Reeve's budget - Have the foundations been laid for a stronger property & construction sector?

Rachel Reeves’ Autumn Budget (delivered 26 November 2025) tried to thread a difficult needle: fund big public priorities while protecting the investment needed to build homes and infrastructure. For the property and construction sectors — which sit at the sharp end of housing targets, planning reform and capital spending — the Budget is a mixed bag of clear long-term commitments, near-term incentives and some new taxes that will matter most at the top end of the market.

Headlines for property & construction

- The Government reconfirmed and built on its housing and infrastructure commitments: the Budget sits on top of the earlier £39 billion Social and Affordable Homes Programme and the new National Housing Bank (c. £16 billion), and pairs those with targeted funds for housing delivery and new towns. These programmes are explicitly intended to accelerate large-scale supply and leverage private capital into development.

- Planning reform and “getting spades in the ground” remain central. The Budget and accompanying statements emphasise streamlining planning rules and reforming the National Planning Policy Framework to speed approvals — measures the government says will unlock hundreds of thousands of additional homes over the medium term.

- Capital spending protections and infrastructure focus: the Budget protects a large increase in departmental capital spending compared with previous plans, signalling sustained pipeline work for major projects and public-sector construction.

Tax and regulatory changes that hit developers, builders and landlords

- New high-value property levy (the so called, “mansion tax”)

The Chancellor announced an annual property tax starting in 2028 that targets homes valued above £2 million. It is designed to raise revenue from the high end of the market and will be collected via council tax banding/revaluation measures. Analysts expect the move to have only limited impact on mainstream markets but to affect the very top of the market and high-value investment decisions.

- Capital allowances and investment incentives

Crucially for construction firms and plant-heavy parts of the property sector, the Budget retains full expensing for business investment and introduces a 40% first-year allowance for qualifying main-rate plant and machinery from January 2026 — while reducing the main-pool writing down allowance from 18% to 14% from April 2026.

- Other measures that matter on costs and approvals

The Government pulled back from more punitive landfill tax mergers that had been a concern for builders.

Stamp duty was left broadly unchanged in the Budget, while a number of income-tax thresholds were frozen.

How the Budget interacts with the UK productivity problem

Productivity — output per hour worked — has been a long-running weakness for the UK and is central to long-term living-standards growth. The Office for Budget Responsibility (OBR) and independent analysts warn that business investment is fragile, and some forecasts show business investment could even fall in 2026.

Why this matters for construction and property:

- Construction is productivity-sensitive.

- Weak private investment prospects are a headwind.

- Skills and bottlenecks matter more than headline money.

Practical, near-term implications for the sector

- Housebuilders and developers

The mix of long-term grant funding, the National Housing Bank and planning reforms should support larger schemes and de-risked sites.

- SME builders and contractors

Landfill tax moderation, apprenticeship support and local delivery funds are likely to be welcomed by smaller firms.

- Investors and landlords

The new annual levy on properties over £2m will influence decisions at the very top end of the market and could weigh on high-value sales.

- Supply chain and plant hire

Capital allowances and the FYA improve near-term tax treatment for new plant.

A positive outlook for 2026 and recruitment opportunities

1. A clearer pipeline of funded projects.

2. Reasons to invest in productivity-raising roles.

3. Local and mayoral funding to seed regional growth.

4. Skills programmes and apprenticeships.

Bottom line

Rachel Reeves’ November 2025 Budget is not a silver bullet, but it does lay down a pragmatic framework: long-term public financing for affordable homes, a National Housing Bank to unlock private capital, planning reforms intended to speed delivery, and targeted tax measures to encourage business investment.

For property and construction businesses the practical next step is clear: convert policy clarity into action. Firms that invest today in modern equipment, digital working, training and site efficiency will be best placed to win the rising pipeline of funded work in 2026. That means recruitment now — for project managers, digital and off-site specialists, tradespeople and apprentices — is not just hiring for growth, it’s hiring to make future work cheaper, faster and higher quality.

This Budget creates a tangible chance to build capacity and lift productivity — and that’s an opportunity worth staffing up for in the New Year.