"What the real estate industry does not need is another disrupter in an already challenging market, created by 'playing around at the edges' of how we tax real estate"
- Caroline Fleet - Crowe
In the run‑up to the 26 November Budget, the Treasury has indicated that a new levy on high‑value properties could form part of the government’s approach to fiscal reform. The proposed measure would target homes valued at £2 million and above, with one option under consideration being an annual charge of around 1% of the property’s value above that threshold.
The move comes as the Chancellor seeks alternative revenue streams after ruling out increases in the main rates of income tax, VAT and National Insurance, in order to honour the party’s manifesto commitments. Instead, attention has shifted to wealth and asset taxation, with property‑rich homeowners likely to face higher bills from 2026.
Key details under discussion include:
A potential annual levy of 1% on the portion of a property’s value above £2 million, meaning an owner of a £3 million home could face an additional £10,000 per year.
A re‑valuation of homes in council tax bands F, G and H, affecting around 2.4 million homes in England, with possible increases in annual charges or a new surcharge.
Consideration of replacing or significantly reforming existing property tax regimes, such as Stamp Duty or council tax, in favour of a more proportionate levy based on property value.
Industry reactions
“A mansion tax would be disastrous for the U.K. property market,” said Craig Fuller, founder of buying agency Craig Fuller Property. “Not only would it add an unnecessary financial burden on the owners of long‑held family homes who are asset rich and cash poor, but it would also distort natural pricing across the market.”
Mansion Global
Conversely, property tax experts argue reform is overdue. “Every single person in the country is a loser from Stamp Duty because it restricts you from moving,” noted Tim Leunig, director of economics at Public First. “If you’re going to have a wealth tax, you should have a wealth tax rather than isolating one form of wealth.”
Nick Sanderson, CEO at Audley Group, said, "Property taxes and the lack of suitable housing options are high on the agenda for over 55s. And these are absolutely right. If the government wants to encourage people to downsize, freeing up large family homes to the wider market, it must support the creation of more age-specific properties, crucially in the right locations, and provide an incentive to move.
“Current speculation around the introduction of property taxes, or even a mansion tax, risks the very opposite, with more barriers being introduced at the top of the market. The Autumn Budget presents an opportunity for the government to deliver policies that create real, tangible benefits to both our housing and care systems, and I hope they can grasp that with both hands.”
Caroline Fleet, Partner, Head of Real Estate at Crowe, said, “Real estate taxation in the UK remains a focal point for the Chancellor. There has been much speculation regarding potential reforms – from abolishing Stamp Duty Land Tax (SDLT), making SDLT payable by Vendors, increasing National Insurance contributions for buy-to-let landlords, reforming or increasing Council Tax, introducing an annual ‘mansion’ tax, to capping main residence exemption for Capital Gains Tax."
"With the government’s target to deliver 1.5 million new homes, the Chancellor has the challenge of opening up the real estate market to incentivise housebuilders, whilst acknowledging that owning a house can be a home and/or an investment."
"Often, a home is the most significant asset owned by individuals and therefore also seen as an indicator of wealth. Unlike people and goods, there is the certainty that real estate cannot move, and therefore applying tax to it provides a fairly stable measure. "
"What the real estate industry does not need is another disrupter in an already challenging market, created by 'playing around at the edges' of how we tax real estate."
"It is well documented that SDLT by nature is a drag on property transactions, and that successive governments have compounded the complications and rates of this tax. Short-term rate reductions or increases do not alter the fundamental supply of new homes and merely lead to bunching the market."
"Adding complexity to existing tax codes will only further stagnate and stall the market. ESG remains an enormous challenge for the built environment, and there is little to no fiscal incentive to address this."
"Developing and owning real estate is a long-term commitment and the Chancellor should arguably concentrate on the long-term objectives relating to the built environment, to deliver the fairness and opportunity she strives for.”
The Treasury has neither confirmed nor denied the details ahead of the fiscal event, stating that “we do not comment on speculation around changes to tax outside of fiscal events.”
