Chancellor’s low-key budget is good for property overall
29 October 2026
Given the volatility in global financial markets currently, Chancellor Healey’s main objective in yesterday’s Budget was to avoid doing anything that caused a backlash against UK gilts. Initial evidence suggests he has succeeded; indeed, gilt yields fell while he spoke. That is good news for the property market, as any further upwards pressure on interest rates would have been unwelcome.
Other encouraging announcements from a real estate perspective included the new scheme to support first-time home buyers, ‘Your First Home’. Share prices for housebuilders rose on the news, even though it had been leaked in advance, although the scheme is capped at households with a combined income of up to £110,000 (£140,000 in London), which will reduce its scope. Nevertheless, during the summer the residential market slowed based on some measures, making the new scheme well-timed. The programme commences in April next year, so the property market impact will come over the medium-term.
Plans for mayors to receive a share of business rates revenue should energise regional regeneration and property development over the long-term. There was also a boost for social housing construction with the removal of biodiversity requirements for development on brownfield sites, while land sold to social housing developers will be VAT free.
The increase in the threshold at which retail, leisure and hospitality firms pay business rates is positive news for the small unit markets in those property sub-sectors. However, smaller unit retail, beyond major city centres and towns with wealthier demographics, remains a generally challenged area for property, with footfall low and the consumer squeezed.
The Chancellor’s decision to increase the Bank Levy, from 3% to 6%, risks building a reputation that Britain is a country where big businesses are targeted for tax grabs; particularly as it follows windfall taxation of energy firms. Fortunately, the Bank Levy increase is time limited at 15-months, and we suspect the banks will largely accept the increase, as Brexit highlighted the problems and expense of relocating abroad.
Overall, it was for the most part a Budget of small measures. Nevertheless, that this fiscal statement is unlikely to spook the financial markets, and has several announcements that will offer some upside for property, makes this a Budget the real estate sector will broadly welcome. There are some ‘slow burner’ measures, like the assistance for first time home buyers’ scheme, that will be good for the economy and property market over the medium- to long-term.
