More than half of the homeowners in certain areas may soon feel the impact of Rachel Reeves’ newly proposed mansion tax, the Daily Mail has uncovered.

In the recent budget, Chancellor Rachel Reeves announced that properties valued over £2 million could incur an annual tax charge as high as £7,500.

According to analysis by the Daily Mail, affluent neighborhoods in central London are among the most likely to be affected by this tax.

In the upscale areas of Knightsbridge, Belgravia, and Hyde Park, 63% of homes sold over the past year fetched £2 million or more.

In Marylebone and Park Lane, this figure stands at 43%, while in Wimbledon Common, it reaches 41%.

Conversely, in 90% of middle-layer super output areas (MSOAs)—which typically have populations ranging from 5,000 to 15,000—not a single home has been sold for £2 million or more.

Reports indicate the tax will be implemented by revaluing 2.4million of the priciest homes across the top F, G and H council tax bands – with around 100,000 properties expected to be hit.

Properties which have gained significant value compared to the rest of the market or inflation, depending how the scheme works, also run the risk of going up a council tax band.

The ‘mansion tax’ is set to raise £400million for the Treasury – but there will be no impact on homes in bands A to E.

Labour have argued that because the typical Band D property is not affected they are protecting ‘working people’.

More than half of homeowners in some neighbourhoods could get hit with Rachel Reeve’s new mansion tax, the Daily Mail can reveal

However, huge numbers in the South East who have seen the value of their properties soar over the past decades, could be in for a shock.

The South East has around 645,000 homes in the top three council tax bands, compared to just 43,000 in the North East, according to official data.

The stark contrast has led to warnings that families across the South will feel they have been ‘singled out’ to pay for the Government’s mistakes.

The Conservatives said any new property tax would amount to ‘a war on family homes across Middle England’.

Amy Reynolds, of Antony Roberts estate agents, told the Daily Mail: ‘In areas like Richmond, a £2m valuation doesn’t equate to extraordinary wealth — it often just reflects decades of organic price growth.

‘Many long-term owners, particularly older residents who are no longer earning, are “asset-rich but cash-poor”. 

‘A new annual levy risks placing them under real financial strain. Deferral may soften the blow on paper, but the reality of an accruing debt attached to your home is hugely stressful for older people who value stability above all else.’

The property expert also called the mansion tax ‘regionally unfair’ due to its focus on ‘perfectly ordinary family homes’ in London.

She added: ‘Londoners already face the highest cost of buying these properties, with stamp duty now at its most punitive levels.

‘Rachel Reeves cannot keep taxing the same group of people on the same asset; at some point it becomes a penalty for simply living in the south.’

The overhaul has come despite then-Labour frontbencher Jon Ashworth vowing during the election campaign: ‘We’re not changing council tax banding.’ 

The policy is the closest the Government has come to announcing a form of ‘wealth tax’ in the Budget, which political opponents on the left have been calling for. 

Experts have also warned it will damage the property market at a time when the Government is looking to build 1.5million more homes. 

The Chancellor has put together another grim package, despite promising just a year ago that she would not be back for more taxes. 

Her slew of tax rises have been designed to allow her to pump up benefits by £15billion a year. 

Nick Leeming, chairman of Jackson-Stops property experts, said: ‘What concerns me is the greater economic consequences beyond the Chancellors tax grab, leaving £2m homeowners who are mortgaged having the potential to slip into negative equity as prices realign. 

‘We know house prices in London and the South East reflect decades of inflationary growth and chronic undersupply, where as a result, asset-rich and cash-poor homeowners will be disproportionately affected. 

‘A £2m threshold is arguably too low for these regions where a single blanket threshold fails to recognise regional nuances.’

Homeowners are expected to be allowed to defer paying the ‘mansion tax’ until they move house or die, to avoid people having to sell up to cover the cost.

The threshold means Prime Minister Sir Keir Starmer and Home Secretary David Lammy – who own properties in north London worth between £1.5million and £2million – are likely to escape the tax.

But Energy Secretary Ed Miliband and Attorney General Lord Hermer could be clobbered, because they each own homes with an estimated value of close to £4million, analysis suggests.

Property guru Kirstie Allsopp warned this week that the ‘performative’ plan would see more properties being valued at £1.99million by owners to avoid a tax ‘cliff edge’ at a time when the market is already ‘desperately in the doldrums’. 

And she warned that the levy would be ‘incredibly damaging’ to the top end of the housing market which she said is a ‘huge economic driver’. 

Ms Allsopp said the tax was ‘completely performative’ because Ms Reeves ‘cannot get to grips with her backbenches’.

She added: ‘She wasn’t able to get to grips with welfare spending at all. And she needs to hand a nice chunk of meat to her backbenches and say, look, I am bashing the wealthy.’

Current council tax banding, which determines the size of bills, has been unchanged since properties were first assessed in 1991, when it replaced the poll tax.

Valuations were carried out by estate agents and surveyors who drove down streets to make quick judgements. 

Band A, the cheapest council tax band, covers homes worth less than £40,000.

On the other hand, Band H, which is the most expensive, includes those worth more than £320,000. 

Since the bandings were rolled out however, the value of homes in commuter towns dotted across the Home Counties has increased six-fold.

Prices have only gone up by a factor of 2.5 in areas like County Durham. 

But critics of the mansion tax have labelled the Chancellor’s policy as ‘nothing more than a superficial fix’.

Andrew Dixon, founder and chair of Fairer Share, the campaign group for a Proportional Property Tax, said: ‘The Chancellor has missed a critical opportunity to enact the meaningful, long-overdue reform that our broken Council Tax system desperately needs. 

‘Revaluing the top bands is an acknowledgment that the system is outdated, yet the refusal to launch a comprehensive review of UK property taxes leaves the job unfinished -and millions of people continue to face an unfair, regressive system.

‘Adjusting the top bands is nothing more than a superficial fix. The Chancellor herself referenced the problem, a Band D house in Darlington can still pay a higher rate of Council Tax than a mansion in Kensington.

‘Even with a surcharge of £7,500, a £5 million mansion would pay just 0.19% of its value in council tax. That rate is more than five times lower than what families in Darlington face. 

‘The Government’s reforms fail to address the deeper, structural flaws at the heart of Council Tax. This should have been the moment to initiate a full-scale reform of how property is taxed in this country.’

It comes at a tough time for councils, with many facing bankruptcy or forced to cut services, especially discretionary ones such as youth clubs, childcare and museums.

Ever since council tax was introduced in 1993, no minister has dared order a national revaluation of properties.

Although one was due in 2005 by the then local government minister David Miliband, he delayed it – a move labelled by one critic in the Guardian as ‘done out of sheer fear’.

However Wales is leading the way, with their revaluation creating new property bands that are predicted to raise council tax for over 470,000 homes and reduce it for about 800,000 households.

The IFS think tank has also produced a report for the Scottish Government outlining how it could follow similar proposals, as it also still uses 1991 property values.