Housing Market Cools Amid Tax Uncertainty under Rachel Reeves

The UK housing market is showing signs of moderation as buyers and sellers adopt a “wait-and-see” stance ahead of potential tax changes.

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What Triggered the Slowdown

According to data from Rightmove, the number of new buyer enquiries and new seller listings in September fell by around 5 % year-on-year — a post-summer bump failed to materialise.
The underlying reason appears to be speculation that Rachel Reeves, the Chancellor of the Exchequer, may introduce one or more new property taxes in the forthcoming Autumn Budget.
Measures under consideration reportedly include a new tax on home sales above around £500,000, removal of the capital gains tax exemption on primary residences above £1.5 million, and possibly a new council tax band for very high-value homes.

In short: when major tax changes are anticipated, market participants often delay decisions, which reduces transaction volumes and can weigh on pricing.

What This Means for the Mortgage Market

Because housing market activity influences mortgage demand, this slowdown is relevant for prospective buyers, remortgagers and landlords alike.

• Fewer transactions can mean lenders become more cautious in certain segments.

• It could push some buyers into longer-term plans, which may alter the timing for locking in fixed-rate deals.

• For remortgagers and buy-to-let landlords, increased tax burdens could reduce affordability or alter profitability.

While typical mortgage rates remain relatively stable, uncertainty around tax-driven costs adds another layer of complexity to affordability calculations.

How Buyers, Sellers and Lenders Are Reacting

Market commentary suggests the high-value end of the market is particularly affected. Zoopla data shows that activity for homes above £500,000 is down more sharply than in the rest of the market.
Some estate agents believe sellers are holding off listing, while buyers are delaying offers, hoping to see what tax reforms emerge.
That said, the market remains generally resilient and the tax changes are not yet confirmed, so this is more a story of sentiment than a direct pricing shock.

Key Numbers

• 5 % drop in buyer enquiries and seller listings in September vs a year ago

• Average asking price increase of just 0.3 % in October — below the long-term October average of ~1.1 %

• Potential annual property tax on homes above £2 m could raise around £1 bn nationally

As at 24 October 2025 London time.

What This Could Mean for Different Groups

First-Time Buyers
If you’re looking to buy, this period of reduced competition might mean more negotiating power. However, the uncertainty around tax means you should factor in possible additional costs.
Read more about first-time buyer mortgages.

Home Movers & Remortgagers
If you’re planning to move or remortgage soon, this could be a tricky timing decision. The slowdown might delay your sale or purchase; meanwhile, tax changes could affect your moving costs or future liabilities.
Consider speaking to a qualified mortgage adviser to evaluate your options.

Buy-to-Let Landlords
Prospective changes — such as ending the capital gains tax exemption on expensive homes or applying a new annual property tax — may alter the economics of high-value properties.
If your borrowing relies on rental income, build in tax risk in your calculations and seek buy-to-let mortgage advice.

Why This Matters for the Broader Market

Even if tax changes affect only high-value homes, the psychological impact can ripple across the entire housing market.
When sellers hold off and buyers pause, volumes shrink, liquidity falls, and price growth can soften.
For the Government, slower turnover may reduce stamp duty revenues in the short term — a potential irony as tax changes are being considered to raise funds.

Final Thoughts

The housing market isn’t locked into a downturn — mortgage rates remain competitive and affordability is improving compared to 2022 peaks — but the tax-cloud over the horizon is adding caution.
If you’re buying, selling, remortgaging or investing, it’s a good time to assess timing, costs and tax risks, and talk to a qualified mortgage adviser about your strategy. Information only; not advice.

FAQs

What property tax changes is Rachel Reeves considering?
The Chancellor is reportedly exploring a new annual or sales-based tax on homes worth over about £500,000, removal of the capital gains tax exemption on primary residences above £1.5 million, and additional council-tax bands for high-value homes.

Will these tax changes affect low-value homes?
According to current reports, proposed reforms are targeted at the upper end of the market (homes worth over ~£500,000 or £1.5 million). Lower-value homes appear less directly affected.

Does the tax uncertainty mean I should delay moving home?
Not necessarily. If you have good mortgage terms and meet affordability criteria, waiting purely for tax clarity may not always improve your outcome. Seek guidance from a mortgage adviser.

How might this affect mortgage rates?
Tax uncertainty doesn’t directly determine mortgage rates — these depend on base rate, swap rates and lender risk. But lenders’ appetite and borrower affordability could shift in affected segments.