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?

I know some people who restored a stately home from being a shabby, 14 apartment complex back to the glorious Abbey that it once was. It is a very grand house but they struggle to afford it.

They can't heat the house because it's too big and it's absolutely freezing in there. They hold many functions at the Abbey in order to be able to keep their running costs going. They also host events for the villagers as a lovely gesture.

They have said that if the mansion tax comes in, they will have to sell the Abbey. Probably to a foreigner.

It would be such a shame if a rich foreigner came in who would be unlikely to live there full time and it would just become another bauble to them instead of a valued village feature which is 'shared' by the villagers.

For this reason alone, I think the mansion tax is ridiculous. Don't forget how much tax these homeowners have had to pay just to get the property in the first place.

Er, um, without wishing to volunteer for my first MN flaming, may I point out some basic facts?

1)London does NOT disproportionately benefit from government investment; on the contrary, London and its satellites and commuter belt are supporting those of you in Wales, Scotland, etc, no matter how you slice it. Per capita: the government invests more per person living in Wales (or anyone outside the SE) than per person living in London. By area of the country: London and the southeast are the only regions of the UK that pay more to the gov't in tax than they receive back in investment. www.thisismoney.co.uk/money/news/article-2100345/Londons-taxes-prop-rest-UK-One-pound-earned-capital-funds-rest-country.html Of course, we do have better public transport, because there are a lot more of us to transport so it's cost-effective. [chocolatehunter], I would not disagree if you reason that the government should spend more in less densely-populated areas: where houses are further apart, the government must naturally spend more to run buses, collect rubbish, run pipes delivering water and so on. By the same token, PRIVATE services eg inter-city bus companies, Internet, petrol stations as someone mentioned above, shops tend to be more numerous in more densely-populated areas, not because companies discriminate against country living but because they EARN more per £ of investment in big centres like London.

2. The average cost of a home in London is 6 x that of one in southern Yorkshire
   www.home.co.uk/guides/house_prices.htm?location=London & www.home.co.uk/guides/house_prices.htm?county=syorks. But average family income in London is only 1.5x the average income in Yorkshire en.wikipedia.org/wiki/Income_in_the_United_Kingdom. You do want to eye those figures a bit dubiously, since the income stats are from 2007 and surely don’t include the unemployed, who are twice as numerous in Yorkshire www.nomisweb.co.uk/published/stories/story.asp?id=10. And obviously even in London people earning the average are not usually in £2 M houses!

3. one reason parts of our central gov’t are so keen on the idea of the mansion tax is that the revenue would go to the central gov’t, unlike council tax which goes to your local gov’t to pay for local services. Is this what those of you complaining about the rich people in the centre want? Wouldn’t improved council tax banding make more sense? (The top band can be amazingly low: In our London borough, the council tax paid will be the same for anyone living in a place worth more than £320 K regardless of whether it’s a small flat, which is quite possible, or a £6 M mansion.) www.wandsworth.gov.uk/info/200028/council_tax/5/how_much_is_council_tax/4

4. There is no suggestion that mansion tax would replace council tax, btw; it means higher-value houses would be taxed twice. Again, you may feel this is justified.
   ... to be continued! sorry for length

'I feel so sad for the young trying to get on the housing ladder and this mansion tax will only serve to push more average income families out of London as well. Regardless of the price of their property there are plenty of families with medium sized incomes that will be pushed out leaving just the super rich to it.'

You are right there. But I wonder what will happen when they find there are no cleaners, shop workers, binmen, teachers, nurses etc etc? London house prices are insanely unsustaniable.

4. property owners do pay tax already on the massive gains in value their houses have been making -- when they SELL those houses, they pay capital gains tax. CGT is 28%; your income tax rate will be higher than CGT only on any earned income you have above your first £40K per year and so your average rate of total income tax will be higher only if you are earning well over £60K per year.

5. the proposed mansion tax is based on the value of your house (however they calculate that), not the equity you hold in your house. In other words, if you live in a £2 million house on which you have yet to pay a £1.8 million mortgage, you will be taxed on money you haven’t yet earned towards your mortgage. Granted, only higher incomes will get a mortgage of that size in the first place.

6. the whole idea of a mansion tax actually originated with us Londoners getting annoyed by all the foreigners and non-doms pushing up London property prices by sheltering their sometimes ill-gotten gains here and not paying any tax. Arguably then the main beneficiaries of the mansion tax could be London residents, if it punctures the property bubble. But possibly the rich foreigners, who are generally buying to let not to reside, will simply buy more smaller places, thereby pushing us locals out of those properties too.

Personally I’m very on the fence about the mansion tax, but I’m not on the fence about the fact that the media never mention any of these points in their comments on the subject. I'm even less on the fence about our dear politicians holding interest rates at levels guaranteed to cause a housing bubble and ensuring that no other form of investment, except for a brief interval gold futures, has kept place with inflation in the past half-decade in the UK -- a serious penalty for those of us trying to save to buy a home OR a pension!

CHJR
Very interesting and well backed up post, thank you.

This is what £2,000,000 will buy you in Central London, which is arguably the most expensive part of the UK.

Why people would spend £2,000,000 on a house in London when they could have an estate in the countryside for the same amount is beyond me.

This is what £2,000,000 will buy you in Central London, which is arguably the most expensive part of the UK.

Why people would spend £2,000,000 on a house in London when they could have an estate in the countryside for the same amount is beyond me.

£2,000,000 properties

CHJR, there's no gains tax on sale of your own home. You are referring to second/investment properties?

Why people would spend £2,000,000 on a house in London when they could have an estate in the countryside for the same amount is beyond me.

As a Londoner, I totally agree.

That's your personal choice Iammiranda, not sure what t contributes to the argument. Equally I would loathe living in the countryside, mansion and estate too, I like being close to other people, to life and noise, would feel bored, isolated and frustrated that I would have to drive to get a pint of milk in a hurry. Not to mention the commute if I worked in London and lived miles outside.

Vixatis it's not too late to change you know - move house, do a job you like, have time to do your own garden, be home earlier - with a house worth £2.3 million you have lots of options available to you. I could not do a job I dislike when I could live a different life that made me happy. There is more to life than work and London!

I am one of those dreadful people that you pay for - a teacher in the state sector at a comprehensive school. Unlike you I don't bring money in to the economy I just educate the next generation. I love my job, am happy, spend time with my family, live in a lovely home and get to go on holiday. My son goes to a fantastic local primary school and will go to an outstanding local secondary. I am really lucky ... I moved back up north as I realised in London I worked for all the wrong reasons and saw none of the benefits. I have never regretted it ( and yes we have theatre, galleries etc etc). I changed my life for a proper life.

Your post made me sad for some reason, to think that you see that as your only option.

We are only here on this earth once.

Steps back and waits to be flamed.

Oh and sleepwhenidie being further north than London does not mean all the shops disappear ... I am five minutes work from a shop and five minutes walk from countryside. About ten minutes gets me to the centre of a small town that has wine bars and everything!

Vixatis, can't you be a bit more like Purplegirly?

Vixatis. Just curious. What did your house cost to buy and how much has it increased in value?

Perhaps, Crowler, because they need to be in London to work and they couldn't do their jobs, raise their family and look after their homes if they had to commute too? See Vix's post above....

I was kidding.

musieb Vix talks about a job she dislikes, the long hours she works etc. and how if she had her time again she would perhaps have chosen something different (and made some comment about the job being paid formbynthe taxes of others). I was just pointing out that life is too short and she COULD change if she wanted to as selling a £2.3 million house would probably leave her room to change.

And crowler'why would someone want to be unhappy when they have the power to change their life and be happy? Sarcasm. Doesn't work very well on a typed forum. But seriously, what is wrong with my life that you would say that? I say I am very lucky and happy. Sorry if that is not what all people strive for!!

Nothing is wrong with your life. There's something wrong with your suggestion that someone else would change their life to be more like yours.

vixatis

If you don't like it you have the freedom to downsize, send your kid to a state school, use NHS, become a florist etc etc

Yes you work hard - many, many people work hard with far less pay and far less job security in jobs which benefit society a whole lot more.

We are all being asked to give and give some more - we work hard and are worried about affording to heat our home this winter but we know many, many families are far worse off.

I am also one of those dreadful people you pay for - I work frontline NHS.

I don't suggest that at all, I said that I felt sad at Vix's post where she describes her "ghastly job", her long hours, her need for au pair etc, the fact that she will not be able to stay in her home when retired etc. I made the change to suit me as I was unhappy, just like Vix sounds. No where do I say she needs to live like me, just that I have never regretted making a change.

Would you rather live unhappily or make a change that makes you happy? People can live a good life outside of London. The house prices are ridiculous ...

And the mansion tax is fundamentally wrong for 'normal' houses and families but I don't see a way around that or where the line will be drawn.

I can imagine how annoyed you are vixatis, I can.
But you have chosen your path and your accrued wealth also gives you choices and options.
Something a hell of a lot of people in the UK just don't have the luxury of.

Purple I was talking about having an 'estate' - something that implies a great deal of land around it, probably no corner shop within five minutes' walk - some people's idea of heaven I know, but not mine. Each to their own but I don't see why those who prefer city life should be penalised for it.

I have a problem with the 'Mansion Tax' for precisely the reasons stated in the post by Vixsatis

It is a very hard conversation to have as modern culture dictates that it is acceptable to be incredibly derisive about those richer than us just because they are richer than us.

I'm sorry, but there are so many posts on this thread that so stink of the politics of envy.

And to those who say - move out of London then - how can it make sense (in terms of it being a fair tax) for someone with a house worth £2m plus to sell, buy a much nicer house elsewhere worth £1.5m and have cash in the bank...their assets are still the same, just held differently, and they will avoid paying! This is a tax based on making people who are worse off feel better and it has the great advantage of being easy to administer, as it's pretty hard to hide a house. It will not dampen the London housing bubble, demand is simply too high from the very rich, but will vastly increase commuter belt prices.