The Autumn Budget is due later this year. In five days, it will technically be the winter budget.
While the budget will have a significant impact regardless of when it comes, it is the upcoming budget that will impact the real estate finance market and hit prime real estate the hardest. It’s no secret that demand for bridging loans surges during times of uncertainty.
An increase in the stamp duty surcharge last year and a reduction in the threshold in April both triggered a surge in transactions, followed by a slowdown in the market. Second quarter (Q2) data from the Bridge and Development Lenders Association showed completions fell 8.9% after a historic first quarter.
Prime property market faces perfect storm
At the same time, the end of the non-resident tax regime has reduced demand from international investors, and prime property stock levels are near record highs, with prime London homes valued at more than £5 million up 24.9% year-on-year (August data).
On top of that, the autumn budget is rumored to be making some big changes. With the Budget being late, we have essentially witnessed another four weeks of market activity (already subdued) essentially frozen as many property investors await the impact of the Chancellor’s measures.
Possible consequences for the Autumn 2025 Budget are:
Property tax adjustment
One potential change is a complete redesign of property tax and stamp duty. This could include replacing stamp duty and council tax with an annual levy on homes above a certain value.
If this happens, any stamp duty paid before the changes are implemented will mean a significant loss of quality properties and the annual fee to retain such properties will be higher. Many buyers are holding off on buying as they wait to see what happens.
This challenging market offers a clear opportunity to provide transitional solutions where traditional financing is inadequate
Another rumor involves introducing capital gains tax (CGT) on primary residences above a certain threshold. If introduced, it could hinder (or even punish) downsizing and liquidity, further freezing the top end of the market. Properties with higher values will be hit harder.
What does bridging have to do with it?
Particularly at the high end of the market, confidence has almost plummeted and sales have slowed. Potential buyers are reluctant, and sellers may soon feel the same way.
The prime property market is facing a perfect storm – sellers are struggling to find buyers, but more buyers are likely to emerge as sellers retreat following possible property and tax changes in the autumn budget.
Adventurous buyers are still active, as evidenced by the £32m Savills auction on 1 October
Inconsistency in goals within the chain can lead to push and pull, exacerbating the already high demand for bridging loans.
Before the budget is introduced
Ahead of the Budget, we saw a surge in demand for bridging loans from sellers looking to close the loop on the conveyancing process, where they had exchanged properties but buyers were stalled or about to exit.
Other sellers may not have a legally binding commitment that needs to be completed but want to seize a time-sensitive opportunity and they can’t wait until the buyer is ready.
Some property investors may see the Budget as the last straw and use bridging loans to move into alternative investments
Opportunistic buyers are grabbing low prices for quick transactions for those looking to sell their properties before the Budget. Despite the uncertainty, adventurous buyers remain active, as evidenced by Savills’ £32m auction on 1 October. In these cases, bridging financing can often be completed quickly.
After the budget is announced
Announced changes may be implemented within the deadline. This could lead to a completion rush similar to that seen when stamp duty thresholds were lowered. New peak periods may arise when bridges are critical to completing purchases and sales.
If changes brought about by the budget make selling unattractive, those unable to sell may use bridging as a tool to borrow against their assets while waiting for a potential market rise later.
Additionally, some property investors may see budgeting as the last straw and use bridging loans to move to alternative investments.
As we know, demand for bridging loans surges amid uncertainty
The upcoming budget has created an unusual market dynamic, where uncertainty for some means opportunity for others, and constraints for some mean flexibility for others. The prime property market has had a tough year and the tardiness of this Budget has extended that uncertainty into what might have been the peak autumn sales season.
For brokers, this challenging market presents a clear opportunity to provide transitional solutions where traditional financing falls short.
Lucy Waters is Managing Director of Aria Finance
This article appears in the November 2025 edition Mortgage strategy.
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