Homes Over $2M See Value Drop Amidst Mansion Tax Concerns
New figures indicate a significant decrease in property values for homes exceeding $2 million, with experts linking the trend to anticipated property tax increases.
Properties valued at more than £2 million have seen their worth decline by an average of £284,000, according to new figures attributed to concerns over Labour's proposed mansion tax. The policy, set to be implemented from April 2028, will impose an annual tax of between £2,500 and £7,500 on homes valued at £2 million or higher.
Experts suggest that demand for high-value properties has diminished since the tax was initially outlined by former chancellor Rachel Reeves. Data indicates that between April and June 2026, houses sold at this price point experienced the largest discounts, averaging £315,119.
Analysis from property experts TwentyCi reveals that homes valued at £2 million or more are less than half as likely to sell and take twice as long to find a buyer compared to those priced below the tax threshold. On average, these higher-value homes took 86 days to secure a buyer, in contrast to the 41 days typical for the broader market. During the third quarter of the year, the average percentage of the initial asking price achieved for a property valued at £2 million was 90.5 percent, translating to a sale price of £190,000 less than the original valuation.
The distribution of these high-value homes is geographically concentrated, with approximately 64 percent located in London. When combined with the South East and East of England, these regions account for 88 percent of all UK homes valued at £2 million or more.
Property finance specialist Chris Sykes noted a decrease in activity within the £2 million to £2.5 million price range, as buyers weigh the financial implications of the additional annual cost. Shadow housing secretary Katie Lam criticized the tax, asserting it would impede the housing market and described it as a "tax on aspiration."
Further discussions have emerged regarding a potential reduction in the threshold for this tax to properties valued at £1.5 million. Such a change would increase the number of affected homes by more than double, to an estimated 271,000. Sources indicate this is considered a viable option as the Valuation Office already collects data on properties exceeding £2 million. However, no definitive decision has been made, with concerns raised about the impact on more modest homes.
A government spokesperson stated that the tax is projected to generate approximately £430 million annually to support public services, aiming to rectify perceived inequities in property taxation where less expensive homes in some areas incur higher council tax than luxury mansions in prime locations.