Mansion Tax Faces Backlash as ‘spanner in the Works’ for London Property Market
London, UK – A newly proposed ‘mansion tax’ targeting high-value properties is drawing criticism from industry experts who warn it will stifle investment and disrupt the UK housing market, notably in London. the policy, announced in the Autumn Budget, will apply a stamp duty surcharge to properties sold for over £1 million, effectively increasing the tax burden on higher-end transactions.
While not a full-scale annual property tax based on home value, the measure is expected to significantly impact the middle-to-upper end of the market and has been labelled a “spanner in the works” by industry insiders. The move comes amid broader uncertainty surrounding potential tax increases proposed by Shadow Chancellor Rachel Reeves.
“the new policy throws a spanner into the works of the housing market for not much in return,” said Tom Bill, head of UK residential research at Knight Frank. “like other announcements… it feels primarily designed to keep backbenchers happy and ensure the near-term survival of the Chancellor and the Prime minister.” Bill cautioned that many owners of high-value homes are not necessarily cash-rich, frequently enough still carrying substantial mortgages and having benefited from rising property values. He added a mansion tax would “freeze investment in homes over £1m overnight, as owners hold back on improvements to avoid being pushed over a threshold the government will almost certainly freeze.”
The policy has also been criticised for its potential shortcomings in addressing broader issues within the property tax system.Madeline Gowett, tax partner at law firm Travers Smith, stated the tax may “tick the fairness box by supposedly targeting those wiht broadest shoulders”, but is “far from perfect and without structural reform this Budget misses the chance to modernise a property tax system that is outdated, deficient, and overly intricate”.
Cities like London, Manchester, and Edinburgh are expected to bear the brunt of the new tax, given their concentration of high-value properties. The impact on London’s property market, a key driver of the UK economy, is a particular concern for industry analysts.
