"For genuinely wealthy families with substantial liquid assets, the numbers involved are relatively modest. For context, at a 3% interest rate, it would take less than a month to earn £5k on £2m sitting in the bank. For those buyers, the tax is an irritation rather than a deterrent."
- Rosie McCormick Paice - Edwin Coe LLP
The so-called ‘mansion tax’ has been a constant source of headlines both before and after the Budget. It sounds dramatic, and when repeated often enough, it can create a sense that prime central London is about to grind to a halt. In reality, what we are seeing on the ground is far more measured. For most buyers in prime areas, this is not a moment of panic.
It is a time of assessment. Many clients put their plans on hold waiting for the outcome of the budget. Now that they can build their decisions on fact rather than conjecture and speculation, many are ready to put their plans into action.
For international buyers in particular, decision-making is driven by real-time costs rather than taxes that remain several years away. Conversations with clients are practical and detailed. Stamp Duty Land Tax is almost always at the forefront of mind, especially where the non-UK resident and additional property surcharges apply.
These are immediate, known costs that materially affect pricing, timing and structure today. A tax that may arrive in 2028 is noted and factored into long-term thinking, but it is rarely decisive at the point of purchase.
Currency movements often have a much sharper influence on behaviour. Exchange rate shifts can change affordability overnight. A swing in sterling can add or subtract hundreds of thousands of pounds from the effective purchase price in a matter of weeks. Compared with that, future policy proposals tend to feel abstract. Political announcements can affect sentiment, but clients are generally more concerned about uncertainty around existing taxes, such as SDLT and capital gains tax, and about the broader conversation around a possible wealth tax, than about one specific proposal that is still some way off.
Lifestyle considerations continue to sit at the heart of most discussions. Wealthy buyers still care deeply about how and where they live. Clients talk about schools, neighbourhood character, access to green space, shopping and restaurants, and how a home fits into their wider family and business lives. Increasingly, safety is a more explicit part of those conversations. Many clients are more cautious than they were five or ten years ago.
They are prioritising locations that feel secure, well-managed and established, particularly as London’s reputation as a safe global city is questioned more openly in the international press.
Looking at market history, it is also worth remembering that clearly signposted reforms are usually absorbed over time. Prime property markets are not strangers to tax change. Many of our clients take a genuinely long-term view, usually planning to hold property for many years. For them, gradual change is something to plan for rather than something to panic about.
This is where smart, strategic advice becomes critical. It is about structuring ownership correctly, understanding exposure, and aligning property decisions with wider financial planning.
There is also an important distinction that often gets lost in the public debate. While the language around a ‘mansion tax’ implies a levy on the ultra wealthy, in practice, it is unlikely to trouble those at the very top of the wealth spectrum. For genuinely wealthy families with substantial liquid assets, the numbers involved are relatively modest. For context, at a 3% interest rate, it would take less than a month to earn £5k on £2m sitting in the bank. For those buyers, the tax is an irritation rather than a deterrent.
Where the impact is more keenly felt is among high-earning professional services families who happen to live in valuable homes. Senior lawyers, partners in accountancy firms, executives in finance or technology, and entrepreneurs who are asset-rich but not cash-rich are more exposed. These are households whose wealth is often tied up in a family home rather than diversified across large investment portfolios.
For them, an additional annual charge can feel significant, particularly when combined with existing pressures around school fees, mortgage costs and broader cost of living increases.
This is an important nuance. The tax is less about clipping the wings of global wealth and more about increasing the burden on a specific group of high earners who have chosen to put down roots in London. That has implications not just for individual households, but for how attractive London remains to the senior professionals who underpin its economy. It is a conversation that deserves more honesty than it usually receives.
The tax will feel even more acutely by elderly people who have lived in their homes for years, whilst they have accrued significant value. Their income as pensioners may well not stretch to the tax. The Government is going to have to think about reliefs.
So yes, the ‘mansion tax’ makes for a compelling headline. But headlines rarely capture how decisions are actually made. What we are seeing in the market today reflects practical realities rather than distant measures. Overseas buyers remain engaged, selective and focused on best-in-class property in the right locations. They are weighing up immediate costs, currency dynamics and lifestyle priorities, not reacting to a proposal that may still change shape before it arrives.
The mood is thoughtful rather than fearful. Clients are asking good questions, taking advice early and planning carefully. That is a healthy market response. The noise may continue, but beneath it sits a steady appetite for prime London homes that are realistically priced and which meet real needs and long-term ambitions.
