A £2m council tax surcharge could choke buyer mobility, stall transactions and distort property values at scale
Mortgage brokers could see a chain reaction in market activity if the government presses ahead with its proposed “mansion tax,” according to Michelle Niziol, founder of IMS Property Group.
The High Value Council Tax Surcharge – due to take effect in April 2028 – targets properties in England valued at £2 million or more. Government proposals indicate annual bands ranging from £2,500 to £7,500, levied on top of existing council tax. The tax will be based on a targeted national valuation exercise to assess 2026 property values, raising industry concerns over fairness, valuation accuracy and broader market impact.
Not just a tax on the wealthy
Niziol argues that the term “mansion tax” is misleading. “This won’t just hit the wealthy elite,” she told Mortgage Introducer. “It’ll catch people who bought modest homes years ago in strong areas, stayed put, and watched the value rise.”
She points to long-term owner-occupiers in regions such as London, Surrey, Oxfordshire and Cheshire, where rising demand has pushed average family homes past the £2 million mark. “These aren’t high-net-worth clients. They’re teachers, doctors, business owners who now face what amounts to another mortgage payment every month – just to stay where they are.”
Niziol added that many caught by the surcharge will be people who’ve saved hard and stretched to afford a dream home. “They didn’t plan for this extra tax layer, and now it’s a financial risk they didn’t sign up for.”
Threshold effects and valuation confusion
A key concern is how the £2m threshold will influence pricing and valuations. Niziol expects a growing cluster of properties to be listed below their actual market value in an effort to avoid the surcharge.
“A £2.2m home might suddenly be listed at £1.95m just to dodge the surcharge. That’s not real value, that’s reactive pricing,” she said. “Buyers will push to stay under it. Sellers will feel forced to accept less.”
This behaviour could stall chains and reduce stock mobility across the market. Properties that remain unsold at the top end can cause blockages further down, making it harder for first-time buyers and upsizers to transact.
There’s also a question of how these properties will be valued and revalued. “While the government has confirmed the valuation will be carried out by the Valuation Office Agency and will be separate from existing council tax bands, there is still uncertainty around the detailed methodology and appeals process,” Niziol said. “If it’s inaccurate, expect a tidal wave of appeals.”
With implementation years away, many still don’t know how their property will be assessed, a factor Niziol believes could freeze decision-making in the meantime. “If your home is on the cusp, you won’t know for sure until the government says what valuation method they’ll use. That’s going to freeze decision-making for a lot of people.”
Ambition punished, activity stalled
Niziol’s broader concern is the message the surcharge sends to aspiring homeowners.
“I work with clients who are ambitious – they move from £350k to £600k, then maybe £1.2m, and eventually aim for that £2m dream home. But if hitting that level brings a huge recurring tax bill, why climb the ladder at all?”
She believes this shift could change how younger buyers think about their property goals, especially in areas where £2m doesn’t buy extravagance. “In many parts of London, a £2m property isn’t a mansion, it’s a decent family home. If that becomes a financial penalty rather than a milestone, we’re in trouble.”
For brokers, that shift could mean fewer purchase applications, less upsizing and a flatter market overall.
When asked whether homeowners might simply choose to improve rather than move, Niziol was cautious. “If you’re in a £1.6m house, are you really going to spend another £200k on an extension knowing you might tip over into the taxable range? That’s a gamble most clients won’t take.”
The risk of accidentally breaching the £2 million threshold without knowing exactly how it will be applied, may deter homeowners from investing in extensions or upgrades. “We risk losing mobility, aspiration and investment. That’s dangerous for the housing market, and for our industry.”
Industry response and implementation risk
So far, industry voices have raised concerns about implementation. Propertymark has warned that without clear guidance, the tax could be seen as arbitrary or unfair. The National Association of Estate Agents (NAEA) has also called for transparency around how thresholds are set and revalued.
Niziol echoed those concerns, adding that many councils are already overstretched. “Although valuations would sit with the Valuation Office Agency, any system of this scale will still require significant coordination and resourcing across local government,” she said. “I run a lettings business, and we deal with councils all the time. They’re already struggling to keep up with basic tasks like tenancy updates. Adding high-value property revaluation to their remit will require serious investment and resourcing – otherwise, the system won’t work.”
With valuations due in 2026 and implementation set for April 2028, the tax’s full impact may not be felt immediately. But Niziol warns that uncertainty is already influencing client decisions today.
Brokers, she says, will need to adjust the way they advise clients. “This is going to bring a new layer of complexity to affordability discussions,” Niziol said. “It’s not just whether someone can get a mortgage, it’s whether they can carry the ongoing tax burden that comes with a higher-value property.”
A policy with wider consequences
For Niziol, the biggest risk isn’t the tax itself, it’s what the tax does to mindset and mobility.
“The whole mortgage system is based on progression. You work, you save, you move up. If people stop doing that, the whole chain slows down. That affects brokers, lenders, buyers and sellers at every level.”
She urges brokers to stay ahead of the issue. While further policy detail is still expected, the tax is already shaping decisions and will require advisers to take a more strategic, forward-looking role in guiding clients through uncertain ground. “This isn’t just a high-end issue. It’s a market-wide issue, and it’s coming faster than many realise.”
