The 2025 UK Budget is shaping up to be one of the most important for the housing market in the last decade. With mortgage rates finally stabilising, buyer confidence slowly returning and landlords exiting the market at speed, the pressure on the government to deliver strong housing measures has never been higher. What the Chancellor announces will directly influence house prices, mortgage availability, investment decisions and affordability for millions of people. This full breakdown covers what is realistically likely based on government behaviour, economic conditions and current housing market trends.
Why This Budget Matters More Than Usual
The government is under huge political pressure. First-time buyer numbers have dropped, rental supply is falling, mortgage approvals have slowed and the construction sector is well behind delivery targets. When housing slows, the wider economy follows. That is why housing support is almost guaranteed to appear in the Budget. This time, the stakes are even higher as the government prepares for an election cycle where homeownership and living costs will dominate voter concerns.
Housing touches everything: borrowing, spending, labour mobility, investment, confidence and tax revenue. For that reason, the government is expected to introduce measures aimed at stimulating activity and boosting affordability across multiple parts of the market.
Stamp Duty Changes: The Most Likely Headline
Stamp duty is always the quickest, simplest and most effective lever the government can pull. History shows that changing stamp duty thresholds immediately boosts transaction levels, buyer enquiries and mortgage applications. The Chancellor knows this, and the market is expecting a targeted change. The most likely scenario is a temporary stamp duty reduction or a threshold increase aimed at first-time buyers and second-steppers.
Raising the tax-free threshold is one of the cleanest ways to stimulate movement. It could also be adjusted regionally, especially for higher-value areas like London and the South East, where the current thresholds no longer reflect average prices. A short-term holiday similar to 2020–2021 is possible, though a lighter version is more likely.
There is almost no chance of the government removing the 3% surcharge for second homes. It generates too much revenue. However, they may soften the rules for portfolio landlords who own multiple rental properties, especially as the rental crisis worsens.
The Mortgage Guarantee Scheme: Extension Almost Certain
The 95% Mortgage Guarantee Scheme is due for renewal, and the government has already hinted it will extend it. This scheme helps lenders offer 95% mortgages with more confidence, which is crucial for first-time buyers who cannot save large deposits. Extending it into 2026 is highly likely. The government may also encourage more lenders to participate or apply the scheme more heavily to new-build homes to support construction targets.
If extended, this will benefit first-time buyers nationwide, especially outside London where 5% deposit purchases are still achievable with sensible affordability.
Targeted Support for First-Time Buyers
First-time buyers are a core political group, and the government knows support in this area is a vote-winner. Expect several measures aimed directly at boosting affordability for new entrants to the market. Increasing the first-time buyer stamp duty relief threshold is almost guaranteed. Other possibilities include deposit support schemes, widening the Shared Ownership model and changes to ISA limits or qualifying property values.
If the government updates ISA rules (for example, raising the Lifetime ISA property price cap), it would have a huge impact on first-time buyer activity. Many buyers are currently blocked by the £450,000 limit, especially around London, Birmingham, Manchester and coastal growth areas.
Interest Rates: Could the Budget Influence Mortgage Pricing?
The government cannot directly set interest rates — that is the Bank of England’s responsibility — but it can influence the financial environment. When the Budget supports stability, affordability and economic confidence, lenders respond by pricing more competitively. We have already seen fixed rates fall from above 6% to the mid-4% range, with some lenders dipping even lower for lower LTVs.
A stable Budget with strong housing measures could push pricing down further into early 2025. Lenders look closely at Budget outcomes, and positive signals can lead to more aggressive rate cuts across both residential and buy-to-let products.
Landlords and Investors: Expect Measured Support
The rental market is under severe pressure. Landlords have been exiting due to tax changes, higher regulation costs and rising mortgage rates. This has reduced rental supply, pushing rents up sharply. The government cannot ignore this. Expect support measures — not huge tax cuts, but calculated adjustments designed to stabilise rental supply.
Based on industry commentary, likely changes include improved allowable expenses, incentives for energy-efficiency upgrades, capital gains tax adjustments for long-term landlords or a temporary easing of Section 24. A full reversal of Section 24 is extremely unlikely, but partial relief or transitional support is possible.
The aim will be to encourage landlords to stay invested without creating political backlash from renters. Expect balanced, targeted changes rather than broad tax giveaways.
Support for New-Builds and Developers
New-build delivery is far below target, and the government needs developers to build more homes. Instead of directly funding large developments, the government will likely support SME housebuilders, streamline planning and encourage first-time buyers to choose new-builds. Expect incentives such as planning fast-track zones, grants for small developers, and schemes that make new-build mortgages more competitive.
This could translate into higher lending caps for new-build flats, more favourable valuations, and increased competition between lenders offering new-build products. Developers may also receive support that allows them to offer more incentives such as deposit contributions or upgraded specifications.
Remortgaging in 2025: What Could Change?
Remortgaging activity slowed during the recent rate spikes, but the Budget could reverse that. If lender confidence grows and affordability rules are reviewed, remortgage options may widen. Homeowners with deals ending within six to seven months should review their options early. Locking in a rate before demand spikes can prevent delays and secure better pricing.
If stamp duty incentives appear, some homeowners may choose to move rather than remortgage. This could increase market mobility and push lenders to become more competitive with retention and switch products.
Will Budget Changes Push House Prices Higher?
Yes — stamp duty cuts almost always increase house prices. When the government intervenes to support buyers, demand rises rapidly. This leads to more offers, faster transactions and sellers increasing asking prices. While it will not create the extreme conditions of 2020–2021, it could stabilise prices where they are currently falling and lift values slightly in high-demand areas.
The combination of lower mortgage rates, stamp duty changes and buyer incentives would instantly shift market sentiment. Even modest incentives would be enough to spark increased activity across the UK.
The Impact on Different Buyer Types
The Budget will affect everyone differently. First-time buyers will benefit most if deposit support or ISA changes are announced. Second-steppers will feel the impact of any stamp duty adjustments directly. Homeowners looking to remortgage may see improved pricing and wider lender options. Investors could benefit from tax adjustments and energy-efficiency support.
High-LTV buyers may gain more choice and better pricing if lenders receive greater confidence. Higher earners and buyers in London or the South East would benefit from regional stamp duty threshold changes or ISA cap increases.
Regional Market Impacts
While the Budget will apply nationally, certain regions will feel the effects more strongly. London and the South East will be most affected by stamp duty changes due to higher average prices. Northern cities could benefit from first-time buyer incentives and improved lending options. Coastal and commuter areas may see increased activity if affordability support improves.
Scotland and Wales will see indirect effects, as devolved governments often react to UK Budget decisions with their own adjustments to local housing policy.
What Buyers Should Do Before the Budget
The best approach is to prepare early. Buyers should secure an Agreement in Principle, gather documents, review their credit file and speak to a broker before the Budget is announced. If the Budget triggers a wave of demand, delays will follow, and rates may change quickly as lenders react.
Buyers who prepare early will be in the strongest position to move quickly if incentives appear. This is especially important for first-time buyers and anyone with limited deposit options.
What Homeowners Should Do Before the Budget
Homeowners nearing the end of their fixed rate should consider refinancing early. Many lenders allow rate switches within six months of expiry. Reviewing options before the Budget ensures that if demand spikes, you are not stuck waiting in lender backlogs.
Those considering moving should also start preparing early. If stamp duty is reduced, competition will increase sharply. Being early in the process gives you a major advantage.
What Landlords Should Do
Landlords should review their portfolio affordability, check their energy performance requirements and consider improving their properties before any new incentives or rules are introduced. If capital gains tax is adjusted or partial Section 24 relief is granted, long-term landlords could benefit significantly. Preparing early ensures you can act quickly once the Budget is confirmed.
Final Thoughts
The 2025 Budget will play a major role in shaping the property market. Buyers, homeowners and investors all stand to benefit if the right measures are introduced. With rates stabilising and lenders showing increased appetite, the market is primed for renewed activity. Preparing early is the key to taking advantage of any Budget changes quickly.
If you want to understand how possible Budget changes could impact your plans — whether buying, remortgaging or investing — get in touch today for a full review of your options.