Chancellor Rachel Reeves's proposed 'mansion tax' could see thousands of homeowners with properties valued above £2 million hit with a significant annual council tax surcharge starting in 2028. The plan, which has sparked intense debate, could also have the unintended consequence of inflating house prices by an average of £30,000, according to property specialists.
How the New Property Surcharge Would Work
The core of the policy is an additional levy on high-value residential properties. From 2028, homes with a market value exceeding £2 million will face an annual surcharge on top of their existing council tax bill. The initial extra charge is set to start at £2,500, but it is designed to rise sharply for properties with even higher valuations, creating a tiered system of taxation for premium real estate.
However, a major point of contention lies in the proposed method for assessing which homes fall into this new tax bracket. Concerns are mounting that the government plans to rely heavily on computer-generated 'desktop' valuations, rather than conducting physical inspections of individual properties.
Industry Experts Warn of Flaws and Backlogs
Property professionals and homeowner advocates have raised serious alarms about the potential for unfairness and administrative chaos. Paula Higgins, the chief executive of the HomeOwners Alliance, highlighted the unique nature of high-value homes. "Desktop valuations might be adequate for streets where similar houses sell regularly," she stated. "But for £2million-plus homes, particularly in prime areas, every property is unique and requires a much more tailored assessment."
Nick Leeming, chairman of estate agency Jackson-Stops, pointed to another critical flaw: the reliance on lagging house price data. He warned that this could drag more properties into the tax net than is economically justified. He also foresaw major logistical issues, stating, "This is a huge undertaking. Many homeowners are likely to challenge their valuation, which could create a backlog and significantly slow the process."
Public Reaction and Broader Concerns
The proposal has ignited strong reactions from the public. One frustrated Briton commented, "With Labour at the helm anybody with real assets, savings, investments etc who are still here should seriously plan an escape." This sentiment reflects a fear of increased taxation on assets and wealth.
Other commentators focused on the practical difficulties of valuation. One noted the frequent inaccuracy of online valuation tools, saying, "I check three online valuation sites now and again and they’re all vastly overstating what I’d probably get for my house if I sold it." Others questioned whether the existing council tax bands would also be increased, warning of a "massive distortion" if they are not.
The debate has even drawn comparisons to past controversial taxes, with one person remarking, "There is no logic to the council tax at all. The Poll Tax was logical but didn’t stand a chance because all the skivers would have to start paying."
As the 2028 implementation date approaches, the government faces mounting pressure to clarify its valuation methodology and address concerns that the policy may penalise homeowners unfairly while adding complexity and potential cost to an already strained housing market.
