Labour’s upcoming mansion tax has triggered the biggest fall in Westminster house prices on record.
Average house prices in the central London borough fell 22.8pc from £1,083,519 in May 2025 to £836,331 in May 2026 – the fastest decline since Land Registry data began in 1996.
The looming mansion tax and an increase in mortgage rates since the outbreak of the Iran war prompted the decline.
In the broader London market, prices dropped 3.7pc to an average of £554,814 in the year to May, which was the fastest fall in house prices for two years.
The capital was the only region in the UK to record a decline in annual property prices in that time, the data showed.
Labour’s mansion tax, known as the high-value property surcharge, will hit homes worth more than £2m with a tax surcharge of at least £2,500 a year and will come into force in April 2028.
House prices in the capital have also been hit by the scrapping of non-dom status and higher stamp duty rates.
Lucian Cook, the head of residential research at Savills, said: “I think there is an element of caution around the tax environment. They already know that they’re exposed to the high-value council tax surcharge.”
He added: “There’s also a bit of a legacy effect in terms of some of the changes which have been made to non-dom taxation.”
In Hammersmith and Fulham, property prices fell 10.9pc in the year to May, the fastest annual decline since July 2009 when the property market was still reeling from the global financial crisis.
House prices in Kensington and Chelsea declined 11pc year on year to an average of £1.26m in May 2026, down from £1.4m in the same month a year earlier.
Richard Donnell, the executive director at Zoopla, said: “There has been a lot of talk of wealth taxes, taxing higher value properties … If you’re an overseas buyer or someone thinking about relocating, London and the UK have had a lot of uncertainty around.”
He added that inner London property prices “are effectively resetting”.
