Flip-flops on property tax policy are stalling the mortgage market and piling pressure on brokers
A year of rapid and often contradictory Government moves on property taxation has pushed the mortgage market into a state of near paralysis. Sudden changes to stamp duty, the rollback of thresholds, leaks about National Insurance on rental income and persistent hints of new taxes on high-value homes have combined to stall activity across multiple segments. Brokers say the unpredictability is now doing as much to disrupt transactions as interest rate movements.
The turbulence began with the Autumn 2024 increase in the stamp duty surcharge on second homes and buy-to-let properties, which rose from three to five per cent. In April this year, the nil-rate band for main-residence purchases fell back to £125,000, while first-time buyer relief was reduced to £300,000 - a shift that altered affordability overnight and accelerated some completions before leaving a quieter market behind. Through the summer, landlords faced leaks suggesting ministers were considering National Insurance on rental profits, while high-value buyers reacted to the steady flow of briefings about a possible “mansion tax” or council-tax revaluation.
At Mortgage 1st, Jon Stones said this cumulative uncertainty “is having a big impact on pipelines,” with cases frequently “getting delayed” and deals needing to be rebooked as clients pause to reconsider their options. He notes that many customers underestimate the work involved in making repeated adjustments, saying they “don’t appreciate the amount of work of ‘oh, can we swap this or can we change this?’” and that he has observed “a lot of people waiting and holding off on things.”
Each new rumour or Treasury briefing triggers a fresh burst of client questions. “Emails will ping, and that will generate questions from clients, most of which it’s not relevant to them,” Stones said, pointing out that even a small proportion of his active and historic clients seeking reassurance consumes significant time. As he puts it, “flip-flopping… creates uncertainty, which creates questions, which creates additional work for advisors.”
The pattern is the same at Mortgage Required, where Craig Head said “the goalposts are moving so often” that long-term advice has become difficult, particularly for buy-to-let clients and first-time buyers. He notes that “buyers are stalling and sellers are hesitating,” describing the cumulative effect as feeding into a “paralyzed market while we all await the key announcements.” Even usually decisive clients are stepping back. “We can deal with higher rates,” he said, “but what is very difficult to deal with is uncertainty.”
What comes next?
With the Autumn Budget approaching, brokers are preparing for another round of client enquiries, but also for shifts that could reshape caseflow. If National Insurance on rental income is formally introduced, buy-to-let affordability will tighten further, prompting lenders to revise rental-stress models and pushing landlords to reassess the viability of their portfolios. Any confirmation of a high-value property levy is likely to suppress activity at the upper end, affecting remortgaging and purchase pipelines for high-net-worth clients.
Another change to stamp duty or thresholds could spark a familiar pattern: a rush to complete followed by a slowdown. And with income-tax thresholds frozen for longer, more landlords will be drawn into higher tax bands regardless of policy changes, adding another constraint on yields.
For mortgage firms, the winners in this climate are likely to be those that communicate proactively, model multiple tax scenarios for clients and invest time in advice rather than reacting transaction-by-transaction. The industry can adapt to higher taxes, but not to ever-shifting goalposts. As brokers across the sector have made clear, what the market needs most now is a period of stability, something it has been denied for a year.
