Dec’25 UK property – From pause to progress

The UK property market slowed slightly in the second half of 2025. This is because buyers were waiting for clarity on tax changes and Stamp Duty adjustments. With these uncertainties now behind us, interest rates are showing early signs of easing and property supply is more stable. Analysts expect prices to grow by 3% to 5% in the coming year.

London prices slightly softened

Zoopla’s recent data shows that average UK prices rose by 1.3% overall – driven mainly by northern regions where affordability, better supply conditions and lower tax rates supported growth of around 3%. London, along with parts of southern England, on the other hand, saw a slight decline due to factors like higher stock levels.

Supply in London is currently around 8% to 15% higher than a year ago, creating better conditions for buyers and encouraging negotiation. Rightmove reports suggest that the capital city’s average is £660,040, around 83% above the UK average of £364,833, proving London stands tall as a premium property market.

Buyer activity has also increased, with agreed-upon sales up by 4% since late 2024 as investors take advantage of the price shifts.

Mansion Tax announcement brings certainty

There were concerns earlier in 2025 that around 210,000 homes priced above £500,000 might be subject to tax. The Autumn Statement, however, has made it clear that this will not happen. Instead, only properties priced above £2 million will be subject to the new annual Mansion Tax starting April 2028.

These figures represent a mere 0.5% of all UK properties. Annual charges for this tax start at £2,500 for homes valued between £2 million and £2.5 million, rising to £7,500 for those over £5 million.

Price recovery expected in 2026

Analysts are predicting a price rise again in 2026 as buyer confidence resumes. Affordability is also improving and the price-to-income ratio is expected to drop to 8.2 in the coming year, down from 9.5 back in 2022.

Continued investor interest in London and Reading

Benham and Reeves recently presented several reputed Berkeley developments to global investors in Mumbai and Delhi, led by our Managing Director, Anita Mehra. Reading Riverworks, Oval Village, White City Living, South Quay Plaza and The Green Quarter were the projects previewed.

These developments are situated within proven regeneration areas surrounded by solid infrastructure, rental markets and demand. This reflects the continued focus from overseas buyers on stable investment prospects within London and Reading.

Malaysia & Singapore property events

Our Kuala Lumpur office recently launched The Verdean, which sits right next to Acton Main Line Station on the Elizabeth Line, Zone 3. This development offers convenient links to central London, Canary Wharf and Heathrow and has seen rental growth of 28% over the last three years, with an expected return on investment up to 5.5%*.

Our Singapore office showcased Lombard Square in Plumstead, where rental yields are expected to reach up to 6.2%* , as well as The Row in Abu Dhabi’s Saadiyat Island cultural district. These successful events confirm strong demand from overseas buyers for well-positioned property investments.

Rental income tax to increase in April 2027

Starting April 2027, rental income tax will increase by 2%. The basic rate will then be 22%, the higher rate will be 42% and the additional rate will be 47%. This translates to around £20 additional tax for every £1,000 of net rental profit.

London rents above the national average

Latest ONS data reveals that national private rents are set to touch 5% to £1,360 per month. London rents rose by 4.3% and are currently at £2,265; about 67% above the UK average. This news comes as the Renters’ Rights Act will begin to be implemented from May 2026.

This act will further remove Section 21 ‘no-fault’ evictions and introduce additional standards across the rental sector. For discerning foreign investors and landlords, complete lettings support, tenant management and compliance remain crucial.

Benham and Reeves Hong Kong supports investors

Benham and Reeves Hong Kong SAR office was established in 1995 to provide professional, on-ground London property investment services to Hong Kong buyers, sellers and landlords. Our multilingual team offers a one-stop service which includes London property sales and full letting and management services to investors in Hong Kong SAR, China, Taiwan, Macau and Japan.

In liaison with our London office, we handle all property-related matters on your behalf, from obtaining a right market price appraisal to recommending the best lawyer and mortgage broker.

If you are looking for an experienced team to assist you with buying, selling or letting your London property investment, get in touch with Benham and Reeves SAR today.

Disclaimer: The Verdean – Planning permission No.: 193424HYRBIRD and 221747HYRBRID granted by the London Borough of Ealing Council. Lease Term: 999 years. Estimated Completion Date: Building 1 – Q1 2029. Property reference number: BRHK-UK250902.

Lombard Square – Planning permission No.: 19/4398/O granted by the Royal Borough of Greenwich. Lease Term: 265 years. Estimated Completion Date: Q1 2026 – Q2 2028. Property reference number: BRHK-UK22SE2.

To buy or not to buy non-local off-plan properties? Assess the risks before you buy! 境外樓花買唔買？計過風險先好買！*Expected rental yield per annum, not guaranteed. Purchasers are acquiring an interest in the land, the building to be erected thereon and/ or a right to use and occupy the properties in the building. Computer-generated images for illustrative purposes only. Purchasing uncompleted properties situated outside Hong Kong is complicated and contains risk. You should review all relevant information and documents carefully before making a purchase decision. If in doubt, please seek independent professional advice before making a purchase decision. The non-licensed staff engage in estate agency work exclusively in relation to properties outside Hong Kong and they are not licensed to deal with any property situated in Hong Kong. Advertisement Date: 11 Dec 2025. Benham and Reeves (Hong Kong) Limited License No. C-092169.