Mansion tax could affect twice as many homes as expected

The mansion tax proposals from Labour and the Liberal Democrats will hit double the number of homes than previously expected, according to new research from Knight Frank. The property consultant said that house-price inflation in central London meant that properties that were valued at £1.2m in 2009 would now be in the scope of the proposed tax. Nearly 70 per cent of the properties valued at more than £2m are located in London. Knight Frank explained that if the £2m threshold mooted in 2009 had increased in line with house-price inflation, it would now be at £2.8m. In the most expensive areas of London, such as Kensington & Chelsea, the threshold would have to be raised to £3.2m to cover the same number of properties.

Knight Frank’s report follows comments from Ed Balls, the shadow chancellor, who stated that the threshold should rise in line with average rises in house prices to ensure more modest properties are not brought into the scope of the tax. Mr Balls also hinted that Labour would seek to protect people on modest incomes whose properties have soared in value as part of a general spike in prices in the area they live. He said: ‘Labour will only support a mansion tax that is fair to those who are asset rich but cash poor. We will look at a relief scheme or allowing those on modest incomes to defer payment until the property is sold.’ …

Click on the link below to read the rest of the IBB Solicitors briefing.

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