It’s now three months since the November Budget confirmed the introduction of a 'mansion tax' from 2028. Using Hamptons’ latest data, we’ve examined how the announcement is beginning to shape buyer and seller behaviour. Our analysis suggests that buyers purchasing homes priced around the threshold are submitting offers that ensure the value sits below the entry level £2m mark. We expect this to feed through into achieved prices, putting gentle downward pressure on values.
But first, what is the mansion tax and what properties will it affect?
The mansion tax will be an annual charge applied to properties valued at £2m or more (in 2026 prices). The tax will take effect from April 2028, with the amount paid rising in line with both CPI and a home’s value.
How many properties will be set to pay?
The Valuation Office Agency (VOA) will begin assessing homes currently estimated to be worth £1.5m+ late 2026. Our analysis indicates there are around 145,000 homes valued between £1.5m and £2m and a further 130,000 priced above £2m. However, these numbers are likely to shift as the market adjusts to the new tax.
How are buyers responding to the tax?
The blue line on the chart above tracks the share of offers below the £2m mark on properties priced between £1.8m and £2.2m, broadly the entry level zone where owners may have to pay the new tax when it comes into effect.
Since November, we’ve seen a marked rise in the share of these homes receiving offers below £2m, coinciding directly with the announcement. For example, 83% of offers on homes priced within 10% of the £2m mark kept the price beneath the tax threshold, compared with 64% a year earlier. This suggests that some buyers are negotiating final sale prices to stay below the tax boundary.
To test whether this reflects wider market conditions, we repeated the analysis for properties that fall outside the scope of the new tax. The red line shows the same measure for homes within 10% of £1m. Here, buyer behaviour remains unchanged following the Budget.
How are sellers responding to the new Mansion Tax threshold?
Turning to sellers, the number of homes brought to market between £1.8m and £2m rose by 5.6% YoY in the two months following the Budget. This could reflect one of two responses to the announcement:
- Sellers are responding to buyer expectations by pricing more keenly to keep homes below the taxable threshold, or
- The tax has prompted some owners to sell properties that sit close to the £2m boundary, to avoid being drawn into the tax when properties are valued.
At the same time, the number of homes listed between £2m and £2.2m fell 6.5% YoY in the two months post-Budget. If owners were primarily trying to offload properties that might incur the new tax liability, we would expect listing numbers in this range to rise. Instead, the decline suggests that some sellers are adjusting asking prices downwards to ensure their properties fall below the threshold where demand now appears strongest.
Confirming this, a similar pattern is emerging around the £5m threshold. The number of homes coming to market above this level has fallen 7% YoY, while the number of properties being marketed below the threshold has risen by 35%.
Together, these trends indicate that the Mansion Tax is already placing a gentle downward pressure on prices where homes are clustered close to taxable thresholds. Sellers are adjusting their prices based on the buyer expectations.
The outlook
The Mansion Tax introduces an additional layer of financial commitment for prospective buyers, and its influence is already beginning to shape behaviour and create a cliff-edge. Looking ahead, this is likely to encourage some degree of price bunching around the tax thresholds, with a higher share of purchases completing just below as buyers seek to avoid triggering the tax for at least until homes are revalued.
