Chancellor Rachel Reeves has announced a significant change to property taxation in England, introducing a new high-value council tax surcharge for the most expensive homes.
The new levy, set to take effect from April 2028, will apply to residential properties valued at £2 million or more.
How the New Property Tax Bands Will Work
The surcharge will be structured across four price bands. The minimum annual charge will be £2,500 for homes worth more than £2 million.
This will rise progressively, reaching a top rate of £7,500 per year for properties valued at over £5 million.
Robert Gardner, Chief Economist at Nationwide Building Society, provided an immediate assessment of the policy's likely impact.
"The changes to property taxes announced in the budget are unlikely to have a significant impact on the housing market," Gardner stated.
Limited Impact on the Wider Market
Gardner emphasised the narrow scope of the new charge, noting it will affect a tiny fraction of the housing stock.
"The high value council tax surcharge will apply to less than 1% of properties in England and around 3% in London," he explained.
Commenting on the current market climate, he added: "Against a backdrop of subdued consumer confidence and signs of weakening in the labour market, this performance indicates resilience. The housing market has remained fairly stable in recent months with house prices rising at a modest pace."
Mortgage and Buyer Sentiment Post-Budget
Mortgage industry experts have weighed in on how the budget measures are influencing buyer behaviour.
Mark Harris, Chief Executive of mortgage broker SPF Private Clients, observed: "While the market has been a little quieter as some adopted a 'wait and see' approach, lenders have remained keen to lend, with funds available to do so."
He also offered advice to borrowers considering their next move: "With talk of another base rate reduction this month, borrowers may be tempted to hold on in the hope of cheaper rates to come but those concerned about budgeting and rate rises might wish to consider locking into a cheaper rate now several months ahead of when they might need it."
Sarah Coles, Head of Personal Finance at Hargreaves Lansdown, noted that many potential buyers paused to assess the budget's contents.
She struck a cautiously optimistic note for the year ahead: "There's a decent chance that 2026 will usher in more positivity. We often see a boost in January, and despite challenges, there are a few things working in the market's favour. The budget brought a property tax that will only affect a small slice of the market."
The consensus from financial and property experts suggests that while the new surcharge marks a shift in policy for high-value homes, its targeted nature is expected to leave the broader UK housing market fundamentals unchanged.
