The Chancellor’s Autumn Budget has delivered several policy changes that will directly influence the prime central London property market. For homeowners, landlords, and prospective buyers in Kensington and Chelsea, two announcements stand out:
A new annual council tax surcharge for properties valued above £2 million, taking effect in April 2028.
A 2% increase in property income tax for landlords and investors from April 2027.
Below, Parkes Estate Agents breaks down what these developments mean for our clients and the local market.
From 2028, homes valued above £2 million will incur a new yearly surcharge. Initial estimates suggest charges starting around £2,500, with higher-value properties; particularly those over £5 million, facing annual costs in excess of £7,500.
Given the proportion of premium homes in Kensington and Chelsea, this policy is expected to reshape both buyer behaviour and seller strategy. We anticipate:
Increased attention on properties priced just below the £2m threshold
More detailed justification of asking prices for homes at the upper end of the market
Greater emphasis on long-term financial planning due to the delayed rollout
This extended lead time offers homeowners an opportunity to review valuations, plan future moves, or reposition properties effectively.
From April 2027, landlords will face a 2% rise in tax on property income. Although this will affect net returns, rental performance in Kensington and Chelsea continues to be robust. High tenant demand, limited supply, and consistently strong rental values mean well-managed properties remain attractive long-term investments.
Some landlords may reassess their portfolios in light of rising costs. Those who maintain high-quality homes and adapt strategically could benefit from:
Reduced competition
Longer tenancy durations
Continued capital growth over time
For investors, tax efficiency and the right ownership structure will play an increasingly important role moving forward.
Despite the policy shifts, the current climate is favourable for many buyers. Stable lending conditions and motivated sellers are creating opportunities; particularly for those purchasing below the £2m mark, where demand is expected to intensify.
For prime homes above £2 million, negotiability is likely to increase as the market digests upcoming costs. With informed guidance and careful selection, buyers can secure long-term value in one of London’s most prestigious postcodes.
We expect to see a period of market recalibration, rather than contraction. While transaction numbers may remain steady rather than surging, Kensington and Chelsea’s enduring appeal, its heritage architecture, cultural amenities, international pull, and investment stability; continues to underpin demand.
The area remains one of London’s most resilient markets, supported by both domestic and overseas interest.
As these reforms begin to take shape, our team at Parkes is here to provide clear guidance tailored to your circumstances. Whether you are considering selling, exploring investment options, or simply seeking clarity on how the Budget affects your property, we’re ready to help.
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