Industry reactions to the “Mansion Tax”

Ric Iannucci-Dawson, CEO of Alto, said:

“This Budget signals a meaningful shift in how high-value homes will be taxed, and while the changes don’t come into force until 2028, the impact on confidence will be felt much sooner.

“Agents operating in the £2m-plus bracket should expect increased questions from clients around valuations, pricing and future costs, especially as council-tax revaluations begin to bite.

“For the wider sector, the message is the same: clarity and preparation matter. Landlords and homeowners will look to agents for guidance, and the agencies that use data well, to model scenarios, track valuations and explain what the changes mean in real terms, will be the ones who build trust. Today reinforces the need for modern tools that help agents give clearer, faster answers. It’s how the best agencies will stay ahead.”

Andrew Lloyd, Managing Director at Search Acumen (property data insight and technology provider), comments on the Autumn Budget regarding council tax surcharge and increased property income tax:

“This budget has felt like the most anticipated political move in years – a make or break for Starmer’s leadership. For industry, many have been hoping that economics would win out to politics, but the result has been a mixed bag. Whilst Reeves’ salami sliced Budget has seen a plethora of penny grabbing tactics, she has also underscored some solid commitments to technology, science and infrastructure that have given her some runway.

“The Chancellor’s decision to add a surcharge to higher council tax bands signals a desire to redistribute regional mobility and bridge the wealth divide, rather than create transactional peaks and troughs like a Stamp Duty change would have likely had. Whilst this will be difficult to implement, the three years until it comes into effect will allow careful planning if managed correctly. A fully digitalised Land Registry will certainly aid this process and support the monumental task of revaluations of hundreds of thousands of homes. The concern is how valuations will take place and how legally binding they may be. If we see higher value homes reduce in price over a sustained period of time between now and 2028, there is likely to be some pushback.

“Tinkering with property taxes was always going to divisive, but now that the Chancellor has made her choice, the priority must be stability. No U-turns, no prolonged uncertainty: give homeowners the confidence to plan their lives.

“For landlords, some will be hit twice in today’s Budget if stung by a council tax surcharge and an increase in property income tax. Some will have no choice but to exit the market entirely, reducing supply of the already squeezed private rental sector. Rents have increased nationally by about 36% since 2020, a figure that sits well above wage growth and has tightened the screws on the cost-of-living crisis. What’s more, the scarcity of rental homes will add further pressures to social care and social housing supply, with a housebuilding sector currently in turmoil. Our research shows that the gap between social housing availability versus the ballooning volume of the non-working population is the largest since 2019, widening 173% in 2024. This means that non-working people, or those between 16 and 64 who are economically inactive and often most in need of social care, are outnumbering new affordable and social housing numbers 12 to 1. Taxing landlords to the extent that they are forced to increase rents or leave the market paints a concerning future for the UK’s rental population.”

John Fraser-Tucker, Head of Mortgages at online mortgage broker Mojo Mortgages, provides a follow-up analysis on the Chancellor’s key property tax measures and the resulting outlook for the property and mortgage markets in 2026 and beyond.

The £2 Million Mansion Tax: Market Distortion at the Top

“The official announcement of a recurring annual levy on high-value homes (commonly dubbed the ‘Mansion Tax’) for properties valued above £2 million and the 2% property income tax hike for landlords will have the most immediate impact on market behaviour.

“This annual charge, set to be collected alongside Council Tax from April 2028, targets the top 1% of the housing market. This tax may slowdown in transaction volumes at the top end of the market, particularly in prime London and the South East,” says Fraser-Tucker. “Owners of properties in this bracket who are not under pressure to move may well decide to ‘stay put’ to avoid a property sale at a time when a new, recurring tax is being factored in by buyers. This hesitancy reduces market mobility, which can slow the entire property chain down, as many up-sizers rely on the sale of an expensive property to fund their next move.”

Property and Mortgage Market Predictions for 2026

The market in 2026 will be defined by a clear split in performance and priorities between the lower and upper ends, with affordability still being the primary concern. Expectations point towards further gradual cuts to the Bank of England Base Rate during 2026, influenced by sticky but declining inflation. This should push fixed-rate mortgage products lower, potentially settling rates in the 3.5% to 4.5% band.

The Impact of Falling Rates

“Any sustained fall in rates acts as a powerful catalyst,” Fraser-Tucker notes. “Mortgage affordability, the key block for most buyers, improves significantly, leading to pent-up demand being released into the market.”

However, the 2% tax hike for landlords is predicted to accelerate the exit of some Buy-to-Let investors. While this may increase the supply of properties for sale, the resulting reduction in rental stock may push rents higher, potentially making it harder for first-time buyers who are renting to save up their deposits.

Broker Focus in 2026: What Mortgage Brokers Will See

The shifts in regulation, tax, and interest rates will directly alter the flow of business for mortgage brokers. The team expect to see more:

95% High-LTV Products: The permanent Mortgage Guarantee Scheme, coupled with slightly lower rates, will drive a high volume of FTBs seeking small deposit, high loan-to-value (LTV) products.

Complex Refinances: A high number of borrowers who fixed in the low-rate era of 2021-2022 will be refinancing onto higher rates. They will require detailed advice on rate shock mitigation, capital raising, and switching terms.

Specialist Lending/Tax Planning: In the wake of the Mansion Tax, HNW clients will require bespoke mortgage products and financing structures that integrate complex tax planning (e.g., trust-owned properties, deferred charges).

Whilst seeing less:

Standard 80-85% LTV: As more FTBs enter with 5% deposits, the proportion of loans with a 15-20% deposit will likely decrease in the FTB segment.

Simple Product Transfers: Borrowers will be seeking genuine advice, making simple, unadvised product transfers less common as clients search for the best deal possible to manage higher payments.

High-Value Standard Transactions: Sales of properties just over the £2 million threshold using standard prime residential mortgage products will slow down due to the new recurring charge creating market uncertainty.

“For brokers, 2026 will be the year of the specialist adviser,” concludes Fraser-Tucker. “The market is becoming highly complex. We’ll be focusing on helping the first-time buyer navigate the high-LTV space and providing more sophisticated and specialist advice to the high-value market to navigate the new tariffs.”

Further commentary on: Self-Employed Borrowers

“The self-employed segment, which often faces a different level scrutiny under standard lending rules, is predicted to see improved opportunities but continued complexity in 2026. As overall fixed-rate mortgage pricing declines, affordability checks become slightly easier. However, the introduction of the new 2% tax on landlord property income may put further financial pressure on those who use rental income as part of their self-employed earnings. Mortgage brokers will be crucial here, as lenders’ criteria for proving income (using SA302s and accounts) remains strict. Brokers will increasingly be sourcing products from specialist lenders who can underwrite income based on one year’s accounts or retained profits, rather than the standard two-to-three-year average.”

Further commentary on: Older Borrowers

“The increasing age of first-time buyers and the general cost-of-living challenges mean that older borrowers will remain a highly important segment. We predict a rise in demand for longer mortgage terms (up to age 75 or even 80) and a growing interest in Retirement Interest-Only (RIO) mortgages. The reduction in available rental stock due to the landlord tax changes may also increase the number of homeowners looking to release equity via equity release to support family members (like first-time buyers) whose saving power is being eroded by higher rents. Brokers will need expertise in balancing longer-term repayment strategies with the borrower’s retirement income plans.”

I have a question – it the mansion tax still based on the individual living units or the whole building ?

I can see several London properties currently set up as HMOs that may have a problem.

Reply to the comment left by Paul Essex at 26/11/2025 – 19:56
There is no definitive guidance yet on how any future “mansion tax” or equivalent valuation-based charge would apply to buildings with multiple units or HMOs. Nothing has been published that sets out whether assessments would be based on:

• the value of the entire building as one hereditament
or
• the value of the individual units if they are self-contained

There is also no clarity on how shared-facility HMOs, mixed-use buildings or sui generis properties would be treated.

The Government has not released draft legislation, technical notes, or implementation rules that would allow a reliable interpretation. Anything beyond this would be speculation.

Once formal documents are published, the details will become easier to interpret. Until then, it is sensible to avoid drawing conclusions based on early commentary or press summaries.

Expert commentary from Nick Neale from Emoov.

There are fears that many people will be forced to downsize in certain parts of the country due to the “mansion tax”.

The mansion tax will affect people who own properties worth £2 million pounds and over.

The tax will start in April 2028 and will cost homeowners between £2,500 and £7,500 a year.

Nick Neale, property expert at Emoov explains the concerns, “London and the South East are being penalised a lot more than other parts of the country. People who have lived in their properties for decades are selling up, often shocked by how much equity they’re sitting on despite having little actual cash in the bank. These are the homeowners who will really feel the impact moving forward.”
He also stressed this may impact family inheritance wishes, “It will cost families even more money just to keep the house, along with the maintenance and all the other aspects of maintaining a larger property. In the future, they are most likely to consider selling.”

Nick also explains that the lack of bungalows for older buyers who are looking to downsize is a major issue, “In the 1960s, we were building a lot more bungalows than we are building now. I don’t see many developers building bungalows for downsizers to move into.

This is where we’re going to have a problem. People are stuck in bigger houses, paying higher fees, but have no alternative to move into, and there doesn’t seem to be a middle ground.”
Nick has expert advice for those affected by the new tax, “Facing the mansion tax doesn’t have to mean panic. Here is how homeowners can prepare and protect themselves.

Mansion Tax Survival Guide

1. Check Your Property Value
Know where your home stands. An independent valuation ensures you’re not paying more tax than necessary.
2. Consider Downsizing
Smaller homes or properties outside high-tax areas can reduce monthly costs and free up equity.
3. Explore Equity Options
If your home is asset-rich but cash-poor, equity release or remortgaging could provide extra liquidity.
4. Plan Ahead for Inheritance
Trusts, wills, and estate planning can help safeguard family wealth and make passing on property easier.
5. Reduce Running Costs
Invest in energy-efficient improvements or property maintenance to offset extra expenses.
6. Stay Informed
Mansion tax rules may change, keeping up to date allows you to act quickly and strategically.
7. Seek Expert Advice
Tax, property, and financial advisors can provide tailored guidance to suit your situation.
Bottom Line
Early planning, informed choices, and professional guidance are key to navigating the mansion tax with minimal stress.

Nick Neale from Emoov concludes, “The mansion tax marks a significant shift for homeowners in London and the South East. For many, the difficult decision to stay, downsize, or sell family homes will no longer be just a matter of choice; rising costs and financial pressures will shape it.

Early planning, informed decisions, and professional advice are essential for homeowners navigating the mansion tax.

The tax highlights the challenges facing households across London and the South East and the urgent need for suitable downsizing options for older generations.”