Council tax revaluations on high-value homes hit London and the South East disproportionately

Saturday 15 November 2025 10:54
| Updated:

Saturday 15 November 2025 10:56

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Rachel Reeves will introduce a council tax surcharge on expensive homes in a move that will disproportionately impact London and the South East, according to reports.

The Chancellor is currently finalizing plans to plug a £25 billion black hole in the public finances, and last week ruled out a major rise in income tax.

The new charge called ‘mansion tax’ will see the Treasury use the existing council tax system to revalue 2.4 million of the most valuable properties in bands F, G and H over the next few years – representing one in 10 homes in England.

A new and separate surcharge on top of existing council tax bills will then be applied to the 300,000 most valuable properties in the top three brackets, according to The Telegraph.

More than two million homes fall within the scope of the new tariffs, with 1.3 million middle class families living in group F properties across England set to be similarly impacted as prime properties in groups G and H.

This will have a huge impact on London, where one in ten homes is priced at more than £1 million.

It is unclear exactly how much the new levy will cost, and details will be finalized in the Autumn Budget on November 26.

Sir Mel Stride, the shadow chancellor, accused Labor of engaging in “class war against middle England”.

He said: “If Starmer and Reeves decide to introduce a new tax policy on family homes, they will punish aspiration and hit hard-working people.

“Under Labour, nothing is safe – not your job, your home, your savings or your pension,” according to the Telegraph.

Other taxes under scrutiny include a levy on landlords’ income, an increase in gambling taxes, and an exit fee for wealthy people leaving the UK.

The housing market is under pressure

Reeves’ move is likely to add pressure to Britain’s high-end housing market, which is already suffering from a glut of supply and a lack of demand.

The problem is particularly big in the South East: The average price of an apartment in London, for example, fell by 2.6 per cent year on year to £445,000, according to the ONS.

Overall house prices in the capital fell 0.3 per cent year on year, meaning the average price of a property was £566,000.

However, the surcharge on the council tax band, which has not been reassessed since 1991, is a much less stringent option than the capital gains tax previously applied to principal residences in England.

Changes to the levy have been under discussion since 2012, with reforms supported by former Chancellor George Osbourne, although the idea was later blocked by David Cameron.

Reeves said that higher taxes on the rich will be “part of the story” in his Budget on November 26, as he seeks to fill an estimated £20 billion gap in the Treasury’s finances.

AM City has contacted the Department of Finance for comment.