One measure being weighed up by the Treasury is to end the longstanding capital gains tax exemption on primary residences above £1.5m, according to reports earlier this week. 

Homes sold above that level would be subject to a capital gains tax at 18% for basic-rate taxpayers and 24% for higher-rate taxpayers. 

Reeves is also understood to be weighing up a new tax on the sale of properties worth over £500,000 as part of wider stamp duty and council tax changes. 

Rightmove property expert Colleen Babcock said such a move, which some have dubbed a mansion tax, would impact homes in “the most expensive areas of London and the South East”. 

The property website says that the proportion of homes for sale over £1.5m in London is 10.9% and 4.4% in the South East, while the national average of homes sold above this level, excluding the capital, is 1.6%. 

Hargreaves Lansdown head of personal finance Sarah Coles says: “The speculation could cause issues for the property market. People in the process of trading up may decide to pause a purchase, because they’re worried about the tax burden they may be taking on.  

“Meanwhile, those trading down might be in a hurry to part with a property they’re concerned could become a tax liability.  

Coles adds: “An imbalance of demand and supply in what is already a buyer’s market could depress the price of more expensive properties, so that downsizers have to cut their selling price, blowing a hole in their retirement planning.” 

Earlier in the week, Coventry Building Society head of intermediary relationships Jonathan Stinton argued that a new property tax could distort the current market. 

Stinton said: “A new property tax, which would shift the burden from buyers to sellers — removing one of the biggest upfront hurdles people face — but it comes with a risk of market distortion.  

“The prospect of reform could make buyers and sellers delay their moves while they wait for clarity.   

Stinton added: “Once in force, it could reduce the supply of new homes coming onto the market, or warp house prices — with some owners trying to sell under £500,000 to stay below the threshold, and others increasing prices to offset the tax.” 

However, Coles points out that the plans are in their nascent stages. 

She says: “The capital gains tax rumour is also said to be something that’s being tossed around in the Treasury, so might well eventually end up being tossed aside.  

“It would be incredibly difficult politically, and any party wanting to be elected in future will have an eye on older voters in marginal seats, so it’s far from a forgone conclusion.  

Coles adds: “If some sort of tax on the gain in property value did eventually emerge, there are no guarantees it would be at the current rates of 18% for basic rate taxpayers and 24% for higher rate taxpayers.”