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 UKโข housingโ market, notably in London. the policy, announced in the Autumn Budget, will apply a stamp dutyโข surcharge to propertiesโ sold for over ยฃ1 million, effectivelyโข 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” byโฃ industry insiders. The move comes amid broader uncertainty surrounding potential tax increases proposed by Shadow Chancellor Rachel Reeves.
“the new policy throws โคa spanner into โขthe works of the housing market for not much in return,” said Tom Bill, head โคof UK residential research at Knight Frank. “like other announcementsโฆ it feels primarily designed to keep backbenchers happyโ and ensure the near-term survival of the Chancellor and the Prime minister.” Bill โcautioned that many owners of high-value homes are not necessarily cash-rich, โfrequently enough โstillโค carrying substantial mortgages and having benefited from rising property values. Heโค added a mansion tax would “freeze investment in homesโ over ยฃ1m overnight, as owners hold back on improvements to avoid being โpushed 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 โขTravers Smith, stated the tax may “tick the fairness box by supposedly targeting those wiht broadest shoulders”, butโ is “farโ from perfect and without structural reform this Budget misses theโ chance to modernise a property taxโฃ system that is outdated, deficient, โand overly intricate”.
Cities like London, Manchester, and Edinburgh are expected to bear the โbrunt of โthe new tax, โคgiven their concentration of high-value properties.โ The impact on London’s property market, a key driver of the UK economy, is a particular concern for industry analysts.
