The High Value Council Tax Surcharge - 'the mansion tax' - was unveiled in the November 2025 Budget.
The Treasury envisaged that this progressive annual levy on homes of £2 million-plus would be a reliable means of raising extra revenue from the wealthiest property owners in England. Currently, if these people live in London, they are often paying relatively low council tax bills.
But, as our analysis shows, the number of homes liable for the mansion tax is fast diminishing.
This tax is due to come into force in 2028. But the Treasury’s projected windfall is already under threat from the decline in house prices that began in prime central London (PCL), but then spread to other locations.
A shrinking £2 million-plus market
There are now 8,800 fewer homes valued at £2 million or more than at the time of the Budget. In fact, to date this year, there has been a monthly decrease of 1,000-1,500 in such properties.
This is not a sudden shift, but the acceleration of a trend. The number of £2 million-plus homes peaked back in 2023, just after the Covid race for space pushed property prices up and as interest rates started to rise. Subsequently, a downturn took hold - not just in prime central London, but also in other locations in the capital, and then in the premium areas of the South.
As a result, there are 17,400 fewer £2 million-plus homes in England than in 2023, with a 23% reduction in PCL alone. Price appreciation in the Midlands and North has not compensated for this drop.
If prices had remained at their October 2025 level, the Treasury would be earning £28 million more from the mansion tax. Indeed, there would have been £50 million more in revenue from this tax if prices had remained at their 2023 peak.
"There are 8,800 fewer homes valued at £2 million or more than at the time of the Budget. "
London vs. the Home Counties
The mansion tax was designed to be, almost exclusively, a London levy, driven by the belief that the capital’s more affluent residents did not contribute enough to the Exchequer.
However, there are now 27,000 £2 million-plus homes in PCL. This is almost identical to the total in the commuter-belt Home Counties, where there has been a 13% jump in such properties since 2023 – and a near 100% increase since 2016.
But the Mansion Tax burden will not be distributed evenly in the Home Counties. Salubrious Surrey boasts 10,600 £2 million-plus homes. Hertfordshire follows in a distant second place with 5,200 properties. Buckinghamshire has 3,700.
From penthouses to detached houses
As a consequence of the rise in £2million plus homes outside London, the 'High Value Council Tax Surcharge' will be more of a traditional 'mansion tax' than would have been the case at the beginning of this decade.
"An annual increase of just 1% over the next 20 years will double the number of properties in the mansion tax net. "
Over the past five years, the number of apartments liable to pay this tax has tumbled by 16% to 5,100. But there has been a 41% leap to 17,800 in the number of detached houses that are liable.
The long-term view
In the short term, one result of the lower number of £2 million-plus homes is that the mansion tax administration costs will consume a larger share of revenues.
But, over the longer term, even a modest amount of house price growth will drive up revenues. An annual increase in property values of just 1% over the next 20 years will double the number of properties in the mansion tax net.
Will the mansion tax succeed as a progressive means to raise revenue, or will it further depress values in PCL and, indeed, the Home Counties? That is the £2 million question.
