"would be an attack on all who own, or aspire to owning a home of their own"
The Labour party proposal to levy a 'mansion tax' on homes valued at more than £2 million could affect thousands of homes in the Putney and Wandsworth area.
Local agent Allan Fuller said: "It is an easy political sound bite, let's squeeze the rich and if we say it’s for the NHS it will appeal to everyone who does not live in a mansion, so who could object?
Well we all want to see an efficient NHS, and the calls on its service can only continue to grow. How to fund it is always a major issue. I do however wonder how much of the detail in this proposal has been thought out."
Allan continued: "It would certainly be a tax that will mainly hit London and the South East, and in plenty of areas some fairly ordinary homes will be affected. For it to have any semblance of credibility we need much more detail, for example how will the values of properties will be assessed, and who will carry out those valuations and at what cost?
"The situation of an older person who has lived in a home for many years must be carefully considered, because virtually through accident of location they may now live in a home worth two million plus, and they would almost certainly not be able to fund an annual tax of £20,000 plus. Apparently it is suggested the tax could be rolled up until there is eventually a sale, this would therefore considerably delay the tax benefit for the NHS."
At present, council tax bands are still based on valuations of homes made in 1991. The Institute for Fiscal Studies recently said that rather than adding a mansion tax, it would be better to reform council tax to make it proportional to current property values.
Allan commented: "Apparently there is a suggestion of bands of rising tax at certain property value levels, but no clue as to what this would entail, certainly more work for valuers. Would there be an appeal system against being in a particular band as there is with council tax, or would it be additional bands of council tax, if so who will collect, central or local government, and if local would they want a cut for working as tax collectors for the government? Has is also occurred to anyone that property values can drop, there have been at least 3 periods during recessions in the last 40 years of upwards of 30% drops in value. In fact a house worth £2,100,000 million before the tax is introduced could be justifiably claimed to be worth less and unsaleable at that figure after it is introduced!"
Allan concluded: "I mention all of these factors because this uncertainty is bound to be causing concern to homeowners who fear that they may fall in to this new suggested tax category, as well as those contemplating a move, so however positive we as agents always like to remain I can see that the market above the two million threshold is likely to be slower for anyone who thinks that this change is likely. It will not be concerning people under this amount, except taxes have a general history of expanding, not contracting, and a more general annual tax on owning property would be an attack on all who own, or aspire to owning a home of their own."
Estimates vary on how many homes would come into the mansion tax band across the UK. Some have put a catchment of between 58,500-110,000 homes, ranging from country houses with acres of land, to London flats. Over 80% of property valued at over £2 million is in London or the South East.
Some housebuilders and estate agents fear that any mansion tax will curtail building of new homes in London and the South East of England, where a shortage of supply has been one of the factors pushing up prices.
Some years ago, the Liberal Democrats proposed a mansion tax based on 1 per cent of a property's value over £2 million. This meant a property worth £3 million would have faced a charge of £10,000 a year. The proposed scheme was widely unpopular and was dropped.
The Labour Party has said this would be a progressive tax so that the biggest homes would pay more than those with homes just above the £2 million threshold. They say there would be protection for those on low incomes in these houses - this could mean the option of paying the charge from their estate when they die.
October 1, 2014