The introduction of a new council tax band for homes worth £1 million plus would be a highly lucrative proposition for the Exchequer, thanks to the boom in the housing market. This has deprived the £1 million-plus pad of much of its value, but not all of its glamour.

The assumption that wealth is needed to buy such a property still applies. After all, anyone seeking to buy a £1 million house would still require a substantial six-figure income, even with a deposit of £100,000 and a generous mortgage lender.

There are many accidental occupants of homes that now have seven-figure values. They would have bought the houses for modest sums three or more decades ago and likely be living on smallish occupational pensions. They would be most indignant at the prospect of a £2,000 increase in their council tax bill. If a new rate band is imposed, expect to see a mass movement of pensioner council tax refuseniks.

The Treasury is more likely to focus on the greater number of homes that could be liable for a higher band of council tax. Like the rest of us, White-hall mandarins pore over reports of homes in Kensington, West London, that are put on the market for £12 million and sell for £15 million, after a sealed bid auction. This suggests there is a breed of super-rich who should be paying more for local services.

Since 1991, when council tax bands were set, there has been a threefold increase in the price of the average home, from about £67,000 to £200,000. Real estate in the most sought-after London postcodes of Chel-sea and Notting Hill has outpaced the mean, showing gains of 30 to 40 per cent last year. This has given prime real estate in Central London an average price of £1.1 million.

But the £1 million-plus house is not purely a metropolitan phenomenon, as Land Registry figures show. Last November, for example, 457 houses worth seven figures were sold; but only about half of those (236) were in London. The capital did account for 55 of the 77 £2 million-plus transactions in the month. The Land Registry said that the number of houses sold for more than £1 million had increased by 31 per cent on the previous year.

A recent survey of the 20 most expensive streets in England and Wales showed that £1 million homes were widespread, if not commonplace. Streets cited in the study included Park Avenue in South Harpenden (where the average value of homes is £1.8 million), Western Avenue in Poole (£1.5 million), Roman Grange in Sutton Coldfield (£1.2 million), and Sandmoor Drive in Leeds (£1 million).

This year, fewer properties may move into the £1 million bracket as higher interest rates costs dampen the market’s exuberant mood. The most optimistic observers predict that prices will grow by 7 per cent; the rest think that gains will be limited to 4 per cent.

A limited supply of properties for sale in some areas should continue to propel prices upwards in these locations, which will presumably push up the values used for the assessment of council tax bills.

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