Should You Sell or Hold Your £2M+ London Home Before 2028?
TheHub@Druce- •
- 04 Dec 2025
Should You Sell or Hold Your £2M+ London Home Before 2028?
With the Renters’ Rights Bill taking effect in October 2025, the proposed annual levy for properties above £2M starting in 2028, increases to taxation on rental profits from 2027, and rising compliance standards across the Private Rented Sector, homeowners are now asking the same critical question:
“Should I sell my high-value London property, or continue holding it through these changes?”
At Druce, we believe the answer cannot be simplified into “sell” or “hold.” Instead, homeowners should understand the true cost of ownership, the future tax landscape, and the strategic implications specific to their asset.
Below is a clear, data-led breakdown of what is changing and how it may affect your decision.
1. The 2028 Annual Levy: A New Cost for £2M+ Properties
From 2028, the government plans to introduce an annual levy on homes valued above £2,000,000.
This is not Stamp Duty, not council tax — it is a recurring annual charge on ownership simply for holding a high-value residential asset.
While the final rate has not yet been published, international models and market forecasts suggest a tiered structure such as:
| Property Value | Estimated Annual Levy (2028 onwards) |
| £2M – £2.5M | £5,000 – £8,000 |
| £2.5M – £4M | £8,000 – £15,000 |
| £4M+ | £15,000 – £25,000+ |
This levy will apply every year you continue to own the property, regardless of whether you live in it, leave it vacant, or rent it out.
2. If You Rent Out Your £2M–£3M Property, Your Tax Position Becomes More Complex
Many homeowners prefer to retain their prime property and rent it out. However, the environment for landlords holding high-value homes is tightening.
A typical £2.5M London apartment generates around:
- £90,000 – £120,000 per year in rent
After deducting expenses (service charge, repairs, management, insurance), the realistic net rental profit is:
- £40,000 – £60,000
With income tax at 40–45%, landlords typically pay:
£16,000 – £25,000 per year in tax (on rental profit alone)
And from October 2025, the Renters’ Rights Bill introduces further restrictions:
- Only one rent increase per year
- All increases must be via Section 13 only
- Tenants may challenge increases at the Tribunal
- Stricter timelines for repairs (14-day duty for damp/mould, heating, safety)
- All tenancies converting to periodic status
These introduce additional operational and financial considerations for landlords.
3. The Mandatory Costs of Owning a £2.5M Property (By 2028)
Below is what a homeowner realistically pays each year for a £2.5M prime London apartment:
| Cost Category | Annual Cost |
| Service Charge | £10,000 – £40,000 |
| Ground Rent | £0 – £1,000 |
| Insurance + Safety Compliance | £500 – £2,500 |
| Maintenance & Repairs (Decent Homes Standard) | £4,000 – £20,000 |
| EPC Upgrades (amortised) | £1,000 – £5,000 |
| Annual Levy (2028 onwards) | £8,000 – £15,000 |
| Total Estimated Annual Cost | £40,000 – £80,000+ |
So even with £100,000+ in annual rent, net profit after tax and costs may fall to:
£25,000 – £40,000/year
(sometimes lower in ultra-prime buildings)
This is why the question of whether to sell or hold a £2M+ property is becoming increasingly nuanced.
4. The Most Important Insight: Each £2M+ Property Reacts Differently to These Policy Changes
Two homes may have the same valuation but radically different holding costs.
For example:
Case A — A Strong Asset
- EPC B
- Service charge £8,000
- High tenant demand
- Modern building
This home remains highly rentable with strong capital resilience.
Case B — A Weak Asset
- EPC D
- Service charge £25,000
- High maintenance
- Tenant turnover
With annual levy + running costs, the economics change significantly.
Case C — A Borderline Asset (£2.1M–£2.4M)
This category is vulnerable:
- Above £2M threshold
- May attract buyer resistance post-levy
- Potential for future downward pressure on value
The conclusion is clear:
There is no “one-size-fits-all” answer to whether a £2M+ homeowner should sell or hold.
Your property’s structural condition, EPC rating, service charge level, rental profile, and market resilience all shape the correct strategy.
5. Why 2025–2027 Is the Window for Strategic Assessment
This period offers clarity not seen in other cycles:
Interest rates are expected to fall
→ Buyer confidence strengthens
Prime and prime-fringe markets forecast moderate growth
→ 3–5% annual uplift in many areas
Annual levy has not yet started
→ Buyers are not discounting for future tax exposure
New rental rules from the Renters’ Rights Bill clarify compliance costs
→ Stronger buildings will outperform significantly
This creates a unique window where homeowners can objectively assess their position before the financial impact of the levy begins.
6. What Should You Actually Do Now?
The real answer is:
Understand your property’s financial future before making a decision.
A £2.5M asset with £10,000 service charge, EPC B and strong rental demand behaves very differently from a £2.5M asset with £25,000 service charge and EPC D.
Depending on the profile, your property may be:
- A strong long-term hold
- A viable rental asset
- A candidate for lease extension or EPC upgrade
- Or an asset where holding cost will outpace return post-2028
But none of these conclusions are universal without a full asset-level analysis.
⭐ The Smartest Decision Is Not “Sell or Hold” — It’s “Get the Numbers Right First.”
The financial changes ahead are complex:
- Annual levy
- Decent Homes requirements
- Renters’ Rights Bill compliance
- Rental profit taxation
- Service charge inflation
- EPC expectations
- Tribunal procedures
- Section 13 limitations
This isn’t a moment for guesswork.
It is a moment for strategic planning.
Book a Complimentary “Sell or Hold” Consultation with Druce
Druce offers a private, data-backed assessment for homeowners with properties valued above £2M, including:
✓ Full holding-cost analysis (2025–2030)
✓ Annual levy impact modelling
✓ Net rental profit forecasting
✓ EPC & compliance cost review
✓ Capital growth projections
✓ Scenario modelling: hold vs rent vs sell
✓ Recommendations tailored to your personal financial goals
This consultation is fully confidential and complimentary.
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