Palace tax in Britain.. Thousands of luxury homes confuse the government before implementation

A British study showed that about 40% of homes valued at about 1.5 million pounds had not registered any sale with the Land Registry.
This highlights the scale of the challenge facing the British government in determining which homes in England are subject to the proposed “mansion” tax.

This tax, known as the “Additional Council Tax for High Value Properties,” will come into effect in April 2028, according to a report by the Barnes Law website.

It will be levied at £2,500 a year on homes in England worth more than £2 million, with higher fees imposed on homes worth more than £2.5 million, £3.5 million and £5 million. The government expects this tax to generate 430 million pounds sterling annually.

The Zoopla real estate website estimated that there were 183,000 homes worth more than two million pounds as of May 2026, which represents the highest 0.9% of homes in England in terms of value. There are another 75,000 homes worth just under this threshold, or more than £1.75 million.

But these estimates, produced by automated valuation methods, need to be carefully reviewed by the government to ensure homes are being taxed correctly.

Zoopla also found that the average time since the last sale for homes worth more than £1.5 million registered with the Land Registry was 11 years. Nearly two-thirds of these homes lack energy efficiency certification, a criterion that increasingly influences the evaluation.

Real estate agents and researchers have drawn attention to the difficulty of valuing homes at the top end of the market, where there is greater variability between properties, a decrease in the frequency of transactions, and an increased likelihood of automated appraisal methods providing inaccurate valuations.

Some have warned of a flood of appeals from homeowners over assessments.

“Valuations are more complex in the top 1% of the housing market,” Zoopla CEO Richard Donnell told the Financial Times. “The challenge is how to build confidence in the validity of these valuations.”

It is the responsibility of the property valuation agency to assess whether a home is taxable, which says it will look at homes with a rateable value of £1.5 million or more to determine how accurate these values ​​are.

The agency will use an automated valuation system, which assesses the value of real estate – even in the absence of a sale – by studying the relationship between sales prices and property characteristics across many transactions, and will seek the help of professional real estate appraisers when further evaluation is needed.

However, it may be difficult to verify the data without inspecting the property. Features that are not visible from the street, such as basement excavation or a complete renovation, are not recorded in public records and may significantly affect the assessment. “Planning statements may show a planning application, but this does not necessarily mean the work has been completed,” Zoopla said.

Donnell added that for expensive homes, it can be difficult to obtain evidence about the quality and condition of the property. “In the luxury property market in London, for example, a run-down house that needs huge sums of money to repair is very different from the house next door that has been newly renovated to excellent condition,” he said.

The biggest burden of the tax will fall on London and south-east England, two regions that account for 85% of taxable properties in England, according to Zoopla estimates.

The company found there were around 125,000 homes worth more than £2m in London, and 34,100 in the south-east, compared to just 200 in the north-east.

The pace of real estate transactions in London and the density of housing there contribute to making automated valuation models more accurate there. But outside the capital, the relative scarcity of expensive homes — and thus a dearth of data upon which to base comparisons — means that valuation disputes are more likely in these areas, Zopla says.

The government is consulting with the real estate sector and other stakeholders on the implementation of the tax, including possible reasons for exemptions and proposals to enable homeowners to appeal assessments. The consultation period ends on 14 July.

HMRC said: “We have extensive experience in valuing residential property, and will use a variety of evidence, including sales data where available, along with property characteristics and other relevant information, to determine the valuation categories for the High Value Residential Property Valuation Scheme.