House sellers are already pushing sale values below £2m in a bid to avoid the coming “mansion tax” on expensive homes.
The high-value council tax surcharge (HVCTS) is not due to be implemented until April 2028 but estate agents Hamptons have found Brits are already taking steps to avoid the levy.
The “mansion tax” charge was announced at last year’s Budget, prompting property experts to slam the levy as an “assault” on middle-class homeowners.
The tax will hit owners of homes worth more than £2m with a £2,500 annual charge, while properties worth more than £2.5m, £3.5m and £5m will be subjected to higher rates.
Buyers and sellers are pushing values below the £2m threshold to avoid their homes being flagged by the Valuation Office’s assessment of which properties fall into these bands, which will be carried out later this year.
Budget had instant effect on house prices
The proportion of house offers around the £2m mark which keep values below this threshold have surged since the November Budget, according to Hamptons’ research.
As many as 83 per cent of offers for homes around this value stayed below £2m since the Budget, compared to 64 per cent a year earlier.
Comparative analysis on offers for homes worth around £1m proves this trend because buyers have made no attempt to push down offer values since the Budget, Hamptons said.
Around 145,000 homes in England are currently valued between £1.5m and £2m and a further 130,000 are worth more than £2m, according to Hamptons, but the estate agency said these numbers are likely to change as the market prepares for the tax.
Hamptons claims their analysis shows that homeowners are opting to push their houses below the surcharge threshold, rather than simply flogging properties which they fear could incur the levy.
David Fell, lead analyst at Hamptons, told the Financial Times: “If owners were primarily trying to offload properties that might incur the new tax liability, we would expect listing numbers just above £2mn to rise.
“Instead, the decline suggests that some sellers are adjusting asking prices downwards to ensure their properties fall below the threshold where demand now appears strongest.”
In November, experts said the charge amounts to a tax on “ordinary success” and warned it will disproportionately affect homeowners in London and the South East, where house prices are inflated.
