Mansion Tax at £1.5m? 222,800 Homes Could Be in the Grey Area

By Lisa Hayes · 28 September 2026

Knight Frank's head of UK residential research, Tom Bill, has warned that if ministers drop the mansion tax threshold from £2m to £1.5m, the number of homes sitting in the valuation "grey area" around the line would roughly triple, from about 73,600 to 222,800. For anyone selling a home worth somewhere between £1.3m and £2.3m, that turns a tax on the super-rich into a live pricing problem, and it is already shaping how buyers and sellers negotiate.

I know, I know. Most of you reading this don't own a £1.5m house, and you might be tempted to click away. Please don't, at least not yet. Property taxes have a habit of leaking outwards. A change at the top of the market moves the middle, because people who sell expensive homes buy the next one down, and that chain runs all the way to the bottom. So here is what has actually been proposed, what Knight Frank has actually said, and what it does and doesn't mean if you're thinking of selling in the next couple of years.

What has actually happened?

On 28 September 2026, Tom Bill, Head of UK Residential Research at Knight Frank, published analysis on the possible effect of lowering the threshold for the High Value Council Tax Surcharge. The Negotiator ran it as a guest blog under his name, and Estate Agent Today and Property Industry Eye reported the same figures the same day.

The policy itself is not new. The surcharge, which the press calls the mansion tax, is planned to begin in April 2028. As Property Industry Eye reports it, the starting threshold in England is £2m, and the annual charge runs from £2,500 to £7,500 depending on which of four bands your home falls into.

What is new is the chatter that the Treasury might lower the entry point to £1.5m. Mortgage Strategy has also reported on speculation about a £1.5m threshold and the concern it is causing in London and the south-east. I want to be careful here. A lower threshold is being considered, according to those reports. It has not been announced. The Chancellor, John Healey, was due to speak to the Labour Party conference on the day the analysis was published, and the Budget is where anything firm would land.

What does Knight Frank say the numbers are?

Knight Frank's headline figure is about valuation, not about who pays. Tom Bill estimates that around 73,600 properties in England sit in the "grey area" around the current £2m threshold, in the £1.8m to £2.2m range, as The Negotiator reports his blog. Lower the line to £1.5m and, on Knight Frank's numbers, that grey-area group grows to 222,800 homes. That's three times as many.

• 73,600homes in the grey area around a £2m threshold (Knight Frank)
• 222,800homes in the grey area around a £1.5m threshold (Knight Frank)
• £2,500–£7,500planned annual surcharge across four bands (Property Industry Eye)
• April 2028planned start date

A quick health warning on one number. Estate Agent Today's write-up describes the £2m figure as "approximately 73,000 homes" at or above the threshold, while The Negotiator and Property Industry Eye describe 73,600 as the count in the £1.8m to £2.2m band. Those are different things, and they were reported slightly differently on the same day. I've used the Knight Frank author's own framing, from his own blog, and I'd treat the exact figures as estimates rather than gospel.

Why does the "grey area" matter more than the tax itself?

Because the surcharge depends on a valuation, and valuations are opinions.

Think about how you'd find out whether your house is over the line. Nobody is going to knock on the door with a tape measure and a Rightmove login. The taxman will need a figure, and that figure will come from the Valuation Office Agency (the VOA). Property Industry Eye reports that Knight Frank sees the grey area creating "major complications" for the VOA. If a home is worth £1.95m on a good day and £2.05m on a bad one, the difference between paying nothing and paying £2,500 a year comes down to who argues most convincingly about a bay window.

Triple the number of homes in that fuzzy zone and you triple the arguments, the appeals, and the number of owners who will wish they'd got a proper valuation before someone else gave them one.

What did Tom Bill say about how buyers and sellers will behave?

He was blunt about it. According to the Estate Agent Today report, he said that "whatever bands are used, it will inevitably lead to more pointed negotiations between buyers and sellers". His own blog on The Negotiator adds "bunching below price thresholds", and draws a direct comparison with the old stamp duty slab system.

If you were buying or selling before December 2014, you'll remember exactly what that looks like. Under the old slab system, tax was charged on the whole price once you crossed a line, so sellers listed at £250,000 instead of £251,000, and buyers offered £499,950 instead of £500,000. Asking prices clustered just under the thresholds like commuters just under a barrier. Then the rules changed, and the clustering faded. The mansion tax, on Knight Frank's reading, could bring it back at £2m, or £1.5m, or both.

Property Industry Eye quotes him with a subtler point. In their words, Tom Bill said it "may discourage up-sizers but could have the opposite effect on downsizers as homeowners seek to avoid paying higher charges." That cuts against the neat story that a tax on expensive homes just freezes the top of the market. Some people will stay put to avoid trading up into a higher band. Others will sell, and move to something cheaper, to get out from under it. Those are opposite pressures on supply, and it's not obvious which wins.

"Whatever bands are used, it will inevitably lead to more pointed negotiations between buyers and sellers." Tom Bill, Knight Frank, as quoted by Estate Agent Today

Why does £1.5m buy so much less in London than in Hartlepool?

Bill's blog makes the regional point in a way that's hard to argue with. At the average price per square foot in Kensington and Chelsea, which Knight Frank puts at £1,168, £1.5m buys 2.2 one-bedroom flats. In Hartlepool, the same money buys 20.

Read that again, because it is the whole political problem in one sentence. A flat rate threshold means something completely different depending on where you live. In prime central London, £1.5m is a not-very-large flat. Across much of the North East and the North West, it is a small estate.

How does this sit alongside the other property tax stories?

It doesn't sit alone, and that's the bit worth stepping back to look at. The last few days have been busy. The Resolution Foundation published a report describing council tax and stamp duty as "broken housing taxes", with the think tank arguing that Londoners underpay by £3.1bn relative to the value of their homes. There has also been renewed talk of capital gains tax rises before the Budget, and a first-time buyer scheme reported as due to be announced at the Budget.

Taken one at a time, each of these is a headline. Taken together, they are a Treasury that is looking at property from every angle at once. I'd be careful about reading too much into any single leak. Budgets are a bit like weather forecasts: three days out, everyone knows something is coming, and nobody knows what. Many of these ideas will not survive contact with the final Budget red book. Some will.

Our own take on the wider tax picture is in our property news archive, where we've followed the stamp duty and mansion tax stories as they've moved.

What does this mean if you own a home worth £1.3m to £2.3m?

This is where I'll tell you what I actually think, rather than just report what others have said.

First, don't sell in a hurry because of a rumour. A tax that would not start until April 2028, on a threshold that has not been confirmed, is a poor reason to take a lower price this autumn. The annual charge, if it lands as reported, is between £2,500 and £7,500. That is real money, but it is small next to the swing you can get in a sale price from pricing, presentation and picking the right buyer. Get the sale right and you can lose a lot more than £7,500 by getting it wrong.

Second, and this is the practical bit, find out what your home is honestly worth. Not what a neighbour says, not what the online estimate says, but a grounded figure. Our how much is my house worth guide explains how to triangulate one, and our house prices pages show how the market has been moving. If you are within about 10 to 15 per cent of £1.5m or £2m, that figure matters twice: once for the sale, and once for the tax.

Third, think about your buyer. If Knight Frank is right and negotiations get more pointed, you will be selling to people who are counting the tax into their offer. A buyer at £1.55m who knows a £1.5m line exists will ask why they shouldn't pay £1.49m. Have an answer ready. That might be a strong survey, a tidy legal pack, a shorter chain, or evidence from recent sales nearby.

Could this push prices down, or pile them up just under the line?

Probably a bit of both, and it will depend on the area.

In markets where lots of homes sit close to a threshold, expect clustering. Sellers price at £1,495,000 rather than £1,500,000. Buyers lowball on the grounds that the seller can hardly refuse. Estate agents will start listing "£1.49m" as if it were a new round number. If you've watched the £500,000 and £250,000 clusters over the years, you have seen it before.

Where I'd be more cautious is in predicting a broad price fall. The surcharge is an annual cost, not a one-off. Economists tend to argue that recurring property taxes get partly "capitalised" into prices, meaning buyers pay less because they'll pay tax later. I'd expect that effect to be modest at £2,500 to £7,500 a year on a £1.5m to £2m home, and it would show up slowly. It is a headwind. It is not a cliff.

What if you're a downsizer?

This is the group I have the most sympathy for, and it's the one Tom Bill flagged. If you're 68, own a £1.7m family home in Surrey that's now too big, and you've been half-planning to downsize for a couple of years, the mansion tax argument pulls two ways.

On one hand, you might choose to sell earlier and move to something under the line, and so avoid the charge. On the other hand, you might feel pushed out of a home and a neighbourhood you love, which raises the awkward question of whether tax should be nudging elderly homeowners to move at all. Property Industry Eye reports that the consultation includes options for some owners to defer payment, which, if it goes ahead, would help precisely this group.

Whatever you do, avoid selling in a rush. Our guide to selling a house fast covers how quick routes work, and the trade-offs. Speed comes at a price. The people who get hurt by a tax change are usually the ones who sell against the clock.

What should you do now?

Here is a short, practical list. None of it needs a decision today.

• Get a realistic valuation. Ask two or three agents, ideally ones who have sold recently on your road. A written comparison of sold prices beats an asking-price hunch.
• Check where you sit against £1.5m and £2m. If you're miles away in either direction, this story is mostly background noise for you.
• Watch the Budget, not the leaks. Until the Chancellor sets a threshold, the number that matters is unconfirmed.
• Keep your paperwork tidy. Title deeds, planning permissions, gas and electrical certificates. If negotiations get pointed, a well-prepared seller holds their price better.
• Understand your options if speed matters. If your circumstances mean you need certainty, our cash house buyers page explains who they are and how offers work, and our property jargon explained glossary decodes the terms you'll hear.

What does the data show about regional exposure?

Knight Frank's precise regional breakdown of the grey-area homes was not in the pieces I could read, so I won't invent one. What is clear from Knight Frank's own framing, and from the Mortgage Strategy headline, is that London and the South East carry most of the exposure. Here is the price-per-square-foot comparison Tom Bill used, laid out plainly.

Place	What £1.5m buys (Knight Frank)	Average price per sq ft
Kensington & Chelsea	2.2 one-bedroom flats	£1,168
Hartlepool	20 equivalent flats	Not stated in source

The point of the table is the ratio, not the decimals. A flat-rate threshold cuts very differently across the country. It is worth remembering when you hear politicians say "just the top one per cent". At £1.5m, in parts of the South East, it isn't.

What might bunching look like in practice?

Here is an illustration, and I stress it is an illustration, not a forecast. Imagine a street of similar detached houses in a commuter town, all broadly worth between £1.4m and £1.6m. Under a £2m threshold, none of them would care. Under a £1.5m threshold, half the street is suddenly having a conversation nobody wanted.

The seller of a house that would sell for £1.52m in a normal market now faces a buyer who says: "I'll pay £1.49m, because I don't want to be in the surcharge band." The seller can refuse, but the next buyer may say the same thing. Multiply that by dozens of homes and you get exactly what Tom Bill describes, bunching below the line and more pointed negotiations.

The flip side is that some owners will fight to prove their home is worth less than the line, and some buyers will pay a little more for a home that is clearly below it. Nobody has yet worked out how much a saved £2,500 a year is worth in a purchase price. My guess is a few thousand pounds at most, but that is a guess.

Is a home just under the line really a bargain?

Not automatically. A cheaper home isn't a better home. If a house at £1.49m is genuinely worth £1.49m, a buyer gains nothing by paying it rather than £1.51m, other than avoiding a recurring charge. The trouble comes when people pay a premium for the "safe" side of the line, or when sellers hold back from marketing a home at its true value because they fear the surcharge deters buyers.

If you're selling, resist the urge to price for the tax rather than for the market. Price to sold evidence. Ask what comparable homes actually achieved, not what they were listed at. Rightmove and other portals have shown all year that asking prices and sold prices are not the same thing, and that is truer than ever in a market where sellers are competing for a smaller pool of buyers.

Where does the Valuation Office Agency come in?

The VOA is the government body that values homes for council tax. Knight Frank's concern, as reported by Property Industry Eye, is that tripling the grey area creates major complications for it. Nobody has said how frequently homes would be revalued, or how owners could challenge a band. Those are precisely the details that decide whether a tax feels fair or feels arbitrary.

If you're an owner in the grey zone, keep a folder: recent sold prices on your road, your survey if you have one, receipts for major improvements, and any professional valuations. If a challenge is ever needed, evidence wins arguments. This is also good practice for any sale, so it isn't wasted effort.

What's the outlook?

The honest answer is that nobody knows, including the people writing the headlines. What we do know is the shape of the debate.

The starting point is the £2m threshold from April 2028, with a £2,500 to £7,500 annual surcharge, reported by Property Industry Eye. The possible change is a £1.5m threshold. The concerns are valuation disputes, negotiation distortion and unequal regional impact. The possible softeners are deferral options for cash-poor owners. The date that matters is the Budget.

My own view, for what it's worth: the valuation problem is the one that will not go away. Governments can change a rate overnight, but they can't conjure a fair, quick valuation of hundreds of thousands of homes without a lot of work. Even the best system leaves some owners feeling they've been valued unfairly. If you sit in the grey zone, being ready to challenge a figure with evidence is the best protection you can give yourself.

Frequently asked questions

What is the mansion tax in England?

Officially the High Value Council Tax Surcharge. According to Property Industry Eye, it is planned to start in April 2028, with a £2m threshold and annual charges of £2,500 to £7,500 across four bands.

Will the mansion tax threshold really drop to £1.5m?

Not confirmed. Reports say ministers are considering it. Nothing is official until the Chancellor announces it, most likely at the Budget.

How many homes are affected by a lower threshold?

Knight Frank estimates around 73,600 homes in the grey area around a £2m threshold, rising to 222,800 around £1.5m. These are grey-area valuation numbers, not a count of homes that would definitely pay.

Should I sell my house before the mansion tax starts?

Not just because of it. The tax is not due until April 2028 and the threshold is unsettled. Sell when it suits your circumstances, and price it carefully.

Will the mansion tax push house prices down?

Possibly a little, and mostly by creating clustering just under thresholds. Knight Frank's Tom Bill expects more pointed negotiations rather than a specific price fall.

Does the mansion tax affect downsizers?

It could pull two ways. Tom Bill told Property Industry Eye it may discourage up-sizers but could have the opposite effect on downsizers seeking to avoid higher charges. The consultation reportedly includes deferral options for some owners.

Who decides my home's value for the tax?

Knight Frank's analysis points to the Valuation Office Agency, which it says would face major complications if the grey area triples.

What should I do if my home is close to the threshold?

Get a realistic, evidence-based valuation, keep your paperwork tidy, and wait for the Budget before making big decisions. When you're ready, you can compare offers for your home and see what your options look like.

If you would like a clear picture of what your home could fetch, and how quick-sale offers compare with the open market, you can start a valuation in a few minutes. It's free, and there's no obligation to accept anything.