UK (Parliament Politics Magazine) – Experts warn Chancellor Rachel Reeves’ proposed mansion tax could stall luxury home sales and push wealthy homeowners out, freezing the top market.
As reported by The Independent, property experts warn Rachel Reeves’ plan to tax high-end homes could slow sales and push wealthy residents to leave Britain.
The chancellor faces criticism from mortgage and finance experts over plans to tax costly homes, reportedly to cover a £40bn public finance gap.
How could the £1.5m threshold hit thousands of homeowners?
Under the proposed plan, higher-rate taxpayers could pay 24% on gains from selling their homes, while basic-rate taxpayers could face 18%, ending the current tax-free status.
According to sources, the autumn budget could end tax relief on primary residences above a certain value.
A £1.5 million threshold, still under consideration, could affect around 120,000 higher-rate homeowners, exposing them to capital gains taxes of £199,973.
What did Scott Gallacher say about Reeves’ mansion tax?
Scott Gallacher, director at Rowley Turton, said the £1.5m limit could prevent older homeowners from putting their properties on the market.
He warned that the proposal risks damaging the high-end property market and would be difficult to implement.
Mr Gallacher stated,
“It would be insane if it creates a cliff edge in that properties over £1.5m are subject to Capital Gains Tax on the entire gain, as properties sold at £1.49m would incur no CGT, whereas £1.5m might be a six-figure bill. If it’s only on gains above £1.5m, then the CGT raised would be minimal, as potentially you’d be exempting six or even seven-figure gains.”
He said,
“Homeowners, especially older ones, who perhaps bought their houses in the 1970s or 1980s, would be daft to sell and incur a huge CGT liability. Instead, they would be incentivised to hold on to the home until they die and pay no CGT.”
What did Simon Gerrard say about Reeves’ mansion tax?
Simon Gerrard, chairman of Martyn Gerrard Estate Agents, warned that London homeowners could face “eye-watering” tax bills.
He said,
“Meanwhile, those who are actually wealthy know how to bypass these moves and won’t pay it.”
Mr Gerrard added,
“After the deadline passes, people will simply not sell their homes. The property market above the threshold will die until Labour are voted out and the policy is repealed under a more sensible government.”
What did Laith Khalaf say about the proposed mansion tax?
Laith Khalaf, head of investment analysis at AJ Bell, said homeowners strongly expect their primary residences to remain tax-free.
He stated,
“A mansion tax set at a high level would naturally cause people to worry it was just the thin end of the wedge, and the next time the government needs a bit of money they could just lower the threshold.”
Mr Khalaf added,
“It would also be an impediment to mobility in the housing market, as those with properties which might fall foul of the tax would be inclined to sit on them for longer, leaving a log jam in the housing ladder below them.”
What did Stephen Perkins say about the mansion tax and the super-rich?
Stephen Perkins, managing director of Yellow Brick Mortgages, said,
“I can see a lot of families in London being caught with this higher tax bill, and it may push more wealthy tax contributors to exodus the UK, which is already a problem following the Chancellor’s last budget.”
What did Torsten Bell say about wages and tax policy?
Treasury minister Torsten Bell declined to confirm or deny the plans, stating any changes would be decided by the chancellor in the budget.
She said,
“Working people and people’s living standards is what this government is all about. We’ve seen wages rise more in the first 10 months of this government than in the first 10 years of the last Conservative government.”
Ms Bell added,
“But of course, as you know, questions for tax are for the budget and they’re for chancellors.”
What did Aneisha Beveridge say about mansion tax effects?
Aneisha Beveridge, chair of research at the estate agent Hamptons, stated,
“It’s a big change that would hit long-term owners hardest and create a cliff-edge at £1.5m, distorting behaviour around that point.
She said,
“While the headline gains look substantial, they’re often the result of decades of ownership and, in some cases, house prices haven’t even kept pace with inflation.”
Ms Beveridge added,
“For households who don’t need to move, this could act as a strong disincentive to sell, dampening transactions and potentially weighing on house price growth and Treasury revenues alike.”
Key facts about the mansion tax
A mansion tax is levied on high-value home sales, not just large mansions. As of 2025, it applies in New York, California, New Jersey, Connecticut, Hawaii, Vermont, Washington, and the District of Columbia.
The tax aims to raise government revenue, fund public services like affordable housing and education, but it may also slow luxury property transactions.