While there are industry fears that a rumoured ‘Mansion Tax’ would freeze the top end of the housing market at the same time, another mooted plan to increase council tax bills in more upmarket areas could see bills rise by as much as 40%, it has been claimed.

Labour’s Fair Funding Review will redirect money away from many affluent councils into more deprived areas.

And because approximately 51% of council spending is funded by Central Government and the redistribution of business rates, it could leave large gaps in authorities’ budgets and force them into making substantial increases in council tax.

Many in the property industry, such as Viewber founder Ed Mead, have already expressed concerns to The Neg about the impact a mansion tax would have on the upper end of the housing market, and this news will come as a double whammy.

Even more tax on top of an already overloaded segment.”

Benham and Reeves Director, Marc von Grundherr, says that the Government must not “layer even more tax on top of an already overloaded segment.”

And Islay Robinson, CEO of Enness Global, says: “A policy approach that continues to single out high-value homes runs the risk of deterring global buyers, suppressing activity and weakening the very part of the market that supports substantial tax receipts.”

Affects not isolated

But it is not just the top end of the market that will be affected, as there will be rises across all the property types in the borough. In Richmond, for example, it is estimated that the council could lose up to 90% of its Government funding, necessitating a huge rise in council tax, which would incentivise buyers to look elsewhere to make their purchases.

The changes are due to take effect in April 2026. Next month, however, ministers will launch a consultation on bespoke arrangements for any authorities facing financial difficulties, with speculation that councils could be allowed to increase their Council Tax by up to 20% and estimates that many will raise theirs by 40% over the full course of the parliament.