London MPs are “quietly confident” the Chancellor will roll back plans to expand the mansion tax after their appeals to the Treasury.
John Healey was reportedly proposing reducing the proposed threshold for the levy, due to come into effect in April 2028, down from £2 million to £1.5 million.
But after warnings from Labour MPs about the impact it would have on families in the capital, it is understood the Chancellor is reconsidering the plan.
“We are quietly confident it will not be brought down to £1.5 million,” a London Labour source told the Standard.
“That would hit almost all family homes in Zones One to Three. It makes no sense in London.”
Nearly 62,000 more London homeowners could be forced to pay the mansion tax if Andy Burnham decides to lower the threshold, according to experts.
Such a controversial move is said to be a “live” discussion within the Treasury as Mr Healey prepares to deliver his first Budget on October 28.
The original plans unveiled by his predecessor Rachel Reeves last year will hammer homeowners with additional annual charges of between £2,500 and £7,500 from April 2028.
All but one of the top 20 constituencies that would be most affected by the tax are in London, according to analysis by estate agency Hamptons.
Fifteen of the seats are held by Labour MPs.
In Kensington and Bayswater, the most impacted constituency in the country, an extra 3,000 households would be dragged into paying the new tax if the threshold were brought down to £1.5 million.
Hampstead and Highgate had the second highest number of homes that would be hit, followed by Chelsea and Fulham.
The mansion tax has become a campaigning issue in Holborn & St Pancras, where Labour is fighting to retain the seat vacated by Sir Keir Starmer.
One in five homes in the constituency is valued at £1.5 million or more.
Green Party leader Zack Polanski, who is hoping to cause a major political upset and win the north London seat, has suggested he is against the move and would prefer a “wealth tax” placed on the richest Britons.
Experts at Tax Policy Associates found dropping the threshold would mean the number of properties caught would rise from about 123,000 to around 245,000.
Just over half of the newly-caught homes would be in the capital, 61,787 out of around 122,000.
The extra bill for Londoners would amount to £154 million, according to the analysis.
Overall, 144,104 homes in the city would be charged the new levy, with a total bill of £624 million.
Already, house prices have been falling in 20 London boroughs with four, Westminster, Kensington and Chelsea, Tower Hamlets and Camden, seeing drops of more than 10%, according to official figures.
“It does not actually raise that much more money,” a Labour source said.
“We think MPs have convinced the Chancellor’s team it is not worth the electoral headache it could cause.”
The Treasury does not comment on Budget speculation.
A Government spokesman has previously said: "We have reformed housing tax to address a longstanding unfairness in our country, where a band D home in Darlington or Blackpool pays more in council tax than a £10 million mansion in Mayfair."
