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The new Government and the mansion tax

Posted by IMS Team on 28/03/2015
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Since Labour’s initial plans to introduce a tax on homes worth £2 million or more, there has been numerous discussions and speculation as to whether it would be implemented. It was a hot topic pre-election, and there were high levels of uncertainty, particularly at the very top of the market, as neither Labour nor The Liberal Democrats set out clearly what the levy would be on properties worth over £5 million, although it’s thought Ed Balls would have liked to implement the mansion tax ‘from day one’. So, what does a Conservative leadership think of the proposals?

The focus of discussion?

The new shadow chancellor, Chris Leslie, says of the mansion tax, “the principle was fine, but the details of the policy were too sketchy, suggesting that Labour hadn’t done its homework.” Suggesting perhaps that a tax on higher value properties was being considered but just needed more discussion.

According to Mortgage Strategy, a magazine dedicated to mortgage brokers, providers and intermediaries, “Experts north of the border warn against replicating a scheme similar to that introduced by the SNP-run Scottish Parliament in April this year. The new stamp duty charge means properties sold for more than £145,000 are hit with a one-off levy” an effective mini-mansion tax, they go on to quote Alistair Ewing, owner of Perth-based mortgage broker, Blimey! Loans, who says, “the reforms are likely to have a chilling effect in the Scottish (property) market”.

The need for more revenue

Whichever direction the new Conservative government take the discussion in, it seems the new leadership intends to find a way to increase revenue from the property market. Considering that the percentage of properties that are worth over £2million is actually relatively small, (31% in London – cps.co.uk) some might ask the question if a so called ‘mansion tax’ is actually the best way.

The UK has a constant vigil over the property market, with many homeowners and potential homeowners monitoring the highs and lows of house values, trying to judge the best time to sell or buy. While for many more it has become a topic to discuss in general like the great British weather.

Future thinking…

There are many variants possible to what has become known as the mansion tax. Discussion could centre around the owners of property rather than the perceived value of a property itself. There are many avenues down which the talk of increasing revenue could take you. What has certainly become clear of late, is that the property market, particularly that of London, will feature in Conservative leadership discussions, but will it affect the market? Or will buyers at the top end of the market just absorb the additional cost, as property in prime locations such as Central London still remains highly sought-after?

 

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