Policy background and why it matters to agents
Some lower-value homes currently pay more council tax relative to their value than high-value homes, including some properties in central London. For example, a Band D property in Darlington worth £400,000 pays around £2,500 annually, whereas a Band H property in Mayfair valued at £10 million pays around £2,100.
The Secretary of State for Housing, Steve Reed MP, has stated that fewer than 1% of residential properties in England will attract the High Value Council Tax Surcharge (HVCTS). It is predicted to raise £430 million per year, which will support funding for local government services.
Property agents have a direct interest in how the surcharge is designed because the proposals rely on accurate valuation, consistent evidence, and clear processes for owners who want to challenge a decision. Propertymark has previously called for governments to review the impact of tax changes on the property sector and warned that rising costs and tax burdens can affect investment, supply, and market confidence.
Potential penalties for agents
The Valuation Office will publish a draft list of properties in scope in late 2027 so local authorities can prepare bills and owners can check whether their property has been included. The first bills will be sent in March 2028.
Local authorities will be able to request information from managing agents to identify liable owners, and the UK Government has asked for views on whether local authorities should be able to apply penalties if an agent fails to respond.
Who will pay the surcharge?
The surcharge will apply to domestic dwellings, including houses and flats, valued at £2 million or more in 2026. Mixed-use properties may also be included where the residential element is distinct and self-contained. Owners will be liable for the HVCTS. If someone else lives in the property and usually pays the existing Council Tax bill, the owner will still be required to pay the surcharge.
The charges will be uprated each year in line with Consumer Price Inflation. Properties will be revalued every five years, with the next revaluation planned for 2033.
The proposed annual charges are:
| Property value | Annual surcharge |
|---|---|
| £2 - £2.5 million | £2,500 |
| £2.5 - £3.5 million | £3,500 |
| £3.5 - £5 million | £5,000 |
| Over £5 million | £7,500 |
How properties will be valued
The Valuation Office will carry out a targeted valuation, looking at sale prices of similar properties and adjusting for differences between them – the same method used for standard Council Tax. It will also consider a range of data, such as property type, size, age, number of rooms and parking, alongside sales evidence, and in some cases, may contact property owners for more information.
The proposals set out a model-assisted valuation approach, combining automated valuation models with professional valuer judgement, which the UK Government says will help ensure decisions are efficient and consistent.
After the HVCTS is implemented, new homes and changes to properties, such as demolitions, extensions, or renovations, will be recorded. In most cases, a property would not be re-banded because of improvements until it was sold, split, or merged, to avoid penalising owners for updating and maintaining their homes.
Some leaseholders will be liable for HVCTS
Because long leaseholders have rights over property – they can live in it, let it out, or sell the lease and profit from the sale, the leaseholder will be liable for paying HVCTS. Where this definition of a long lease does not apply, liability would sit with the freeholder.
A ‘long lease’ is defined as one where the lease was initially granted for more than 21 years, or where the law treats a lease as having been granted for more than 21 years. This will include leases granted for life, or until marriage.
Support for homeowners with limited ability to pay
Where an owner has a high-value property but limited income, they may be able to defer payment until the property is sold or ownership changes. This scheme would only be available for a primary residence, not second homes, and would not be available to companies.
The proposed eligibility thresholds are a household income of £35,000 or less and capital savings of £16,000 or less. Deferral may also be available where the property is the main home of someone who is disabled or severely mentally impaired, using similar criteria as existing council tax rules.
Exemptions and discounts
Proposed categories that should not be in scope for HVCTS include:
- purpose-built student halls of residence
- Ministry of Defence accommodation
- property owned by a sovereign nation for diplomatic accommodation
- property owned by registered social housing providers
- long-term care accommodation
- accommodation for people seeking refuge from domestic violence
- new-build property owned by developers until first sale or 12 months after completion notice
Where a property’s characteristics are unlikely to change, it would not be valued for HVCTS. Local authorities would be responsible for granting and reviewing discounts for properties where the use or circumstances may change.
The consultation is also seeking views on whether discounts should apply to tied accommodation linked to employment, and to some charity-owned property.
Agent expertise is ignored for appeals
For the new charge, homeowners will have an initial eight-month period to challenge banding. After this, a standard six-month challenge period will apply. Challenges regarding who should pay, whether a property should be included or exempt, or whether an owner qualifies for deferral will not be time limited.
The consultation states that homeowners may be asked to provide examples of similar properties with different bands or evidence of relevant property sales. However, under current proposals, estimates from estate agents or property listing websites would not be accepted as evidence.
Representing members in the consultation process
Propertymark will respond to the proposals on behalf of members. Agents with questions, concerns, or comments about the proposals should contact the Policy and Campaigns team to help shape our response.
The consultation closes on 14 July 2026. Individual responses can be submitted through the online survey.
Property agents have expertise in local areas, about comparable properties, assessing home renovations and improvements, and unique characteristics of properties which are likely to feature in areas where property is valued above £2million.
The UK Government cannot work to an inconsistent process and then not allow professionals working in the sector to support consumers and ensure it is accurate; a much more joined-up approach is needed alongside annual assessments. Propertymark will be engaging in the consultation process, and what the UK Government decide is classed as evidence sharing must be clear and consistent.
