Thousands extra could possibly be dragged into paying Rachel Reeves’ mansion tax on £2m properties as specialists warn revaluation plan may overstate home costs by as much as £30,000

Tens of thousands of homeowners risk being swept into paying Labour’s proposed ‘mansion tax’ after experts warned that the Government’s planned revaluation of properties could overstate house prices by as much as £30,000.

Under proposals backed by Chancellor Rachel Reeves, homes valued at more than £2million would be hit with an annual council tax surcharge from 2028, starting at £2,500 and rising sharply for higher-value properties.

However, property specialists fear the method being considered to assess homes will rely heavily on computer-generated ‘desktop’ valuations rather than physical inspections, increasing the risk that properties are pushed over the £2million threshold on paper alone.

The revaluation – the first nationwide review of its kind in more than three decades – is expected to draw on recent sales data, aerial mapping and historic planning records. 

While faster and cheaper than traditional inspections, experts warn the approach tends to inflate prices for expensive homes because it relies on mathematical averages rather than individual characteristics.

Campaigners say this could prove especially problematic in affluent areas where homes are highly individual and may not have been sold for decades, making accurate valuation far more difficult.

Paula Higgins, chief executive of the HomeOwners Alliance, said the system could unfairly penalise owners of high-value properties.

‘Desktop valuations might be adequate for streets where similar houses sell regularly,’ she said. 

Tens of thousands of homeowners risk being swept into paying Labour’s proposed ‘mansion tax’ after experts warned that the Government’s planned revaluation of properties could overstate house prices by as much as £30,000

Under proposals backed by Chancellor Rachel Reeves, homes valued at more than £2million would be hit with an annual council tax surcharge from 2028, starting at £2,500 and rising sharply for higher-value properties

However, property specialists fear the method being considered to assess homes will rely heavily on computer-generated ‘desktop’ valuations rather than physical inspections, increasing the risk that properties are pushed over the £2million threshold on paper alone

‘But for £2million-plus homes, particularly in prime areas, every property is unique and requires a much more tailored assessment.’

The Valuation Office Agency (VOA) is expected to use an automated valuation model that analyses location, property attributes and nearby sales to determine values.

Critics warn such models struggle to accurately price homes at the top end of the market, where values are often subjective and negotiated.

The Treasury has already admitted the new tax could knock tens of thousands of pounds off the value of affected homes, raising further concerns that valuations will become highly contentious.

Homeowners will be able to appeal their assessment, potentially triggering in-person inspections. But estate agents warn the sheer volume of disputes could overwhelm the system and delay the rollout.

Nick Leeming, chairman of estate agency Jackson-Stops, said reliance on lagging house price data could drag more properties into the tax net than is justified.

‘This is a huge undertaking,’ he said. ‘Many homeowners are likely to challenge their valuation, which could create a backlog and significantly slow the process.’

Research suggests there could be as many as 190,000 homes worth £2million or more by 2028, yet there are only around 8,000 registered residential valuers nationwide.

Industry figures have also raised fears that the valuations could later be used to calculate other taxes, such as inheritance tax, amplifying the financial impact on households.

A spokesperson for the Valuation Office Agency said professional valuers would be involved throughout the process and that properties would be inspected where necessary.

However, critics warn that unless valuations are handled with extreme care, thousands more families could find themselves labelled owners of a ‘mansion’ – and taxed accordingly.