The UK housing market is facing a period of adjustment following the government's announcement of a new council tax surcharge for high-value properties, as fresh data reveals a slight dip in transaction levels.
Budget Clarity and the New 'Mansion Tax'
The Labour government has confirmed plans to introduce a high-value council tax surcharge in England, set to take effect from April 2028. This new levy will target properties with a value exceeding £2 million and will be structured across four new price bands.
The annual charge will start at £2,500 for homes worth more than £2 million, rising progressively to a top rate of £7,500 for properties valued above £5 million. Crucially, this surcharge will be applied in addition to standard council tax bills and will be the responsibility of the property owner, not any tenants in residence.
Market Activity Shows a 'Mixed-Bag'
This policy news comes against a backdrop of nuanced market activity. According to HMRC, an estimated 98,450 home sales were completed across the UK in October 2025. This figure represents a 2% decrease compared to October 2024, though it is 2% higher than the transactions recorded in September 2025.
Nick Leeming, chairman of estate agency Jackson-Stops, described the results as a "mixed-bag". He noted that while some transactions were rushed to beat the Budget deadline, the broader market appeared to be on pause. "It is likely we will see more stock come to the market in the short-term, with minor price adjustments for properties just over the £2 million cliff edge," he suggested.
Expert Analysis on Future Market Trends
Industry experts are now assessing the potential ripple effects of the new tax. Leeming predicted increased demand for homes below the £2 million threshold, which could create upward price pressure in the mid-tier markets of regions like the South East.
Jeremy Leaf, a north London estate agent, offered a measured outlook. "With the Budget out of the way, and mansion tax likely to raise relatively little additional revenue... the impact on housing market activity should be minimal at worst," he stated, adding that improving affordability and potential interest rate cuts could boost transaction numbers.
Sarah Coles from Hargreaves Lansdown pointed out that the October sales data reflects agreements made months prior to the Budget. She believes the absence of a more drastic tax measure will support the market. "News of the so-called mansion tax... may well make a difference at the top end of the market, and some of that will trickle down," she said, but stressed its impact would be limited compared to a broader tax.
Iain McKenzie of The Guild of Property Professionals highlighted that the Budget confirmation provides clarity for thousands of movers. He observed a market currently underpinned by needs-based buyers and sellers, such as those upsizing or downsizing.
Looking ahead, agents like Jonathan Handford of Fine & Country note that "sellers who price their homes realistically and present them well are seeing strong interest." Jason Tebb of OnTheMarket concluded that the removal of uncertainty means "buyers and sellers can make decisions with confidence."
