of a Bank of England base rate cut of 25 bps in the comings weeks to shift the mood in the economy towards positivity.
Most of the Budget measures will be applied in April next year, and I expect the economy to hit a pothole in that month. Thereafter, the dampening effect of higher taxes will be more than counterbalanced by the tens of billions of pounds to be spent on infrastructure investment, research and development projects and defence. I am also forecasting two more Bank of England rate cuts next year totalling 50 bps, and for inflation to trend downwards.
So, I see 2026 as a year of growth for Britain, and a good time for opportunistic investors to take a closer look at UK property.”
