The government has introduced a tax on properties worth over £2 million, though it will come in the form of ‘council tax surcharge’.
The surcharge will be £2,500 for a property worth between £2m to £2.5m, eventually rising to £7,500 for those worth more than £5m.
The change will take effect in April 2028 for properties in England, while the measure is expected to raise around £2.1 billion annually.
The four price bands:
| Threshold (£m) | Annual Rate |
| £2m to £2.5m | £2,500 |
| £2.5m to £3.5m | £3,500 |
| £3.5m to £5m | £5,000 |
| £5m+ | £7,500 |
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Claire Van der Zant is CEO of Novus Strategy, the technology consultancy for the home buying and selling industry.
She said: “Landlords are the losers once again, alongside wealthy homeowners. Both have been hit with a higher tax burden and the subsequent impact on demand at all levels of the property market is now a known unknown.
“The Mansion Tax won’t come into force until 2028 but we can expect increased numbers of prime homes changing hands from now on, as owners in this bracket can find themselves property rich but cash poor.
“Meanwhile, landlords have faced an increasingly hostile environment for nearly a decade with the loss of mortgage interest relief, extra stamp duty on additional properties and a less favourable eviction regime under the Renters Rights Act.”
Mark Hughes, specialist property expert at Pure Property Finance, said: “Reeves introducing a ‘mansion tax’ on properties over £2m, coming into play in April 2028, is extremely short-sighted.
“While this is aimed at higher-valued properties, it risks creating liquidity issues for owners who are asset-rich, but when it comes to cash, actually don’t have that much freedom, forcing sales and destabilising the upper end of the market.
“This new rule could likely ripple down, impacting pricing and confidence across all property tiers. A fairer approach would’ve been preferred, one that stimulates growth not penalises ownership.”
Madeline Gowett, tax partner at Travers Smith, said: “Announcing an annual charge on high‑value homes was widely expected, but without addressing the wider flaws in property taxation is a missed opportunity.
“Council tax based on 1991 valuation is inherently unfair, penalising those in modest homes while under‑taxing prime property. SDLT continues to distort the market, discouraging transactions and locking owners into unsuitable housing.
“With property an obvious proxy for wealth, the new ‘mansion tax’ may tick the fairness box by supposedly targeting those with broadest shoulders, but it is far from perfect and without structural reform this Budget misses the chance to modernise a property tax system that is outdated, deficient, and overly complicated.
“An opportunity to at least consult on options to reinvigorate the property market and restore confidence through considered tax reform has been passed over.”
Tom Bill, head of UK residential research at Knight Frank, said: “Until the revaluations take place, buyers and sellers face years of uncertainty, especially around the £2 million threshold. Even once completed, new valuations can be challenged, which would prolong the limbo.
“The policy may also raise less than expected, especially because it is deferrable. If opposition parties say they would scrap it, many homeowners will look at the opinion polls and wait it out. When you factor in the cost of carrying out the valuation and the potential lost stamp duty revenue from a stickier market, the sums raised could look like a rounding error for the Treasury.
“More properties will inevitably get dragged into the mansion tax net, which means the proportion of terraced houses, flats and semi-detached homes will grow over the years, particularly in the capital. The term ‘mansion tax’ will increasingly feel like a misnomer.
“Overall, it feels like politics has trumped economics. One the one hand, the policy is designed to keep backbenchers happy and ensure the near-term survival of the chancellor and prime minister. On the other hand, it throws a spanner into the works of the housing market for not much money in return, which is important in the context of a Budget where spending is front-loaded. The UK already pays the highest percentage of property taxes among OECD countries.”