A 5% price correction would be the largest annual drop in values since 2009 for homes that have maintained a value of more than £2 million during those years, according to Hamptons’ data

UK homes worth more than £2 million could drop about 5% in value next year as the market adjusts to a so-called mansion tax, according to forecasts from Hamptons.

The broker said that it expected these homes, most of which are in London, to see a “one-off adjustment” in 2026 based on price reductions that factor in a new levy coming into force in April 2028. Chancellor of the Exchequer Rachel Reeves last month unveiled a tax on homes valued at more than £2 million, with a surcharge starting at £2,500 a year and rising to as much as £7,500.

A 5% price correction would be the largest annual drop in values since 2009 for homes that have maintained a value of more than £2 million during those years, according to Hamptons’ data. The broker said that it expected London to be the only region in Britain to see house prices drop in 2025, predicting a 0.5% decline in the year compared to growth of as much as 5% in other regions.

It’s hard to ignore the growing drag of taxation and politics, Aneisha Beveridge, head of research at Hamptons said in a report. London is being held back by higher stamp duty and broader tax anxieties, locking some owners into their homes and others out of buying them.

The new mansion tax targets less than 1% of all properties in England. However, most homes worth more than £2 million are in London, where property agents are warning the tax could amplify turbulence in the city’s market.

Hamptons predicts London will be the only region to not see house prices rise next year, and says it will lag behind other UK regions in growth by as much as roughly 16 percentage points between 2024 and 2028.