Rachel Reeves's 'mansion tax' plan could inflate house prices by £30,000 - catching thousands more homeowners

The Chancellor's proposals would introduce an annual council tax surcharge on homes valued at more than £2million from 2028. Under the plans, charges would start at £2,500 a year and rise to £7,500 for properties worth over £5million.

Property specialists have warned that the way homes are assessed could pull more households into the charge than expected.

Rather than relying on in-person inspections, the valuations are expected to be largely computer-based, raising concerns that some homes could be pushed above the £2 million threshold on paper, even if their real-world value is more debatable.

The planned revaluation would be the most wide-ranging review of property values in more than 30 years, but it would not involve widespread physical checks of homes.

Instead, the Valuation Office Agency is expected to use an automated valuation model, drawing on recent property sales, aerial images and historic planning records to estimate values.

Specialists have warned that these desktop-style valuations can often overestimate the value of higher-end homes because the methodology depends on mathematical averages rather than accounting for individual characteristics.

Charles Curran, from Kensington & Chelsea estate agency Maskells, said: "This model provides the government the ability to value every residential property in the UK at the touch of a button, and this has been available since 2016. [It] produces higher than normal pricing due to the mathematical average it uses."

Campaigners argue this approach proves particularly problematic in wealthy neighbourhoods where properties are highly distinctive and may not have changed hands for decades.

Paula Higgins, chief executive of the HomeOwners Alliance, said: "It's going to be a nightmare. Desktop valuations might be adequate for properties on terraced streets with a high volume of recent sales.

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"However, when considering properties priced at £2million plus in areas like Hampstead or Highgate, some of which may not have been sold in 30 years, each house is unique and requires a more individualised assessment."

Simon Rubinsohn, chief economist at the Royal Institute of Chartered Surveyors, highlighted a roughly £30,000 gap between average London house prices reported by the ONS House Price Index and Nationwide's data.

"Given the contentious nature of property valuation at key market points, these variations can be quite significant," he said.

Property owners will have the right to challenge their assessment, potentially prompting in-person inspections, but estate agents caution that the sheer number of disputes could cripple the system.

Nick Leeming, chairman of Jackson-Stops, said: "The revaluation is a huge task, and many owners are expected to appeal, creating a backlog for the VOA and inevitably delaying the process."

Research from Knight Frank suggests approximately 190,000 properties could exceed the £2million threshold by 2028, yet only around 8,000 registered residential valuers operate across the country.

The Treasury has acknowledged that affected homes could lose as much as £50,000 in value due to the new levy, further fuelling expectations that valuations will become fiercely contested.

Industry figures have also expressed concern that these assessments could subsequently be applied to other property-related taxes, including inheritance tax calculations.