Prime buyers back, cheap fixes flowing, but brokers warn this rebound is fragile
The release of the Office for Budget Responsibility report ahead of the Chancellor’s recent Budget, and weeks of speculation about a mansion tax-style levy, cast a long shadow over the prime property market. Agreed sales above £1m fell sharply in the run-up to the announcement, with November volumes down markedly on the same period last year and agents reporting a pervasive sense of “just waiting for the uncertainty to end”.
Now, with details of the new council tax surcharge for higher-value homes confirmed, some of that pent-up demand is starting to re-emerge.
“We are getting more enquiries again from people keen to buy expensive homes,” says Trinity Financial's Aaron Strutt. “Lots of potential buyers and sellers were clearly holding off until they found out what the chancellor was going to do. I remember the last time there were lots of rumours of a mansion tax coming into force and the property market cooled off then as well.”
In other words, part of the current uptick looks like a classic post‑announcement bounce: buyers who had been waiting for clarity are now prepared to move quickly. The question for 2026 is whether this marks the start of a more durable recovery in prime or simply a relief rally after an unusually prolonged period of political and tax uncertainty.
Council tax surcharge: who will change behaviour – and who won’t
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Under the new regime, higher-value homes face an annual council tax supplement from 2028, with bands increasing in line with value. That has prompted early debate about threshold effects and whether owners will seek to price or structure transactions to avoid falling into higher surcharge brackets.
Strutt argues that the impact will vary sharply by buyer profile and location.
“It really depends on the buyers, where they want to live and how wealthy they are,” he says. “In many of London and Surrey there is still strong demand for prime properties and if parents are moving to an area to be closer to a school or family there are probably going to just pay the tax. For those with less free cash they may well be tempted to buy in a slightly cheaper area.”
That creates a potentially polarised pattern of behaviour: wealthier households in core prime postcodes are more likely to absorb the surcharge as part of the overall cost of securing the right home, while more constrained buyers could be pushed towards fringe locations or lower price brackets.
For brokers, this means affordability conversations in the prime and near-prime brackets are set to become even more nuanced, factoring in not only mortgage costs and stamp duty but also an additional, recurring tax liability that may influence where – and at what price point – clients are willing to buy.
Rates, sentiment and a ‘rarely better’ mortgage window
While tax has dominated the headlines, Strutt is clear that interest rates, and how borrowers perceive their trajectory, will be the decisive driver of activity through 2025 and into the first half of 2026.
“I think there is a lot of room for market sentiment to improve soon,” he says. “As we start the new year lots of people think about making changes to their life and start making plans to move home.”
The rate backdrop is already shifting. “With the cheapest fixes now at 3.51% and the Bank of England base rate set to come down a few more times, there is a bit more hope that mortgage rates will get cheaper,” he adds.
That combination – lower fixed-rate pricing and improving affordability models – could create the sense of a finite opportunity for both first-time buyers at higher price points and existing homeowners looking to trade up.
“Potential borrowers will think that these cheap mortgages and the improved affordability calculations will provide a window of opportunity to get on or move up the property ladder,” Strutt says. “The lenders really have been pushing to get more borrowers to take their mortgages, you only need to look at HSBC and the 6.5 times salary criteria for higher earners which potentially allows buyers to access a lot of money with particularly cheap rates. There has rarely been a better time to get a mortgage over the last few years.”
For intermediaries, the message is twofold: there is genuine competition among lenders to win prime and affluent business, but also a need for careful advice as clients weigh the attractions of higher loan-to-income multiples against the risk that today’s cheap fixes will eventually be refinanced in a different rate environment.
Supply, downsizers and second homes: a cautious recalibration
On the supply side, the new surcharge is landing alongside broader questions about the viability of second homes and the timing of downsizing moves. Older owners who are “property rich but cash poor” are starting to look harder at ongoing ownership costs, while second-home investors already grappling with increased stamp duty and tougher tax treatment for landlords may find a further surcharge tips the balance.
That raises the prospect of more prime and near‑prime stock coming to market over the next 12–18 months. For brokers, a rise in listings would be a welcome shift after a period in which affordability constraints and political uncertainty have limited choice for buyers. But any increase is likely to be uneven across regions and price bands, and mediated by how quickly would‑be sellers adapt to the new tax landscape.
Sellers’ dilemma: don’t assume leverage has flipped overnight
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If there is a note of caution in Strutt’s outlook, it is directed at vendors who see early signs of renewed demand and are tempted to revisit deals already struck.
“You really need to have buyers lined up to be willing to renegotiate and agree a new deal or not be that keen to move home,” he warns. “Lots of people are really struggling to sell their homes at the moment and many of them are taking a real knock on their asking price. Some of the super prime properties are also getting huge down valuations.”
In that context, the risk of overplaying one’s hand is real.
“If a deal is agreed and the buyer are keen to progress, it probably does not make sense to mess around with them unless you have a really good reason,” Strutt says.
For advisers, that means guiding sellers away from knee‑jerk renegotiations driven by headlines about “rebounding” demand and back towards fundamentals: local comparables, lender valuations and the genuine depth of buyer interest in their segment.
Outlook: a more hopeful, but finely balanced, prime market
Taken together, the post‑Budget environment in the prime market looks more hopeful than it did even a few months ago. Clarity on tax, a slow but steady downward path for interest rates and strong lender appetite – particularly for affluent borrowers – are combining to unlock at least some of the demand that was sidelined by political noise.
Yet the recovery remains finely balanced. The new council tax surcharge will alter behaviour at the margins, especially for less liquid buyers. Lender down-valuations are still a feature in parts of the super‑prime sector. And research teams remain cautious on the prospects for rapid price growth, even if activity volumes improve.
For brokers, the opportunity lies in marrying that more positive sentiment with grounded, case‑by‑case advice: helping clients take advantage of today’s relatively low mortgage rates and competitive criteria, while being realistic about what the new tax regime – and still-fragile confidence – mean for prices in the year ahead.
