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Let’s talk about the “Mansion Tax” that is rumoured to be featuring in next month’s Budget. On paper it sounds like a political win: tax homes worth £2 million and above, make the rich pay, close the gap in the public finances. It sounds fair. But it’s built on a myth. People hear £2 million and picture a palace with gates and staff. In reality, in many parts of London and in some areas of the South East, £2 million buys a good family house in a strong school catchment or a smart flat in a well-connected area. It buys a normal life that people have worked years for. Calling those homes “mansions” is misleading spin. It turns ordinary households into targets. Now look at what’s being proposed. You pay huge stamp duty just to get the keys. You pay council tax every year. You pay to insure, maintain and run your home. And now you’d have to pay again every single year, simply for the privilege of living in it. That’s not reform. That’s punishment. And it is punishment aimed at the people who keep the market alive. These are the buyers and sellers who move, upsize, downsize and create chains. They are not offshore investors. They are London’s working middle. A Mansion Tax sends a clear message: success is something to be taxed, not celebrated. You work, you stretch, you pay huge stamp duty on the way in, and then you are told you are now the problem. That’s how you kill confidence. Here’s what no one in Westminster seems to have thought through: this rumour alone will make people think twice about improving their homes. Say you’ve got a £1.6 million house and you spend £200,000 on it, a new kitchen, an extension, an extra bedroom. That could nudge it past £2 million. Congratulations, you’ve just renovated yourself into “mansion” territory. What happens then? People stop. They don’t extend or upgrade. We’d become the only country that discourages homeowners from improving their homes. And it wouldn’t just hit owners. It would hit everyone who relies on that work: builders, decorators, architects, designers, landscapers. You’re not just taxing homeowners. You’re choking the renovation economy. Then there’s fairness. Where does this £2 million line even sit? Will every home be revalued, or only when it sells? Ask three valuers to price the same house and you’ll get three different answers. Prices move with mortgage rates, sentiment and timing. Two identical homes on the same street can sell for very different figures. You can’t build an annual tax on a moving number and call it fair. And sitting in the middle of that are people who aren’t cash rich. Many so-called “£2 million homeowners” bought 10 or 20 years ago and stayed. Their home went up in value on paper, but that doesn’t mean they have the cash to pay an annual bill. They are not the super-rich. They are long-term owners who’ve already paid huge tax on the home they love. The Treasury’s polite answer will be: if they can’t afford it, they can downsize. But who’s buying? Who’s going to upsize into a house that now comes with a permanent annual charge? Families who might have stretched to buy that forever home will look at the running costs and walk away. You’ve pushed out the current owner and scared off the next one. That’s how you freeze a market from both ends. This rumour also follows months of leaks of possible tax changes coming where “those with the broadest shoulders will bear the greatest burden.” It sounds noble, but in practice it’s not just the billionaires who will pay. It’s the squeezed middle, professionals, business owners and long-term London families who already shoulder the highest stamp duty, council tax and income tax. So, buyers have paused. Sellers paused. Nobody wants to commit seven figures when the rules might change next month. Property runs on confidence. Take away confidence and you stall everything. Reeves needs to stop attacking aspiration and start understanding the market she is targeting. The message right now is clear: if you work for something, if you improve it, if you build a life in it, you will be charged for it again and again. Becky Fatemi is Executive Partner at Sotheby’s International Realty UK
