Autumn Budget 2026: what it means for UK new build and off-plan investors
Key takeaways
- Rental income tax rises further from April 2027 to 24%, 44% and 49%, two points more than last year’s Budget announced. Headline rates of income tax, National Insurance and VAT are unchanged.
- City Investment Funds will back city densification in seven mayoral areas, including Greater Manchester, Liverpool City Region, West Yorkshire and the West Midlands.
- Developers get a stable rulebook: no major building regulation changes this Parliament except for safety, and smaller brownfield sites are exempt from Biodiversity Net Gain.
- Your First Home gives first-time buyers 20% equity loans on new-build homes only, from April 2027. That supports developer sales, but also brings more owner-occupier competition for entry-level new-build units within local price caps.
- The UK keeps its fiscal discipline, with £15bn of headroom in 2029-30 and borrowing forecast to fall to 1.8% of GDP.
John Healey delivered his first Budget as UK Chancellor today. For investors in UK new build and off-plan property, whether you’re based in Birmingham or Dubai, it pulls in two directions. Rental income will be taxed more heavily from April 2027, but the government is also putting serious money and new powers into the regional cities where most new build investment happens, and making it easier for developers to build there.
The UK’s economic and fiscal position
The UK went into this Budget with one of the strongest growth records in the G7, recording the joint-fastest growth of any G7 economy in the first half of 2026. That is despite a difficult global backdrop: since the conflict in the Middle East began, borrowing costs have risen across every G7 country, and the Office for Budget Responsibility (OBR) expects the UK to pay around £14bn a year more in debt interest than it forecast in the spring. The government has chosen to absorb that cost using the headroom it built up last year, rather than through broad tax rises.
The detail behind that is encouraging:
- Growth: The OBR has upgraded its 2026 forecast to 1.2%, and the economy grew 0.7% in the three months to August.
- Investment: Business investment is up 7.5% since the start of this Parliament.
- Fiscal rules: The government meets its stability rule with £15bn of headroom in 2029-30, rising to £22bn in 2030-31, and its investment rule with £24bn to spare in 2029-30.
- Borrowing: Forecast to fall to 1.8% of GDP by 2031-32, with debt lower at the end of the forecast than today.
The Treasury points out that the UK delivered the biggest reduction in borrowing in the G20 this year, and is on track for the lowest borrowing in the G7 from 2029. For international investors, that track record matters. The UK has absorbed a major energy and interest rate shock without broad-based tax rises or tearing up its fiscal rules, and that kind of predictability is what gives overseas buyers the confidence to commit to a property that may not complete for another two years.
Rental income tax: what changes and what doesn’t
Last year’s Budget had already announced a two-point rise in the tax on rental income from April 2027, to 22%, 42% and 47%. This Budget adds a further two points from the same date, in what the government calls “a fair and proportionate approach”. From 6 April 2027, in England, Wales and Northern Ireland:
| Taxpayer band | Rate on property income from April 2027 |
|---|---|
| Basic rate | 24% |
| Higher rate | 44% |
| Additional rate | 49% |
Just as important is what hasn’t changed: there is no increase to the headline rates of income tax, National Insurance or VAT, and the government has kept to its 2024 Corporate Tax Roadmap. The Budget also says the government will modernise the taxation of company distributions, so investors who hold property through a company should watch for the detail.
Higher tax on rental income puts more weight on choosing the right property. Modern new builds typically come with lower maintenance costs, strong energy efficiency ratings and structural warranties. Those features protect net yield, which is what matters once tax is taken into account. Every investor’s position is different, so take tax advice before you buy.
If you invest from overseas, the rules you already work with stay the same. The Budget makes no change to the 2% Stamp Duty surcharge for non-UK residents, and your rent is still paid through the Non-Resident Landlord Scheme (NRLS), which means tax is deducted before it reaches you unless HMRC has approved you to receive it gross. The new property income rates apply to non-resident landlords too, so it is worth reviewing your position with an adviser well before April 2027.
A better environment for building new homes
For off-plan investors, the biggest risk is often delivery: will the scheme be built on time and on budget? Several Budget measures reduce that risk:
- Building regulations are stable. There will be no major changes for the rest of this Parliament, except to continue improving building safety, including the Grenfell Inquiry recommendations.
- Smaller brownfield sites are exempt from Biodiversity Net Gain. Residential brownfield developments of up to 1.5 hectares in England are being exempted, cutting costs on many city centre and regeneration sites – how these exemptions translate for investors remains to be seen but could signal the start of better inner city redevelopment projects which can perform well for property investors.
- Planning is going digital. Councils must publish key planning documents as open data by the end of 2027, and the government’s PlanAssist AI tool will be offered to every council in England.
- Social and affordable housing gets £1.5bn more, taking total investment to more than £40bn over 10 years, supported by a new VAT relief on land sold to registered social housing providers.
A predictable rulebook is good news for anyone buying off-plan, because it reduces the chance of costly mid-build changes and supports a steady pipeline of new homes in the UK’s growth cities.
City Investment Funds: densification in the regional cities
The Budget confirms City Investment Funds, made up of grant, loan and patient capital, for mayors to deliver city densification. They cover:
- Greater Manchester
- Liverpool City Region
- The North East
- South Yorkshire
- West Yorkshire
- The West Midlands
- Greater London (Housing Accelerator Fund only)
This sits alongside the government’s “roadmap to fiscal devolution”, which it calls the biggest transfer of power and resources out of Whitehall in a generation. From April 2027, mayors will receive a share of business rates and a permanent 20% share of business rates growth. Nine strategic authorities will also get Business Rates Retention Zones, keeping 100% of growth above a baseline for 25 years. Good Growth Funds get £285m of seed funding in 2027-28 and a £1.5bn mayoral borrowing facility from April 2028.
This is the most significant signal in the Budget for new build investors. Government money is going specifically into denser city centre living in the same regional cities where we see the strongest rental demand, and in our experience that kind of city centre growth tends to bring employers and young professionals with it.
Regional growth projects to watch
The Budget names projects right across the country. These are the ones we are watching most closely in the cities where our investors buy:
- Birmingham and the West Midlands: the Birmingham East Mayoral Development Corporation aims to deliver 50,000 jobs and 20,000 homes, the West Midlands Investment Zone is backing advanced manufacturing, and the Midlands Rail Hub will improve rail links across the region.
- Wolverhampton and the Black Country: the Budget highlights the new Black Country Metro extension into Dudley and the transformation of Wolverhampton city centre, where our Penny Place apartments are located.
- Manchester: a new Centre for Cyber and AI Excellence will train the next generation of cyber and AI security specialists outside London.
- Leeds: more than £300m for the Leeds Existing Station Programme by 2030, plus funding to expand Leeds College of Building.
- Liverpool: £20m to turn the long-derelict Littlewoods site into a 260,000 sq ft creative campus for film, TV, gaming and digital industries.
Andrew Segal, Managing Partner UK and EU at Joseph Mews, said: “Nobody likes paying more tax, and the higher rate on rental income will make me and my team even more selective about where we point our investors. What encourages me is where this Budget is putting its money. Funding and decision-making are moving out of Westminster and into the regional cities, and Birmingham and the West Midlands are right at the heart of that, from the new development corporation in Birmingham East to the Metro extension into the Black Country. For investors who choose the right city and the right developer, the long-term case for UK new build still stands.”
Your First Home: what it means for new build investors
The new Your First Home scheme is aimed at owner-occupiers, but it will still change the new-build market that investors buy into.
The scheme helps first-time buyers purchase new-build homes in England from participating developers, with a 2.5% deposit and a 20% government equity loan. The loan is interest-free for five years, then charged at 1.5% in year six and 3% from year seven. It is backed by £4.7bn over five years, starting with £700m in 2027-28 and rising to £1bn a year, with the first sales from April 2027.
Price caps are set by local authority area. Published examples include Manchester at £355,000. The cap for Birmingham has not been published yet, and the full list is due shortly.
Developers pay to take part, with fees based on the final sale price. They pay 1% on their first 100 scheme sales each year, 3% on the next 150 and 4% beyond that, so a developer selling 500 scheme homes would pay an average of 3.1%.
For investors considering a first step or portfolio expansion in the UK, it’s well worth looking at these as considerations:
- More competition for entry-level new-build stock. First-time buyers with 2.5% deposits will be competing for the same one- and two-bedroom new-build apartments that many investors target, especially where prices sit within local caps.
- Stronger sales rates support delivery. A funded pipeline of owner-occupier buyers helps developers sell homes and fund construction. For off-plan investors, that can reduce delivery risk on schemes that sign up.
- Watch developer pricing. Participation fees of up to 4% may influence how developers price scheme homes and what incentives they offer to other buyers, including investors.
- Exit strategies still rely on the open market. Once a home has been lived in, it is no longer a new build, so buyers of an investor’s property later cannot use Your First Home. Resale buyers can, however, use Lifetime ISA savings, and from 29 October 2026 those can be used on homes above £450,000 with a reduced 20% withdrawal charge.
In our view, Your First Home is good for the overall health of the new-build market, but it will increase competition for entry-level units. Investors should focus on locations and property types where rental demand is deep and where they are not simply competing head-to-head with assisted first-time buyers.
Lettings: a more regulated market
The Renters’ Rights Act came into force on 1 May 2026. No-fault evictions are now illegal, and tenants can challenge rent increases above market levels. With higher tax on rental income from April 2027, running a UK rental property now takes more expertise, especially for investors based overseas.
Speak to Joseph Mews
Whether you are based in the UK or overseas, the Joseph Mews team can help you find new build and off-plan development opportunities in the UK postcodes with the best anticipated growth. Get in touch with Joseph Mews to discuss your investment plans.
Frequently asked questions
How does Budget 2026 affect buy-to-let investors?
The main change is higher tax on rental income from April 2027. Headline rates of income tax, National Insurance and VAT are unchanged, and the government is investing heavily in regional cities.
What will the new property income tax rates be?
From 6 April 2027, property income in England, Wales and Northern Ireland will be taxed at 24% for basic rate, 44% for higher rate and 49% for additional rate taxpayers. These rates apply to overseas landlords too.
Can overseas investors still buy UK new build property?
Yes. Nothing in the Budget restricts overseas buyers. Overseas investors should take advice on UK tax and on the rules in their home country.
Which UK cities benefit most from Budget 2026?
City Investment Funds for densification go to Greater Manchester, Liverpool City Region, the North East, South Yorkshire, West Yorkshire, the West Midlands and London. All mayoral areas gain a share of business rates growth from April 2027.
Is off-plan property still a good investment after the Budget?
That depends on the location, the developer and your goals. Stable building regulations and the Biodiversity Net Gain exemption for smaller brownfield sites reduce some delivery risk for off-plan buyers.
What is Your First Home and why does it matter to investors?
Your First Home is a £4.7bn equity loan scheme for first-time buyers purchasing new-build homes in England, with first sales from April 2027. It supports developer sales, but it also means more competition for entry-level new builds. It cannot be used on resale homes, so it will not help investors when they come to sell.
About this article
This article was written and published on 28 October 2026, the day of the UK Autumn Budget. It draws on HM Treasury’s Budget 2026 document, the Chancellor’s Budget speech, the Office for Budget Responsibility’s forecasts, and press coverage including The Telegraph.
The information is correct at the time of publication. Budget measures may change as they pass into law, and some details are still to be published. This article is general information only and is not financial, investment, tax or legal advice. Property values and rental income can go down as well as up, and past performance is not a guide to future returns. Off-plan purchases carry additional risks, including construction delays. Speak to a qualified tax adviser, solicitor or independent financial adviser before investing. Overseas investors should take advice on both UK tax and the rules in their home country.