Homebuyers and sellers are being left in limbo as fears grow that Rachel Reeves will use the autumn Budget to launch a tax raid on property. Coventry Building Society warned that “two months of uncertainty” ahead of the statement this autumn is already hitting the housing market, with families delaying moves and landlords threatening to hike rents.

The speculation centres on three possible measures: an overhaul of Stamp Duty, scrapping of Capital Gains Tax exemptions on high-value homes, and extending National Insurance contributions to property rental income. Government officials have criticised claims that these measures are on the cards and insist people should wait for the Budget rather than reacting to speculation.

However, Jonathan Stinton of Coventry BS said: “There is a difficult period ahead while we wait for the Chancellor’s Budget to confirm or deny any changes. Two months of uncertainty is unhelpful for the housing market, but brokers and borrowers have to do their best with the information they’ve got.”

He added: “Speculation is inevitable, but it’s not helpful. It makes people nervous about moving, nervous about selling, and nervous about buying. The housing market needs confidence, not confusion.”

Fears of a market freeze

Estate agents report that even rumours of higher taxes are paralysing activity. Zoopla said buyers are adopting a “wait-and-see” approach, particularly in London and the South East where values are highest.

Tom Bill of Knight Frank warned: “Weeks of more speculation in a tiresome re-run of 2024 will keep a lid on transaction activity and stamp duty revenue.”

Jeremy Leaf, former chair of the Royal Institution of Chartered Surveyors, told Mortgage Strategy: “Even rumours of a new property tax can have a detrimental impact on housing market confidence and activity.”

Data from Nationwide this week showed that house prices unexpectedly fell by 0.1% in August, with annual growth slowing to 2.1% – the weakest since June 2024.

The lender blamed stretched affordability and “speculation over potential tax increases in the autumn budget.”

Landlords braced for new charges

The Treasury is reported to be weighing up extending National Insurance to rental income – a move that could raise £2 billion a year.

But Ben Beadle of the National Residential Landlords Association warned: “Further punitive tax hikes on the rental sector will lead only to rents going up, hitting the very households the Government wants to protect.”

Jonathan Stinton of Coventry BS echoed the concern: “This move would be another hit to landlords but it’s tenants who’ll feel the aftershock. … This extra tax may just be the final straw.”

Timothy Douglas of Propertymark said: “Further tax imposition will mean less revenue for the Exchequer because it will drive landlords away from the market.”

High-value homes in the firing line

Reports suggest that Labour is also looking at removing Capital Gains Tax exemptions on homes worth more than £1.5 million. Analysts warn this could choke off transactions in wealthier areas and stall housing chains nationwide.

Tax expert Dan Neidle of TaxPolicy.org said his modelling shows that even a small rise in effective transaction costs could cut property moves by up to 7%.

With the Budget not due until October, the industry fears weeks of damaging rumours. Experts say the lack of clarity risks a self-inflicted slowdown at a time when the housing market was only just starting to recover.