Some 40% of homes worth £1.5m or more have never had a sale recorded by HM Land Registry – a fact which makes future valuations for the so-called Mansion Tax more challenging, it’s claimed.

Zoopla told the Financial Times over the weekend that there are some 183,000 homes in England estimated to be valued at or above £2m – the threshold at which the tax kicks in from 2028.

And another 75,000 sit just below the threshold.

Zoopla suggests that the property industry’s Automated Valuation Models (AVMs) would need to become more sophisticated before the tax applies.

This is partly because of the number of high value homes not having been sold for many years, and partly because high value homes are typically less homogeneous than lower cost properties, so harder for algorithms to calculate accurately.

Zoopla research guru Richard Donnell tells the FT: “There’s a lot more complexity to valuation in the top 1% of the housing market.

“The challenge is, how do you build confidence that the valuations are correct?”

The tax – formally known as the High Value Council Tax Surcharge or HVCTS – will be charged at £2,500 annually for homes in England valued at £2m or more, with higher charges applying above £2.5m, £3.5m and £5m. 

HM Revenue and Customs has told the FT: “We have extensive experience valuing domestic property and will use a wide range of evidence, including sales data where available, alongside property characteristics and other relevant information to determine bandings for HVCTS.

“Combining Automated Valuation Models with professional judgement will ensure valuations are delivered efficiently and accurately.”