Rumours of a 'Mansion Tax' on homes worth more than £1.5 million are already creating ripples across the UK property market.
Even before any formal announcement, experts say the prospect of new taxation is influencing how buyers and sellers approach high‑value properties, particularly in London and the South East.
For homeowners near the proposed threshold, understanding the potential consequences is essential, as early signals suggest that house prices in these high-value areas could face downward pressure.
Regional exposure and early price signals
Experts warn that the 'Mansion Tax' would sharply affect London and the South East, while commuter belts and pockets just outside those areas are also showing signs of strain.
Colleen Babcock, property expert at Rightmove, says: “Even speculation about a Mansion Tax is prompting buyers to be more cautious in prime areas. Sellers may need to adjust expectations if the Budget confirms a new tax.”
Thomas Lawson, director at national estate agents Knight Frank, adds: “Properties near or above the proposed threshold… are experiencing longer listing periods and more cautious interest. Buyers are factoring potential future costs into their offers, which is affecting market momentum.”
A recent index from Knight Frank shows that average house prices in prime central London fell by approximately 4% in the year to October, the steepest annual drop since early 2021.
These shifts suggest that tax speculation is already influencing listing and offer behaviour in high‑value markets.
Colleen Babcock is the Head of Partner Marketing and a Property Expert at Rightmove. She provides insights on the housing market, high-value property trends, and the potential impact of policies like the Mansion Tax.
Thomas Lawson MRICS is responsible for overseeing logistics and industrial property investments, including strategy, transactions, and market analysis, at BNP Paribas Real Estate.
Buyer confidence under pressure
Market sentiment is already showing signs of caution.
Lucian Cook, Head of Residential Research at Savills, notes: “Speculation over potential property tax changes has slowed an already price-sensitive prime housing market. Many buyers are holding off until the Treasury provides clarity, while sellers are reviewing their pricing strategies in response.”
Data from Rightmove indicates that around 11% of homes for sale in London and 4.4% in the South East are priced above £1.5 million.
While these high-value properties represent a relatively small proportion of the national housing stock, they are concentrated in specific areas where uncertainty over a Mansion Tax is already influencing buyer behaviour and extending the time properties spend on the market.
Lucian Cook is the Head of UK Residential Research at Savills, responsible for analysing the UK housing market, tracking trends in residential property values, and providing insights on market sentiment and investment opportunities.
Should homeowners be worried?
According to the experts, caution is advisable – though the scale of concern will depend on the final details of the 'Mansion Tax'.
Collett warns: “Even before formal policy, high‑value markets are showing slower transactions and longer listing times. Homeowners in the £1.5 million‑plus bracket should be aware that speculation alone is influencing prices.”
Babcock emphasises the regional skew: “The most expensive areas of London and the South East are most at risk. Homeowners should monitor market movements closely and seek professional valuations to understand their exposure. Consulting a tax adviser early is essential to prepare for possible annual levies or changes linked to capital gains.”
Cook adds: “Rushing to sell or undertake major renovations before the Budget could be costly. It is better to make strategic decisions once the Treasury confirms the exact details of the Mansion Tax.”
In short: while the 'Mansion Tax' has not yet been confirmed, its mere possibility is already shaping high‑end markets.
Homeowners with properties around or above £1.5 million are wise to stay informed, review valuations, and avoid making big moves until policy details are clear.
