Autumn Budget: impact on the prime and super prime property market
The long awaited budget was finally delivered last week and it was fairly anticlimactic from a residential property point of view. After numerous pre-budget leaks, threatening various tax changes, those of us operating in the prime and super prime markets are generally breathing a sigh of relief; it could have been a lot worse.
Arguably an SDLT reform is needed and an opportunity has been missed there, but as we were all braced for a tax raid, it may be preferable that this wasn’t tackled by the current government. CGT and IHT remain unchanged in general terms. Yes, we have a 'mansion tax', or more correctly a High Value Council Tax Surcharge (HVCTS), but it is not on the scale many feared. The charges, which will be introduced from 2028 will range from £2,500 to £7,500 and impact properties valued at over £2 million, with the thresholds shown below:
| Threshold (£m) | Rate (£) |
| £2.0 - £2.5 | £2,500 |
| £2.5 - £3.5 | £3,500 |
| £3.5 - 5.0 | £5,000 |
| £5+ | £7,500 |
The HVCTS will be based on valuations as at 2026 with properties to be revalued every 5 years. The charge is intended to be payable by homeowners, rather than occupiers who are usually responsible for standard council tax charges.
Whilst there will no doubt be households that are significantly impacted by the introduction of the HVCTS, at a time when the cost of living is already high, on the whole it seems unlikely to have much impact on the market, particularly in the prime and super prime markets. There is still some detail to be understood in relation to the surcharge, including whether there will be an ability to defer payment to the point of sale or death, which would likely be a welcome relief for those in valuable houses with limited income.
The bigger question is perhaps whether the introduction of this new tax will actually raise the relatively modest revenue that is being predicted. The cost of valuations is due to be borne by the government. The valuation process alone will be costly, but we expect to see a large number of appeals for properties on the cusp of the various thresholds, particularly at the £2 million mark, which will result in further expense. Another concern is the delay that this process may cause and the impact this may have on the market for properties that sit around the thresholds.
One thing is for sure, the surcharge will certainly keep the Valuation Office Agency busy and it does beg the question “are we being readied for a wider reassessment of council tax?”
"Property and tax experts have raised questions over the workings and consequences of the ‘mansion tax’ introduced by the Chancellor, Rachel Reeves, in Wednesday’s Budget."
