The High Value Council Tax Surcharge — widely called the mansion tax — was announced in the Autumn 2025 Budget and takes effect in April 2028. For most landlords it is irrelevant. For those letting high-value property, particularly in central London, it is a significant new annual cost with one important question still open.
What the surcharge is
An annual flat-rate charge on top of existing council tax, applying to residential properties in England valued at £2 million or more using 2026 values.
- £2m – £2.5m — £2,500 a year
- £2.5m – £3.5m — £3,500 a year
- £3.5m – £5m — £5,000 a year
- Over £5m — £7,500 a year
Rates rise with CPI from 2029/30. Local authorities collect it alongside council tax, and it is expected to raise around £430 million a year from 2028/29.
Around 165,000 properties are expected to fall in scope — fewer than 1% of homes in England.
Who pays on a rented property?
This is the question landlords keep asking, and the answer has two layers.
The Government’s stated intention is that owners pay, not occupiers. The House of Commons Library briefing puts it plainly: the surcharge is applicable to owners rather than occupiers. Occupiers continue paying ordinary council tax as now.
So on a let property, the design points to the landlord paying — and that appears deliberate, to stop the charge being passed straight to tenants. Trusts, companies and partnerships are expected to be within scope. Leaseholders would be liable on a high-value leasehold home. Social housing is excluded.
But it is not settled in law. The consultation ran from 19 May to 14 July 2026 and liability is among the issues still being worked through. Propertymark has said the proposal does not currently establish that landlords must pay when a home is let.
What Propertymark is arguing
Propertymark wants owners to be able to decide whether they or their tenant pays, mirroring the flexibility that already exists with ordinary council tax.
Its reasoning: in the private rented sector council tax is typically passed to the tenant, though not always — sometimes it is bundled into rent. And if the surcharge funds local authority services, those are benefits the tenant receives, not the landlord, who may not even live in the area.
It also warns of a supply effect. Institutional landlords letting high-value property in central London could face hundreds of thousands of pounds in charges, which Propertymark argues could reduce availability at the top of the rental market.
The valuation problem
A practical issue that could delay the whole thing.
Many homes worth over £2 million have not changed hands for years, so there is no recent sale price to work from. Propertymark warns that online estimates and estate agency appraisals would not be a sufficient basis for imposing a charge — a full inspection by a qualified surveyor would be needed.
With around 165,000 properties to assess before April 2028, Propertymark doubts there are enough qualified valuers, or that councils have the resources to administer the scheme.
The Valuation Office has been instructed to carry out a targeted valuation exercise, with revaluations planned every five years and the next expected in 2033. There is a proposed appeal route to the Valuation Tribunal for England.
Exemptions and deferral
The consultation proposes relief in limited circumstances, aimed at owner-occupiers rather than landlords:
- Exemptions for people who bought or inherited a home but now have lower income
- Relief for temporary changes in circumstance such as job loss or ill health
- A deferral scheme allowing payment to be delayed until the property is sold, targeted at lower incomes with an income threshold of £35,000
A landlord letting a £2m+ property commercially is unlikely to qualify for any of these.
What to do if this affects you
- Work out whether you are near the threshold. £2 million in 2026 values — not what you paid, and not the 1991 council tax band.
- Do not assume your tenancy lets you pass it on. Standard council tax clauses will not cover a charge designed to sit with the owner.
- Factor it into yield calculations on any high-value acquisition before April 2028.
- Watch for the consultation response — that is when liability gets settled.
- Keep evidence of value if you think a valuation has been pitched too high, since there is an appeal route.
Frequently asked questions
Does this affect a normal buy-to-let?
Almost certainly not. Fewer than 1% of homes in England are worth £2 million or more. If your properties are well below that, this does not apply to you.
Can I pass the surcharge to my tenant?
The Government’s intention is that owners pay, which appears designed to prevent exactly that. Propertymark is arguing for landlord discretion, but until the position is confirmed you should plan on paying it yourself.
Is this the same as the proportional property tax?
No, and they are frequently confused. The surcharge is confirmed policy affecting £2m+ homes from 2028. The proportional property tax was a campaign proposal to replace council tax and stamp duty entirely, and the Prime Minister has ruled it out for now.
What if I own through a company?
Company-owned properties are expected to be in scope, as are trusts and partnerships, unless a specific exemption emerges from the consultation.
How will my property be valued?
The Valuation Office is carrying out a targeted exercise using 2026 values. How it identifies properties is not fully settled — Land Registry price paid data is one likely route. Revaluation is planned every five years.
Could it be delayed?
Possible. The valuation capacity concerns are real and raised by more than one professional body. But it is confirmed policy with a stated start date, so plan for April 2028 rather than assuming slippage.
- Starts April 2028, English homes worth £2m+ at 2026 values
- £2,500 to £7,500 a year depending on value band
- Government intention: owner pays, not occupier
- Liability still being worked through in consultation
- Around 165,000 properties — fewer than 1% of homes
- Propertymark wants landlord discretion over who pays
- Separate from the proportional property tax, which is ruled out
Related Articles
- Are landlords going to pay council tax instead of tenants?
- Burnham’s property tax plans — confirmed vs speculation
- Landlord compliance deadlines 2026–2030
RentalReadyUK produces plain-English guides for private landlords in England. We separate confirmed law from proposal and consultation, and we date every page. This article is general information and not tax or legal advice — for a high-value portfolio, speak to a property tax adviser.