01/12/2025
🏠Key changes that will affect property & home-owners
1. New “Mansion Tax” for high-value homes
• The government is introducing a new annual surcharge on homes valued at £2 million or more (as measured in 2026 valuations), starting in April 2028.
• The surcharge will be: £2,500/yr for properties £2 m–£2.5 m, rising up to £7,500/yr for properties valued over £5 m.
• While many properties in Havering are likely well below that threshold, this will affect owners of high-end properties (especially luxury homes).
Impact: If you own a high-value home locally (or plan to buy one), you should factor in a substantial ongoing tax bill — not just upfront taxes or mortgage costs.
________________________________________
2. Higher tax on property income (affecting landlords / buy-to-let owners)
• From April 2027, the tax rates on income from rental property will rise: basic rate becomes 22%, higher rate 42%, additional rate 47%.
• This means landlords’ net returns (after tax) could shrink — which may lead to rent increases, fewer landlords, or landlords reassessing whether to hold property.
Impact: For those renting out properties in Havering, this could raise the cost of letting and potentially reduce rental supply — affecting renters and landlords alike.
________________________________________
3. Local council tax increase in Havering for many homeowners (already underway)
• The local council (Havering Council) has recently approved a 4.99% increase in council tax for 2025/26, as part of its budget to plug a £70 m+ shortfall.
• In addition, they’ve proposed increases in fees, charges, and rents for council tenants — reflecting rising costs across services.
Impact: Even if you don’t own a high-value home or rent out property, regular households in Havering will likely see higher yearly bills.
________________________________________
4. Potential pressure on property values (esp. high-end houses) and demand dynamics
• Because the surcharge applies above a high-value threshold, it may cool demand for luxury homes (people may be reluctant to commit to extra annual payments).
• For landlords with expensive properties, reduced net yields might make them sell — adding supply, which could depress prices for high-end homes or shift demand downward.
Impact: If there are many investors or homeowners with higher-end properties nearby, this may gradually shift the local property market — potentially making high-end homes less attractive, or lowering prices/rental yields in that segment.
________________________________________
5. Increased cost for renters may flow from landlords reacting to higher taxes
• With rental-income tax rising, landlords may try to pass some of the extra cost onto tenants (higher rents), or decide to sell properties — reducing rental supply.
• In areas like Havering, this could lead to rent increases or reduced availability of rental properties — particularly if landlords with older or marginally profitable properties exit the market.
Impact: Residents renting in Havering may see upward pressure on rents, or find less rental property available, which could make renting less affordable or more competitive.
________________________________________
⚠️ A few caveats and who will (likely) be less affected
• If your home value is well below £2 million — which is likely for the majority of properties in Havering — the new “mansion tax” won’t apply.
• The increased property-income tax from 2027 affects mainly landlords and those drawing income from property; homeowners of their own residence only are less impacted.
• The local council tax increase affects all residents, but the impact is more modest compared to the surcharge on multi-million-pound homes.
