The mansion tax hasn’t even taken effect yet, and already the goalposts appear to be moving. Andy Burnham’s incoming administration is reportedly considering lowering the threshold for the High Value Council Tax Surcharge from £2 million to £1.5 million, a move that would pull tens of thousands of additional homes across England into the net.
Under the current plan, announced in Rachel Reeves’s November Budget, the surcharge will apply from April 2028 as an annual addition to council tax for homes valued at £2 million or more. Charges range from £2,500 for properties valued between £2 million and £2.5 million, up to £7,500 for those worth more than £5 million.
At the £2 million threshold, roughly 127,000 homes across England will be caught. Lower it to £1.5 million and the figure nearly doubles to around 243,000, according to estimates from the Tax Policy Associates think-tank. One major national agency puts the wider total at 271,000.
Team Burnham has refused to rule out the change.
This isn’t only a London problem. In the South-East excluding London, the number of homes caught by the levy would jump from 27,502 to 62,500 if the threshold is reduced. In the East of England, which includes Norfolk and Suffolk, the figure would rise from 9,221 to 23,769.
That’s a significant expansion. While most of those properties sit in affluent commuter belts and the pricier pockets of Essex and Hertfordshire, the ripple effects will be felt across the region’s property chains. When higher-value properties become harder to sell, the impact trickles down to mid-market homes as sellers find themselves unable to move on.
The head of one national estate agency chain warns that the lower threshold would drag in many homes that couldn’t reasonably be described as mansions. “In the Greater London area, this could capture many Victorian terraced family homes,” he says. “Many families living in these homes are already contending with substantial mortgage costs and the lingering impact of recent inflationary pressures.”
A London property agent goes further, describing the potential change as something that would “cause carnage” and amount to a backdoor tax on working people. “People living in £1.5 million homes in London and the outer suburbs aren’t oligarchs or multimillionaires. They probably have quite big mortgages and have worked bloody hard. In south-west London, £1.5 million means a pretty bog-standard terraced house.”
Property markets tend to price in risk well before policies take effect, and the mansion tax is no exception. Sales of London homes valued at £2 million or more fell by nearly a fifth in the first half of 2026 compared with the same period before the policy was announced, according to property analyst LonRes. Sales above £5 million dropped by 15 per cent.
One experienced buying agent says he is already factoring the tax into valuations for homes as low as £1.25 million and expects price bunching to intensify at lower price points if the threshold is reduced. That kind of distortion, where sellers cluster their asking prices just below a tax boundary, has been a feature of the stamp duty system for years. The mansion tax looks set to create a new one.
For most homeowners across Norwich, King’s Lynn and the wider county, the direct impact of this tax will be minimal. Average house prices in Norfolk remain well below either threshold.
But the indirect effects matter.
When the top end of the market freezes, chains stall. Buyers in the £700,000 to £1 million range may find that the people they’re buying from can’t sell their own homes further up the chain. That isn’t hypothetical. A similar pattern played out during the stamp duty surcharge uncertainty of 2014 and 2015, and it tends to repeat whenever policy changes create ambiguity about future costs of ownership.
Prime Norfolk locations such as Burnham Market and Holt, where a small number of properties sit at or near the threshold levels, will feel the effects most directly. Even where individual homes aren’t caught by the surcharge, the broader uncertainty dampens buyer confidence at the upper end of the market.
The Ivybridge Collection’s property market reports track price movements and transaction data across 324 locations in Norfolk and Suffolk, providing the local intelligence needed to make informed decisions regardless of what Westminster announces next.
The mansion tax debate highlights a recurring tension in UK housing policy: governments reach for property taxes because homes are visible, immovable and difficult to hide from the taxman. But each new levy adds friction to the market, discouraging movement and suppressing transaction volumes at a time when housing liquidity is already under pressure.
Whether Burnham ultimately moves the threshold is anyone’s guess. His team has been careful to keep options open. But the market isn’t waiting for confirmation. For sellers at the upper end, the smart play is to act before the uncertainty crystallises into something harder to price around.
