to think the idea of a mansion tax just penalises London and the south

[Redpipe]

I will probably get flamed for saying this but I don't believe that owning a 2 million pound house automatically makes you rich. Certainly in London a 2 million will not buy you a mansion, more like a terraced family home.

AIBU to think that the idea just penalises people in the south?

Never thought to Crowler. I don't know anything about it.

I can't see the market collapsing though Red. This where the problem is really. Houses are over-priced. The government wants them to stay that way, hence help to buy, help to sell, etc. People who bought years ago are laughing all the way to the bank. Property prices are not collapsing and will not. That is the problem.

The mansion tax is a ridiculous idea. I won't be voting for any party that adopts it as one of its policies.

I support a land tax.

But who knows ihategeorge, even if property carries on increasing in the near future it will only put more people into the paper money bracket of mansion tax and then it could take a massive dive. It's happen a lot of times in London in the recent past.

how will a land tax work?

No not all people who bought years ago are laughing all the way to the bank. Many people are still living in the same house in the same area and the bank or the people have not seen a penny of the increased value.

Life is not as simple as to make money on your main home and be rich because either you sell and move to another home which will be equally as expensive plus huge stamp duties. Many people can't move away from the area they are in for all sorts of reasons and therefore never really realise the equity.

I'm finding it hard to feel sorry for some hypothetical hard up pensioner sitting in a £2m house. I also find it hard to feel sorry for someone who has bought a £2m house that they are going to suffer as they are being taxed such a lot anyway. (Having that sort of income I'm pretty sure they will be able to afford advisors who will help them cheat the system reduce their tax liabilities).

In any tax system there are some who come worse off rather than others. You can create hypothetical absurdities to make your point as much as you want, but bottom line is if you have a £2m house you are very well off, either in cash or equity.

Absolutely bonkers.

This is a country in which the national average wage is £26,000 - although that's artificially inflated by the 1% of mega earners. Perhaps it's more meaningful to say that 75% of people earn less than £35,000 per year.

How on earth have we reached a stage where it is considered normal or 'not rich' to be in possession of a property worth more than £2,000,000?

I know dahlen, I agree

The thing is though Red, there are many people who rent and their rent increases every year. They cannot afford to buy in many cases. There income is taxed to the hilt. The cost of living is astronomical. It is therefore no longer reasonable to expect this group pf people to pay loads of tax. People who bought years ago may only have paper gains, but the bottom line is, they have no or a very low mortgage. Their outgoings are much smaller than the renter who has yearly increases. Someone has to pay tax. I think people with multiple houses would be a good place to start. Home owners will soon be in the minority if prices keep on increasing the way they are and I guess at that point the pendulum will swing.

I agree ihategeorge but two wrongs don't make a right. As I said before they should start with a hard line on corporation tax.

I agree ^^

This is a really silly "soak the rich" tax which doesn't stand up to any kind of scrutiny. Tax income, do it once, do it right.

Perhaps something else worth remembering in this context: London and the South East (where the vast majority of £2m properties lie) are huge net contributors to the UK public finances (in terms of tax collected less public expenditure). Each of London and the South East contribute some £15bn more to the nation's annual finances than is spent on them. The only other region which is a net contributor is the Eastern one (at about £5bn pa). All other areas are net winners (Wales is one of the biggest, receiving £9bn pa more than it contributes).

London and the South East are the economic powerhouses of the UK. They are already paying a huge proportion of the expenditure on the rest of the country, and a mansion tax would only make this imbalance worse.

Maybe London and the South East should declare UDI and leave the rest of you to get on with it without us?!!

Fine. Please give us the bailout money back when you piss off. Or maybe you should acknowledge that London and the SE don’t exist in a vacuum. And whatever supposed net contribution is actually reliant on the rest of the country for education, water, power etc.

The rest of the UK could recoup the lost London tax money by selling our water at extortionate cost.
I hope as web-based business becomes more prevalent, more of London's current jobs can be done remotely, by people living around the country. Then hopefully housing prices will even out at least a bit.

London has its own water it's called the Thames.

Even in London and the South East though the average wage is way, way below what would be required to get a mortgage on a £2m property. That this area contributes so much to the public purse is because a very small minority of people earn astronomical amounts of money.

If London and the SE were to be cut off from the rest of the country so they could "take advantage" of their higher contribution, all that would happen is that it would become a microcosm of the situation in the UK currently. Unless you reduced again and again until eventually you're left with a situation where the City becomes a state in its own right. Then it would have to import subsistence goods and power, and less-high earners to carry out mundane work, but there would be no room for these, so it would need to expand to include shops and houses...

London uses far more water than the Thames can supply. Even with the fact the water is reused several times.

Anyone fortunate enough to live in a £2 million house is wealthy, wealthy, wealthy in my opinion. How could anyone argue that they're not.

I can quite easily argue that they might not be. Of course some people living in property valued at £2m will be wealthy, but if they are it is likely that they already pay a lot of tax.

But there will be people who's property's are fairly modest, they have just massive increased in value since they were bought.

In the same way that someone can live in a council property worth £400k and not have a huge income, someone can live in a property worth £2m and not have a huge income.

It doesn't become real money until the property is sold, and even then it's not worth much because its not going to buy you anything better than you already had. The value of everyone else's property has gone up at the same time. The only way to turn any of that £2m into money that can actually be spent on tax is to sell and move to a cheaper area or smaller property. People really should not have to do that for the sake of paying a tax on living in your own home.

It doesn't become real money until the property is sold, and even then it's not worth much because its not going to buy you anything better than you already had. The value of everyone else's property has gone up at the same time. The only way to turn any of that £2m into money that can actually be spent on tax is to sell and move to a cheaper area or smaller property. People really should not have to do that for the sake of paying a tax on living in your own home.

Why not? It's part of their 'value' as much as my earnings are part of mine. If people can't afford to live in their house they have to move. The main issue with this is that it is a new tax, and so people won't have been able to plan for it. But taxes changing are hardly a new thing, and are pretty much always controversial.

If people can't afford to live in their house they have to move.

So effectively you are saying that only the unbelievably wealthy can stay? Interesting because I suspect if we were talking about poor people having to move out (as has just happened) you would not support the argument.

last post was for onlytheonce

Or (if you are over the age of 50ish) you can do equity release.

If the value falls below the value of the Equity released then the insurance company loses out.

If you are under 50 then you are probably young enough to flog your house, move 2 miles down the road and buy one for half the price.

Either way - the owner will suddenly be much better off.

In the hypothetcial scanario where London and the South East declare UDI, I guess we would have to install desalination plants and take some of our water from the sea. Like they do in, say, Dubai.

And onlytheonce what makes you think that London and the South East should bear the whole brunt of "the bailout money"? The biggest recipients of government assistance were RBS (run from Edinburgh), Lloyds (OK, run from London), Northern Rock (run from Newcastle) and Bradford & Bingley (run from Bingley)....

onlytheonce

It could also push up the price of smaller cheaper housing as all those affected scramble to buy something well under the threshold.