Rachel Reeves has delivered the first UK Budget from a female Chancellor of the Exchequer and the first for the new Labour government, saying the only way to drive economic growth is to "invest, invest, invest".

The property industry has responded to a series of major changes in key areas such as business rates and housebuilding, as well as promises to unlock major investment in development and infrastructure via planning reform and reform of pensions investment.

This story will be updated with further commentary.

The Budget also gave business and the public confirmation of the Party's broader economic priorities with Reeves pledging a Budget that, while raising £40 billion from taxes, would deliver: "More pounds in people's pockets, an economy that is growing and an NHS when people need it." She said there would be "more jobs in every corner of our country".

The headline fiscal decisions included hikes to capital gains tax and employers’ National Insurance contributions but no increases to VAT, income tax or employees' National Insurance payments. Tax on carried interest will be increased but fuel duty will be frozen.

Reeves spent much of her opening remarks slating the previous government, accusing it of a cavalier attitude towards revealing the true nature of the country's finances. She said her government was now publishing a line-by-line breakdown of the £22 billion "black hole" it inherited from the previous government. And she said she was restoring stability to public finances and rebuilding the country's public services.

There was plenty in the Budget that will affect the real estate sector and broader business.

Will Matthews, head of commercial research at Knight Frank, described it as a "momentous" Budget with potentially major impacts on commercial property.

“Most developed economies face some version of the UK government’s uncomfortable challenge. Whether by accident or design, the UK again finds itself at the head of the queue for a dose of tough medicine. It’s a bruising process, but some health benefits are immediate: fiscal clarity, an emergent industrial strategy, and a real basis on which to make long-term investment decisions. This was a momentous budget, in scale, significance and severity – but given the anticipation, an event perhaps lacking a true element of surprise. That was certainly the assessment of the bond markets, which largely it shrugged off."

For commercial real estate, Matthews said a few themes stand out. "First, the government’s supply-side push majors on infrastructure investment. We need to see the detail, but we can expect a positive impact for commercial development.

“Second, the ‘Get Britain Working’ campaign, at the margin, could boost employment and increase demand for employment space, but we’ll be alive to any counter impact from higher minimum wages and higher employer National Insurance contributions.

“Finally, the changes to carried interest and the end of the non-dom regime will be felt but do not disadvantage the UK versus other G7 economies.”

Walter Boettcher, head of research and economics at Colliers said it was hard to read how the Chancellor’s announcements have been interpreted by markets. "Volatility in the UK bond and equities market during the course of the Autumn Statement announcement has given way to a higher 10-year gilt rate than previously, suggesting that while many of the measures had already been priced in since mid-September, there’s still concerns by market participants on the budget’s impact on business and investment markets.

“The changes that have been announced will give many property investors pause for further thought at a time when the UK market was expecting greater certainty and a new momentum – perhaps the Bank of England can salvage this trajectory at next week’s meeting. Further rate cuts are expected by the end of the year, although the National Insurance and National Living Wage announcements could increase inflationary worries, which are already evident in the new Office for Budget Responsibility forecast.”

Adam Challis, head of UK research at JLL, said: "The starting gun for this government has now gone off. The 'Great Reset' Budget restores investment in housing and key infrastructure to drive productivity.

"Real estate will be excited by the £5 billion for housing and the range of transport and green energy infrastructure investment. This budget has set out clear ambition from Government. To be successful, it will need private sector partnerships to align with that ambition to grow the UK economy."

On the key issue of business rates, the Treasury confirms the government will permanently lower multipliers for retail, hospitality and leisure properties from 2026-27. To make sure this tax cut is fiscally sustainable, the government intends to fund it through a higher multiplier for the most valuable properties.

The Budget also provides £1.9 billion of support to small businesses and the high street in 2025-26 by freezing the small business multiplier and providing 40% relief on bills for RHL properties, up to a £110,000 cash cap. This means that many businesses will see their business rates nearly double, rather than quadruple.

The government has begun a consultation with businesses, in a Discussion Paper, setting out its priority areas for these reforms, and inviting industry to help co-design a fairer business rates system.

The Valuation Office Agency is publishing a response to the March 2023 Consultation on Disclosure, which sets out the next steps on increasing the transparency of business rates valuations by disclosing more information.

Industry figures welcomed the fact that the Labour Party sees that the system needs reform and has provided some relief, but were again disappointed that a government had not gone far enough in overhauling the system given its pledge to abolish it.

Altus immediately estimated that the reduction of the business rates discount for retail, hospitality and leisure firms in England from 75% to 40% from 1April for the 2025-26 financial year will mean an average 140% rise in business rates bills for more than 250,000 high street premises in England next April.

Alex Probyn, its president of property tax, said: "Despite Labour’s manifesto recognition of the undue burden business rates place on our high streets, this Budget actually increases that burden by £688 million for those types of business for next year in the short term.”

Melanie Leech, chief executive of the British Property Federation, said that with no concessions on the overall business rates burden the announcements by the Chancellor on this are just "robbing Peter to pay Paul".

Leech added: "However, the Chancellor has at least recognised the business rates system is broken and has signposted the direction towards a reformed system. In the meantime, recognition of the unsustainable burden on retail, leisure and hospitality sectors and measures to continue to support them are welcome, but alongside the employer tax increases announced don’t go far enough to provide our high streets with the protection they need today."

Simon Green, head of business rates at Gerald Eve, was more critical. He said: "Businesses will be hugely disappointed. After three years of Labour promising abolition and replacement of the business rates system, which remains one of the highest taxes of its type in the western world, it looks like the business community is set for further delay as the government engages with stakeholders about changes that at best seem likely to lead to mere tinkering around the edges. This falls woefully short of what they were hoping for.”

Vivienne King, chair of the Shopkeepers' Campaign, said: “Restricting retail, hospitality and leisure relief will leave shopkeepers facing higher business rates bills in April. We needed a comprehensive overhaul of business rates to address the failures in the system that continue to plague our high streets.

"We will continue to urge the government to take action to stimulate investment in the retail economy and the revitalization of our high streets.”

David Parker, head of rating at Savills said: “The need to assist smaller businesses is undoubtedly acute and this measure goes some way to addressing that in part, but general business rates bills are unpopularly high, and have been for many years and so whilst the introduction of 40% tax relief for retail, hospitality and leisure properties up to a maximum of £110,000 per business is welcome, it is a reduction from the previous 75% relief, which will disappoint many.

“The annual multiplier in 1990 was 34.8p, meaning the annual bill was hypothetically 34.8% of a property’s rateable value. With it now approaching 60p (or 60%) of a rateable value for some properties, it’s disappointing that the funding of the relief to smaller businesses is at the direct expense of larger businesses."

John Webber, head of business rates at Colliers, said: "The Chancellor’s announcements concerning business rates today were desperately disappointing. Despite pre-election promises of business rates reform, nothing of significance was announced. There is to be no consultation, just a discussion document, and the measures announced hardly put a sticking plaster over the gaping wound rather bringing in any fundamental reform."

The Labour government's Budget pledges ambitious planning reforms to remove blockages to growth, the development of a 10-year infrastructure strategy to be published alongside Phase 2 of the Spending Review, the publication of the Get Britain Working White Paper shortly, and the establishment of Skills England to ensure there is the "highly-trained workforce needed to deliver economic growth".

It says the OBR notes that the proposed changes to the National Planning Policy Framework, which are not captured in the forecast, “may enable greater delivery of new housing and infrastructure projects, would boost the associated investment flows, as well as increasing productivity over the longer term”.

The government puts planning reform at the heart of its agenda. It says it will respond to the National Planning Policy Framework consultation before the end of the year to confirm pro-growth reforms to the planning system.

It promises to implement legislative changes to ensure a simplified and streamlined planning system, through the Planning and Infrastructure Bill to be introduced in Parliament early next year. And it will provide an additional £5 million to deliver improvements to the planning regime for Nationally Significant Infrastructure Projects, as well as £46 million to boost capacity and capability in local planning authorities.

It is also allocating £70 million in 2025-26 to support infrastructure and housing development and promises to drive private investment in the economy by creating the National Wealth Fund to catalyse over £70 billion of private investment in the UK’s clean energy and growth industries, and using the Pensions Investment Review, along with the British Growth Partnership, to unlock more pension fund investment into UK growth assets.

The Budget pledged a £5 billion investment in housebuilding to back up its promise to build 1.5 million new homes in the next five years. The government says it has already taken swift action to kickstart the delivery of its pledge, including: launching the National Planning Policy Framework consultation, the New Homes Accelerator and New Towns Taskforce. The government is also seeking views on a "brownfield passport" to ensure that suitable projects get a swift and straightforward approval for development.

The Budget sets out a series of new investments to promote housing market stability and to fire up what Labour terms the biggest increase to social and affordable housebuilding in a generation. This includes a £500 million boost to the Affordable Homes Programme to build up to an additional 5,000 additional.

The Budget committed to reducing discounts on the Right to Buy scheme and enabling councils in England to keep all the receipts generated by sales to protect existing council housing stock and boost capacity. There will be £3 billion of additional support for small and medium enterprises and the build to rent sector, in the form of housing guarantee schemes, to support the private housing market.

The government is pledging to provide £46 million of additional funding to support recruitment and training of 300 graduates and apprentices into local planning authorities, accelerate large sites that are stuck in the system, and boost and upskill local planning authority capacity to deliver the government’s reform agenda.

It confirmed £56 million to unlock over 2,000 new homes at Liverpool Central Docks, along with a £25 million investment in a new joint venture to deliver 3,000 energy-efficient new homes across the country, with a target of 100% of these being affordable. The Budget also confirms £47 million of funding to support the delivery of up to 28,000 homes that would otherwise be stalled due to nutrient neutrality in affected catchments.

Melanie Leech said that while measures to support the delivery of more homes are welcome the Chancellor knows that much more is needed if the Government is to deliver on its 1.5 million homes pledge.

"The promised housing strategy needs to be much bolder and go much further. This includes unlocking the billions of pounds of investment into the build-to-rent sector, so it is particularly disappointing that Rachel Reeves did not take the opportunity to reverse the previous Government’s decision to abolish multiple dwellings relief announced in Spring.”

Kersten Muller, property tax expert and Managing Director at Alvarez & Marsal Tax said: “A boost to housing was widely expected, and indeed one of the Labour government’s key aims, but it has still delivered a boost to house builders share prices today.

“The measures announced are certainly wide-ranging. The headline of investing £5 billion to deliver the housing plan is only part of it.

“A key part will be to increase the supply of affordable homes, which is to be achieved by a reduction in the Right to Buy discount; crucially Local Authorities will be able to retain the proceeds from sales under Right to Buy and decide how to spend them. Another element is a £1 billion boost to remediate homes impacted by unsafe classing.

“Also welcome is the additional funding promised for the planning system, this will be needed to accelerate the building of new homes although it needs to be coupled with reform.”

There were commitments to a number of major transport projects to support the development and delivery of new housing.

These included committing to East West Rail between Oxford, Milton Keynes and Cambridge, including funding to accelerate delivery of the Marston Vale Line ensuring services will run between Oxford and Bedford from 2030. This scheme will unlock land for housing and laboratories across the region, particularly around Cambridge, supporting the world-leading life sciences sector, it said. The government is also launching the consultation for the next stage of East West Rail.

It committed to delivering the Transpennine route upgrade between York and Manchester, via Leeds and Huddersfield, and maintaining momentum on Northern Powerhouse Rail by progressing further planning and design works to support future delivery.

It is also progressing HS2 Phase One to improve connectivity between London and Birmingham. It confirmed funding to tunnel from Old Oak Common to Euston to ensure HS2 trains terminate in central London.

The government also committed to freeports and investment zones.

Reeves says she will abolish the non-domicile tax regime and remove the "outdated concept" of domicile from the tax system from April 2025.

This applies to a UK resident whose permanent home, or domicile, for tax purposes is outside the UK. It means they do not pay UK tax on money they make elsewhere in the world.

She says she will introduce a new, residence-based scheme with "internationally competitive arrangements" for those coming to the UK on a temporary basis. The Office for Budget Responsibility says this package of measures will raise £12.7 billion over the next five years, she says.

Reeves announced the government will increase the stamp duty land surcharge for second homes, by 2% to 5% from tomorrow.

Mark Baycroft, Partner, Haysmacintyre, said in statement: “Governments naturally think in the short-term, and in reality it would probably take longer than a single parliament to entirely rewrite the more complicated areas of the tax system. Stamp duty land tax, for instance, is an unpopular and arguably unfair tax on the process of moving, but an alternative that taxes on the value of property would also be distortive and punish those whose money is tied up in property assets but do not have much by way of liquid assets. There has been no sign of such reform in this budget, only a 3% increase stamp duty land surcharge for second-homes.

“The challenge for Rachel Reeves and the Treasury is to introduce property tax changes that would actually constitute an improvement. The reality is that whilst there is plenty of criticism of the state of property tax – and justifiably so – alternative suggestions are equally subject to justifiable criticism and would benefit from being consulted on.”

Reeves said that Greater Manchester and the West Midlands will be the first mayoral authorities to receive integrated settlements from next year. She says it will give mayors "meaningful control of the funding for their local areas".

The government said it wants more regions to benefit from settlements and confirmed the MCAs that are eligible to receive them from 2026-27 are: the North East, South Yorkshire, West Yorkshire Mayoral Combined Authorities, and Liverpool City Region Combined Authority. The government will also explore how an integrated settlement could apply to the Greater London Authority from 2026-27.