New research reveals scale of proposed tax on London’s £2 million-plus homes
A proposed 1% annual mansion tax on properties valued above £2 million would predominantly impact London, according to new analysis from international mortgage broker Enness Global.
The firm’s review of Land Registry data from January to September this year indicates that two-thirds of transactions above the £2 million threshold occurred in the capital.
Enness Global, which advises high and ultra-high-net-worth individuals, examined completed residential sales across England and Wales, identifying 1,434 properties sold for more than £2 million during the period. These high-value transactions represented just 0.4% of all sales. Based on the rumoured 1% levy applied to the value above £2 million, Enness estimates that the total annual tax liability from these sales would exceed £20 million.
London would bear the brunt of the tax, with 940 of the qualifying sales—66% of the total—taking place in the city. Around 2.3% of all homes sold so far this year in the capital were above the £2 million mark, compared with 0.4% nationally. The estimated annual tax charge for these London properties alone would reach £15.8 million.
The research also highlights the concentration of high-value listings in London’s prime areas. While 8% of homes currently for sale in London are priced above £2 million, this proportion rises to 35% in the city’s most exclusive districts. In Mayfair, 78% of available homes are listed above the threshold, followed by Knightsbridge (61%), Belgravia (58%), Chelsea (40%), Fitzrovia (39%), and both Marylebone and Kensington (38%).
Enness Global suggests that introducing an annual mansion tax could influence behaviour in these markets. Sellers might adjust asking prices to fall below the £2 million threshold, while buyers could become more cautious about properties subject to the recurring charge.
“Any proposal for an annual mansion tax risks unfairly targeting London homeowners and undermining one of the capital’s most important markets,” said Islay Robinson (pictured right), chief executive of Enness Global. “Beyond fairness, there’s also the question of market function.
“The introduction of such a levy could distort pricing behaviour and deter both domestic and international investment at a time when the UK needs to encourage capital inflows and restore housing confidence. While additional taxation may appear politically expedient, the real-world consequences can often extend well beyond the headline revenue figures - particularly in markets as globally interconnected as London.”
Speculation that Chancellor Rachel Reeves will announce the tax in next week’s Budget has prompted a surge in enquiries to brokers from concerned buyers and sellers. So far, no tax changes have been confirmed, though there are reports that the Labour government has ruled out raising income tax rates and is instead considering more targeted fiscal measures. When questioned about the possibility of a mansion tax, housing secretary Steve Reed declined to provide any guarantees, saying that it would be inappropriate to comment before the Budget.
Want to be regularly updated with mortgage news and features? Get exclusive interviews, breaking news, and industry events in your inbox – subscribe to our FREE daily newsletter. You can also follow us on Facebook, X (formerly Twitter), and LinkedIn.
