The introduction of an annual levy on property value above £2 million has highlighted the scale of adjustment theoretically required for many of London’s wealthiest homeowners.

New analysis from high net worth mortgage broker Enness Global suggests that prime central London owners would need to cut their living space by close to half in order to bring the value of their homes under the new mansion tax threshold.

AVERAGE HOMES FAR ABOVE NEW LIMIT

The firm reviewed all properties currently listed for at least £2 million across prime central London, assessing average size, price and price per square foot before determining how much a home would need to shrink to fall beneath the levy.

According to its figures, the typical property marketed above £2 million is valued at £3.5 million and measures 1,768 square feet. With an average price of £1,995 per square foot, a home would need to be no larger than 1,002 square feet to escape the mansion tax.

That equates to a reduction of 43% in floor space for the average prime central London property.

CAMDEN REQUIRES THE BIGGEST CUT

Across the boroughs analysed, Camden would require the most dramatic adjustment. Enness Global calculates that a homeowner there would need to reduce the size of their property by 48.8% for its value to fall below the £2 million threshold.

The City of London would require a reduction of 44.9%, while Westminster would need 44%. Kensington and Chelsea also features prominently, with properties needing to shrink by 42.7% to escape the levy.

Hammersmith and Fulham sees the smallest change among the prime markets reviewed, although a reduction of 33.6% would still be necessary for a property to fall under the limit.

MARKET UNLIKELY TO SHIFT

Islay Robinson, chief executive of Enness Global, said: “Of course, we are unlikely to see prime central London’s property landscape carved up like a Christmas turkey simply so homeowners can avoid a mansion tax.

“However, what these figures highlight is the scale of adjustment a high net worth buyer would theoretically need to make to their lifestyle in order to escape this latest tax grab.

“Prime central London remains one of the world’s most desirable and resilient property markets and the reality is that those capable of purchasing at this level are unlikely to be phased by the introduction of a mansion tax.

“What it does underline is the growing need for strategic planning around property ownership at the top end of the market, particularly for internationally mobile clients and long term wealth holders.”