Comment from Simon Rix, planning expert from the Homebuilding & Renovating Show on the changes announced in the Autumn Budget and how they shift the goalposts for developers and self-builders:
From my perspective, these fiscal changes turn planning strategy into one of the most critical financial levers a homeowner or developer has. In a climate of higher taxation, the “build it big and hope for the best” approach is dead; precision in what you get permission for is now a major way to protect margins.
Specifically, I think the most valuable angle is how strategic planning permission can solve the financial headaches created by this Budget.
How a planning consultant adds value in this new landscape:
- The “De-Mansionising” Strategy: Escaping the £2m+ Surcharge via Plot Subdivision Instead of the “strategic uglification” (which is risky and devalues the asset), the smart planning move is subdivision.
- The Issue: A single massive dwelling now attracts a punitive tax burden.
- The Planning Solution: Planning consultants such as myself can help owners of large plots or “mansion” sites secure permission to replace one high-value unit with two or three smaller, high-specification units. This keeps individual unit values under the tax threshold while increasing the total site value (GDV).
- The Expert Tip: Navigating local “character and density” policies is tricky here, but essential for tax efficiency. I’ve done this for a client in London myself and got the consent needed to subdivide a very large house into two still generous units.
- The Landlord’s Exit Strategy: Don’t Just Sell, Enhance With higher taxes on property income driving landlords to sell, many will dump assets cheaply.
- The Issue: A rush to the exit suppresses sale prices.
- The Planning Solution: Before selling, landlords should engage a planning consultant to secure “uplift” permissions. For example, obtaining Lawful Development Certificates for existing use, or securing permission for a loft conversion or rear extension without building it.
- The Expert Tip: Selling a property with “planning permission granted” separates it from the competition and maximizes the tax-free capital gain portion of the sale, offsetting the income tax hit.
- Quality over Square Footage: The “Planning Gain” of Sustainability As you noted, smaller, better-designed homes make sense.
- The Issue: High construction costs + high taxes = lower profit margins on sprawling builds.
- The Planning Solution: Planning policy is heavily favouring sustainability (Biodiversity Net Gain, energy efficiency). A consultant can help self-builders trade “bulk” for “quality” in the eyes of the LPA (Local Planning Authority). A smaller, Passivhaus-standard home is often easier to get through planning in sensitive areas (like Green Belt) than a standard mansion.
- The Expert Tip: Use the “exceptional quality” design arguments in the NPPF (National Planning Policy Framework) to secure consents that future-proof the asset against energy price hikes, making it more valuable per square foot.
Comment from Michael Holmes, property expert from the Homebuilding & Renovating Show on The Chancellor’s New Taxes on Residential Property:
The Chancellor’s recent budget announcement has once again placed residential property under scrutiny, with both higher-value homes and the buy-to-let market facing new tax measures. The introduction of a Mansion Tax, set to commence in 2028, will impact an estimated 2.5 million homes. Although the initial tax rates appear modest, this marks a significant shift in the taxation of home ownership, diverging from traditional taxes like Council Tax, which are directly linked to public service delivery.
Historical trends suggest that the threshold for this new tax may decrease while rates increase, further burdening homeownership—particularly for those planning to remain in their homes during retirement. This could incentivise empty nesters to downsize as they approach retirement or to liquidate equity before it is claimed by the state for healthcare costs or absorbed by inheritance tax.
The downward pressure on demand for homeownership—and consequently on house prices—will be exacerbated by additional burdens on buy-to-let investors, who will face a further 2% tax from 2026, following the introduction of national insurance on investment income. This follows a series of tax increases targeting landlords who own properties as individuals or partnerships, prompting many investors to exit the market. The resultant strain on the already undersupplied rental market is likely to drive up rents as landlords seek to recover lost margins.
The housing market is a crucial driver of growth in the UK economy, with house prices significantly influencing the rate of housebuilding. In this intricately interconnected market, all taxes imposed on home ownership—whether on occupiers or investors—are poised to have a negative impact on construction output and overall economic growth.