Social landlords exempt from ‘mansion tax’ as consultation opens on surcharge for top 1% of homes

It will cost £2,500 a year for owners of homes worth between £2m and £2.5m, rising to £7,500 for properties worth more than £5m, and it is expected to raise around £430m a year. It is expected to affect less than 1% of properties.

Taxpayers and sector experts have been invited to weigh in over the eight-week consultation period, alongside legal professionals.

The consultation document released this week also raises the possibility of an extra premium on top of the standard charge for non-UK resident owners of high-value homes.

Officials wrote that they are interested in exploring whether overseas buyers are “contributing to pressures on housing availability and prices” in high-pressure markets such as London, and whether a higher charge could be justified as a result.

The surcharge is designed to shake up the council tax system, which has been unchanged since 1992.

Under the current system, the average Band D charge for a typical family home is £2,280, which is more than a £10m property in Mayfair pays, the Department for Business and Trade said.

Dan Tomlinson, the exchequer secretary to the Treasury, said: “A £10m mansion in Mayfair should not be paying less council tax than an ordinary family home in Darlington or Blackpool.

“This change tackles historic unfairness, so that those with the most valuable properties pay their fair share, helping to rebalance the system and putting money back into communities up and down the country.”

Properties will be valued by the Valuation Office and placed into one of four bands, with revaluations every five years. The next revaluation after implementation will be held in 2033.

When it was announced in 2025, Pete Marland, chair of the resources committee at the Local Government Association, urged the government to “work with us on the details” to avoid “unintended consequences” on any future council tax reform.

“This surcharge should not create confusion over accountability, with councils likely to be blamed for a charge that is not theirs,” he said.

The consultation appears to partially address those concerns, confirming that local authorities will be “fully compensated” for the cost of collecting the charge and that the government will work with councils on carrying it out. 

It also said banding decisions will be made by the Valuation Office, not local authorities.