The proposed levying of a mansion tax on houses valued at £2m or over was one of many eye-catching pledges made by Ed Miliband in his keynote speech at the Labour party conference. Particularly contentious is the allegation, stemming from new research conducted by Zoopla, that said tax would chiefly affect households in the booming South East of the country.
Underlining the Labour partyís commitment to the upkeep of the NHS, Mr Miliband guaranteed an average tax of £15,000 to be imposed on wealthier landholders. Zoopla found that 96% of the landholders in question are based in the South East and London, with influential property group Savillsí own data mirroring this.
This is likely to cause outcry in these areas which, despite being thought of as more affluent than other regions of the UK, will not take kindly to another levy augmenting their already substantial tax burden. Increasing stamp duty in recent years as a result of the overcooked housing market in London, and its surrounding regions, are already yielding record proceeds for Her Majestyís Revenue & Customs (HMRC). Yet, this has not dissuaded Labour from their aim to slap a new mansion tax on houses worth over £2m, despite fears that some of these homeowners do not have incomes to comfortably contend with the new tax ñ rather, they are the beneficiaries of heavy property price inflation in the past 25 years.
This is the perspective adopted by Nick Leeming, chairman of influential estate agent Jackson-Stops and Staff, who believes government are mistaking the modern day man for mansion proprietors.
ìThe Downton Abbey view of politics is distorting the realities of those who own homes in the £2m-plus bracket. This will affect people all over the country, not just in London where the market has been most buoyant,î he said.
ìMany owners are people who have worked hard throughout their lives and have been in their homes for many years, or those who have invested in their home to provide a secure retirement. Many are asset-rich and income poor and the threat of a mansion tax would force these people to sell up.î
Lawrence Hall, Zoopla analyst, said: “The introduction of a mansion tax would disproportionately penalise homeowners in London and the south east who are already responsible for the vast majority of property tax take in the UK.
“With more than 100,000 homes to be affected by this new levy, it is somewhat misleading to call it a ëmansion taxí when many three bed family homes in London and the south east would find themselves caught by it.î
If implemented accordingly, the proposed Mansion Tax would add a cool £1.6bn in extra returns to the publicís pockets ñ money which Labour intend to use to recondition the NHS adding over 36,000 jobs to improve efficiency.
Regardless, estate agents have rallied to condemn the governmentís distorted views on asset rich/low-income ëmulti-millionairesí, with pensioners thought of as at immediate risk from an unfairly levied mansion tax. According to official research, roughly a third of properties worth in excess of £2m have been owned by the same individual for 10+ years.
Stuart Law, CEO at Assetz, said: ìBashing the recovering property market with the threat of a ëmansion taxí isnít the best tool in the box for Labourís pre-election policy. The UKís regional cities are beginning to flourish from the London prosperity ripple effect which is great news for local economies. While the spread of property millionaires is more concentrated in the south east, Ed Miliband must not stymy regional growth potential with this ill-thought-through plan.”
ìIntroducing a mansion tax is just fudging the issue of a more important and urgent policy to build more homes and the resultant jobs that will create across the property industry. This seems a better way forward and one that will have a stabilising effect on house prices for homeowners of properties in all price bands and could just be more popular with voters.î
However, Ed Balls, shadow chancellor, appeared resolute on the matter instilled with a determination to eradicate perceived inequalities in the contributions made by wealthier taxpayers.
ìWe will levy a tax on the highest-value properties over £2m ñ a mansion tax. Weíll do it in a fair, sensible and proportionate way, raising the limit each year in line with average house prices and putting in place protections for those who are asset-rich and cash poor,î he said.
ìWeíll make sure that properties worth tens of millions of pounds make significantly bigger contributions than those houses that are just above the £2m limit. Because how can it be right that a billionaire overseas buyer this year of a £140m penthouse in Westminster will pay just £26 a week in property tax ñ the same as the average property tax in that area. We will make different choices.î
Save money by comparing mortgages with MoneyExpert.