Changes to UK real estate tax: opportunities for reform and investment

Stacy Eden

Monday June 30, 2025

Stacy Eden leads the real estate team at RSM. Stacy recently took part in a panel session hosted by Women in Property in partnership with RSM, at UKREiiF.

Recent analysis has revealed that the UK has the highest property tax burden in the G7. The average developed country pays 2.7% of its gross domestic product (GDP) in property taxes while the UK is more than a third higher at 3.7%.

For the highly taxed UK real estate industry, the Spring Statement was more about what wasn’t announced than what was. Ahead of the Chancellor’s update, the industry held its breath hoping for some good news about the myriad of taxes they pay. Unfortunately, all it got was a consultation on advance tax certainty for major projects. There was no relief for the stamp duty land tax (SDLT) increases which have now kicked in for the housing market, no measures to mitigate the burden of business rates, and no action to address rising capital gains tax (CGT) rates. Some help, no matter how small, would have been widely applauded by the real estate industry.

RSM’s latest Real Estate 360° survey reported that the overarching sentiment is that tax concerns, whether based on actual changes or perceived threats, have undeniably come to the forefront of investment considerations. Real estate businesses ranked the tax rules they believe should be reformed to increase investment in UK real estate evenly across the board, with 31% ranking CGT and stamp taxes above the rest. A third cited additional tax concerns as an investment barrier. The report further explores the tax reforms needed to stimulate investment, boosted by more certainty and clear rules.

However, the recent government spending review revealed a challenging fiscal position and has left the Chancellor with little room for manoeuvre. The combination of increased spending commitments and a challenging outlook make further tax increases in the next Autumn Budget increasingly likely. Through manifesto commitments the government has been boxed in and the decision to raise National Insurance contributions was to the detriment of employers, adding additional financial pressure and reducing capacity to hire and retain staff. The abolition of the non-dom regime and inheritance tax changes may have made the UK less attractive as a place to reside and for inward investment.

To address the housing crisis, the government aims to speed up planning and achieve its ambitious new homes and affordable homes target. However, tax constraints remain a key concern for investors, showing the necessity of further reforms to drive investment and ensure mandatory housebuilding targets are realised. Additionally, the shortage of planning officers, is also delaying progress.

In the longer term, sustained economic growth depends on businesses having the clarity and confidence to invest with certainty, meet housing demands, and bring liquidity to the market.

Read more

RSM’s latest Real Estate 360° report reveals the outlook for the year ahead and analyses the challenges and investment opportunities real estate businesses are facing. Based on a survey of over 200 respondents, it covers key topics including the economic and funding outlook, asset class trends, the tax landscape, infrastructure and policy, and sustainability.

To find out more, view the report here.

 


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