There are at least two sides to every story. The proposed Mansion Tax is a prime example. With Labour joining the Lib Dems in supporting such a tax, the question is in the forefront of many local discussions and on the minds of those threatened to be included on the list. Let’s look at both sides.
The coalition argument is simple: those who own high-end property, valued at £2 million or more, can afford to pay more so that low-income earners can receive a much-needed tax break. Further, the additional tax on these properties targets non-resident foreign buyers who have acquired over 60% of properties valued over the £2 million-pound mark. These buyers, they argue, escape a host of taxes by purchasing a home through a corporation.
From the Conservative side, the idea of adding yet another tax on top of the bevy of taxes the wealthy must pay is akin to shooting a man after he’s already been stabbed. They view the wealthy as the prime movers of jobs and the economy.
Yet between the two views, real people will be affected – British citizens, in fact. The concern here is with homeowners who are house-rich but income poor, namely elderly pensioners who toiled hard for years but live on a fixed income inadequate to pay for more. The proposed tax will fall heavily on Londoners, home to 60% of these properties. The tax would require owners to pay out an additional £15,000 per year for homes valued between £2-5 million, increasing to £140,000 for homes over £20m.
From my perspective as an estate agent, much of the growth seen last year in sales was driven by the high end of the market. As the 28% capital gains tax for offshore company owners goes into effect, the Mansion Tax becomes a double-barrel obstacle for foreign capital into the city. The market could once again be crippled by Londoners trapped in homes they can no longer afford with no buyers interested in coming to the rescue.

John Bishop
Tel. 020 3301 7815
johnbishop@colinbibra.com
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