Labour's mansion tax wipes £284,000 off value of homes worth more than £2million, new figures show

Properties worth more than £2million have decreased in value by an average of £284,000 amid concerns over Labour's incoming mansion tax, new figures show. 

Under the controversial plans, houses worth £2million or more will be subject to an additional annual tax bill of between £2,500 and £7,500 per year from April 2028.

Experts say the demand for high value homes has fallen since the levy was first announced by former chancellor Rachel Reeves in last year's autumn Budget. 

On average, properties valued at £2million or more have been discounted by £284,583 since the beginning of this year, compared to £244,000 in 2025. 

Moreover, houses that sold between April and June 2026 averaged the largest discount at £315,119, analysis shows. 

According to property experts TwentyCi, homes valued at £2million were less than half as likely to sell and took twice as long to find a buyer than those priced under the mansion tax threshold.

On average higher value homes took 86 days to find a buyer, compared to 41 days for the rest of the market.

TwentyCi also found that on average the percentage of the initial asking price achieved for a property of £2million was 90.5 per cent during the third quarter of this year. 

A property priced at this value would therefore sell for £190,000 less than the original valuation. 

Moreover, the number of the UK's 148,384 homes valued at £2million or more are not evenly distributed throughout the country. 

Around 64 per cent are located in London, while 88 per cent are concentrated in London, the South East and the East of England combined.

Chris Sykes, a property finance specialist at MSP Financial Solutions, told The Telegraph: 'There is definitely less activity in the £2million to 2.5million space as buyers consider whether it makes more sense to buy at £1.9m and not commit to an additional annual cost.'

Katie Lam, the shadow housing secretary, added: 'Labour were warned that their Family Homes Tax would gum up the housing market. The data now proves this beyond doubt.

'The Family Homes Tax is a tax on aspiration and on those who've worked hard, saved and paid their taxes.'

Concerns about the impact of the mansion tax come after it emerged Labour was planning on extending the levy to properties valued at more than £1.5million.

Lowering the threshold by £500,000 would more than double the number of homes at risk of being affected to 271,000. 

A Whitehall source said: 'This is seen as the most viable option because the Valuation Office is already doing the work to identify the homes worth more than £2million, so it isn't a massive change to capture those over £1.5million.'

Two government sources confirmed that lowering the threshold is a 'live discussion' in the Treasury, The Times reports.

However, nothing has been firmly decided, amid concerns too many more modest homes would be affected. 

A government spokesman said: 'This tax is expected to raise around £430million per year to help fund public services and is addressing a longstanding unfairness in our country, where a Band D home in Darlington or Blackpool pays more in council tax than a £10m mansion in Mayfair.'