Prime values start to cluster below £2 million ahead of the April 2028 levy
A planned surcharge on higher-value homes in England is already reshaping behaviour in the prime market, with both asking prices and offers increasingly set just below the new tax bands.
The high-value council tax surcharge or “mansion tax”, announced in the autumn Budget, is due to start in April 2028. It will apply to properties in England valued above £2 million, with an annual charge of £2,500 at the entry threshold and higher sums at bands above £2.5 million, £3.5 million and £5 million.
Ahead of implementation, the Valuation Office is this year determining which homes will fall into each band. That exercise, based on recent sales evidence, stamp duty records and significant alterations that may have increased a property’s value, will not be repeated for another five years. For advisers, the 2024 valuations will therefore set the tax position of affected clients for a prolonged period.
Research by Hamptons suggests that the proposed levy is already influencing listing strategies. In the two months after the Budget, the number of homes brought to market between £1.8 million and £2 million rose by 5.6% year on year, while new listings between £2 million and £2.2 million fell by 6.5% over the same period.
Hamptons’ analysis indicates that owners are more inclined to reprice to fall beneath the surcharge line than to sell at or above it. Around 145,000 homes in England are estimated to be valued between £1.5 million and £2 million, with a further 130,000 above £2 million. The firm expects these figures to shift as households and advisers react to the new tax bands.
“If owners were primarily trying to offload properties that might incur the new tax liability, we would expect listing numbers just above £2mn to rise,” David Fell, lead analyst at Hamptons, told the Financial Times. “Instead, the decline suggests that some sellers are adjusting asking prices downwards to ensure their properties fall below the threshold where demand now appears strongest.”
Offer behaviour is also diverging around the new boundary. So far in February, 83% of offers on homes marketed within 10% of the £2 million line have come in below that figure, compared with 64% a year earlier, according to Hamptons. By contrast, offers around the £1 million price point show no similar clustering, suggesting that the change is specific to the HVCTS threshold rather than to wider market conditions.
For brokers working with high-net-worth borrowers, the surcharge is emerging as a factor in negotiations as much as in longer-term tax planning. Buying agents report that, although the annual levy may not be material for many purchasers at this level, it is being used as leverage in price discussions, with purchasers pushing to keep agreed values under the £2 million mark.
Similar patterns are visible higher up the price scale. Above £5 million, where the annual surcharge will be £7,500, the number of properties coming to market up to 10% above the threshold has fallen by 7% year on year. Listings priced up to 10% below £5 million have risen by 35% over the same period, underlining the extent of price bunching under the proposed bands.
“The mansion tax introduces an additional layer of financial commitment for prospective buyers, and its influence is already beginning to shape behaviour and create a cliff-edge,” Fell said.
“Looking ahead, this is likely to encourage some degree of price bunching around the tax thresholds, with a higher share of purchases completing just below as buyers seek to avoid triggering the tax for at least until homes are revalued.”
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