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Mansion tax set to hit house prices as "success now comes with a target on your back"

Journalist: Laura Miller, Freelance

ended 27. November 2025

The Government's new ‘mansion tax’ on homes worth over £2 million is likely to hit prime property prices and people should consider downsizing “sooner rather than later”, market experts have said.

The so-called ‘mansion tax’ is expected to be a drag on higher end house prices, a part of the market that has already seen a sustained slowdown in recent months.  

Scott Gallacher, Director at Leicester-based Rowley Turton, said: “Without a doubt, the mansion tax will exert downward pressure on higher-value property prices.”

He added: “In our view, if you’re concerned about the impact, the smart move is to consider downsizing sooner rather than later – before the market fully adjusts to this new reality.”

At the Budget, the Government announced it would introduce a High Value Council Tax Surcharge in England for residential properties worth £2 million or more, from April 2028. 

This charge will be based on updated valuations to identify properties above the £2 million threshold and will be due in addition to existing council tax. 

New charges start at £2,500 per year, rising to £7,500 per year for properties valued above £5 million, and will be levied on property owners rather than occupiers. 

Dariusz Karpowicz, Director at Doncaster-based Albion Financial Advice, said: “The signal is clear: success now comes with a target on your back. This is unlikely to be Labour's final move against wealth, and if you own a £2 million plus home, you should be planning accordingly.”

The mansion tax adds £2,500 to £7,500 annually to ownership costs. That means earning £5,000 to £15,000 gross just to stand still, he added.

Harry Goodliffe, Director at HTG Mortgages, said: "The high end of the market is already fragile, and this extra surcharge just adds another bump. High-value buyers are savvy; they’ll factor the cost in, negotiate harder, or simply hold off if the numbers stop stacking up.”

Kate Allen, Owner at Kingsbridge-based Finest Stays, said from the vantage point of the holiday-lettings market in Salcombe, where many properties sit well above the £2 million mark, “the mansion tax lands like an anchor on a market already treading water”. 

She added: “It’s likely to cool buyer appetite, soften prices at the top end, and stall transactions just when confidence was beginning to return.”

“For second-home markets, the impact could be even sharper: owners who already shoulder higher running costs may rethink their investments altogether, reducing stock, tightening supply, and ultimately making it harder for thriving coastal towns like Salcombe to sustain the tourism economies that rely on high-quality holiday homes."

The Government said fewer than 1% of properties will be in scope of the new charge, which will be used to support funding for local services.

4 responses from the Newspage community

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Kate Allen
Owner at Finest Stays
From the vantage point of the holiday-lettings market in Salcombe, where many properties sit well above the £2 million mark, the mansion tax lands like an anchor on a market already treading water.

It’s likely to cool buyer appetite, soften prices at the top end, and stall transactions just when confidence was beginning to return. For second-home markets, the impact could be even sharper: owners who already shoulder higher running costs may rethink their investments altogether, reducing stock, tightening supply, and ultimately making it harder for thriving coastal towns like Salcombe to sustain the tourism economies that rely on high-quality holiday homes.
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Scott Gallacher
Director at Rowley Turton
Without a doubt, the Mansion Tax will exert downward pressure on higher-value property prices. Many professionals, entrepreneurs and business owners are already facing effective tax rates above 50%. Add years of frozen allowances pulling more people into higher-rate bands, and even high earners are now feeling the squeeze.

Introducing an annual surcharge of £2,500 to £7,500 means individuals need to earn roughly £5,000 to £15,000 gross simply to stand still. Something has to give — and for many households that will be the large, expensive home.

We’re already seeing clients opting to downsize because they realise they’d rather work four days a week and enjoy a better work–life balance than shoulder ever-rising tax burdens just to own the biggest house on the street. A Mansion Tax will only accelerate that trend.

In our view, if you’re concerned about the impact, the smart move is to consider downsizing sooner rather than later — before the market fully adjusts to this new reality.
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Editor
Dariusz Karpowicz
Director at Albion Financial Advice
High value properties might absorb this tax without major price drops, but the signal is clear: success now comes with a target on your back. This is unlikely to be Labour's final move against wealth, and if you own a £2 million plus home, you should be planning accordingly.
The mansion tax adds £2,500 to £7,500 annually to ownership costs. That means earning £5,000 to £15,000 gross just to stand still. Professionals are already choosing four day weeks and smaller homes over six figure properties and endless tax bills. Second homes in premium coastal markets face even sharper pressure. Owners paying inflated running costs may simply sell up, tightening supply and cooling transactions. Savills warns this will drag down prime market recovery, and they are right.
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Harry Goodliffe
Director at HTG Mortgages
A mansion tax won’t crash the market, but it will make a few wealthy homeowners think twice. The high end of the market is already fragile, and this extra surcharge just adds another bump. High-value buyers are savvy; they’ll factor the cost in, negotiate harder, or simply hold off if the numbers stop stacking up. Transactions at £2m+ will likely slow a bit, not because people can’t afford these homes, but because nobody likes feeling singled out by tax tweaks. Overall, this is more of a psychological barrier than a market-shifting earthquake.