Boodle Hatfield Property Insights, Summer 2026 - Flipbook - Page 4
Boodle Hat昀椀eld
Property Insights
High-Value Council Tax Surcharge
The Government’s proposal for a High-Value Council
Tax Surcharge, commonly referred to as the Mansion
Tax, was announced in the Autumn Budget 2025, with a
proposed commencement date of 1 April 2028. Under
the proposals, an annual surcharge will be levied on
residential properties in England valued at more than £2
million, with properties in the highest band (those valued
in excess of £5 million) attracting an annual charge of
£7,500. Despite the initial attention generated by the
announcement, there has been little further indication
of progress towards implementation.
In particular, the consultation process envisaged by
the Government has yet to produce any substantive
guidance on the scope or operation of the proposed
regime. For owners of prime central London property,
country estates and other high-value residential assets,
the more immediate consequence of measures of this
nature is often not the eventual tax burden itself, but the
uncertainty created by anticipated valuation reviews,
potential market reactions and the prospect of future
legislative change. Until draft legislation is published
and the outcome of the consultation process is known,
the Mansion Tax remains a policy proposal rather than
an enacted tax. Clients should therefore remain alert to
developments, whilst avoiding signi昀椀cant transactional
decisions based solely on speculation as to the form or
timing of any future charge.
Saskia Arthur, Partner & Head of Residential
Property
Leasehold reform and
commonhold
The Leasehold and Freehold Reform Act 2024 is intended
to simplify the lease extension and enfranchisement
regimes. Measures already in force include the removal
of the two-year ownership requirement, whilst further
reforms, including the introduction of 990-year lease
extensions at a peppercorn are not yet implemented.
Although the commencement of several key provisions
remains uncertain pending the ongoing legal challenge,
the Government has seemingly signalled its commitment
to progressing the reforms. In July 2026, it launched
consultations on the valuation rates to be used in
enfranchisement and lease extension claims, as well
as the proposed exceptions to the new principle that
each party should bear its own non-litigation costs. The
outcome of these consultations is likely to shape the
昀椀nal form of the reformed regime.
Further reform is anticipated in relation to ground rents.
The Government has indicated that it intends to cap
ground rents in existing residential long leases at £250
per annum through the proposed Commonhold and
Leasehold Reform Bill, with such rents reducing to a
peppercorn after 40 years. In July 2026, the Government
published a consultation seeking views on whether so
called “quid pro quo” leases - where a leaseholder has
agreed to pay a higher ground rent in return for a lower
premium or other bene昀椀t - should be exempt, or treated
differently under, the proposed cap. The outcome of
that consultation may in昀氀uence the scope of any future
ground rent restrictions and re昀氀ects the Government’s
recognition that some ground rent arrangements may
have formed part of a negotiated commercial bargain.
However, neither the proposed cap nor any exemption
regime is currently in force.
