London sellers are already cutting asking prices below the £2m mansion tax threshold more than a year before the surcharge comes into force, according to Winkworth.
The proportion of price reductions taking homes from above £2m to below the threshold nearly doubled following the announcement of the High Value Council Tax Surcharge.
Most of the adjustment took place during the spring, suggesting sellers around the threshold responded quickly to the future tax liability. Winkworth also reports that some sales initially agreed above £2m subsequently fell through before being renegotiated below the threshold.
The findings come as activity across the agency’s Prime Central London offices fell to its lowest level in 18 months during the third quarter.
TAX LINE
From April 2028, homes valued at £2m or more will face an annual council tax surcharge of at least £2,500, based on 2026 property values.
Winkworth says speculation during the summer about a possible £1.5m threshold also affected seller behaviour, with price reductions around that level more than doubling while the proposal was being discussed.
Mohammad Copley, Insights Manager at Winkworth, says: “The Mansion Tax does not come into force until 2028, but our data shows the market began adjusting to it within months of the announcement.
“Since then, asking prices across the £2 million threshold have been affected in our Prime Central London offices.
“The lesson remains the same: the market responds to change quickly, long before anyone has to pay it, and sometimes before it even exists.”
Across Winkworth’s prime offices, properties sold for an average 94% of their final asking price during the quarter, while just one in eight achieved asking price or above – half the proportion recorded a year earlier.
RENTING FOR NOW
The weaker sales market is coinciding with stronger demand for prime London rentals.
More than three prospective tenants registered for every buyer during the quarter, compared with two during the previous three months.
Winkworth says some are would-be buyers choosing to rent while monitoring the sales market with the intention of purchasing later.
Requests from owners for lettings valuations also increased by around a quarter year-on-year as some properties that had failed to sell were considered for the rental market instead.
Lets above £3,000 a week reached a record high over the past year.
The agency also reports early changes in landlord behaviour following the Renters’ Rights Act, with its Notting Hill office seeing landlords increasingly request sales valuations when tenants give notice.
Dominic Agace, Chief Executive Officer of Winkworth, says: “Autumn, once a hive of activity after the summer holidays, is quieter than usual as thoughts remain focused on the impending October Budget.”
He adds that a successful Budget would be “property light”, arguing that further property tax changes risk undermining confidence.
