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 agree too owllady. I don't know what the answer is though - I don't think penalising 40 somethings lucky enough to get on the property ladder 20 years ago is the right thing to do though

(for rather selfish reasons, naturally.)

The threshold won't stay at £2 million though, will it? This is the pilot and once the precedent has been set, the administrative kinks have been ironed out, and all the political justifications have been rehearsed as to why it is fair/necessary/acceptable to the populace etc etc, it will be rolled out to include properties of lesser value. Just as the Congestion Charge was expanded, so this will be too.

This might not matter to some of you. You may still have no sympathy with those caught up in this, including those families who do exactly as many of you suggest and sell their 'mansion' and move into a properly of a lesser value, only to find a few years down the line that this is now classified as a 'mansion' too. Presumably they are expected to put up and shut up and thank their lucky stars for their undeserved wealth, or stop moaning and down size yet again.

Someone a few pages ago asked why on earth anyone would chose to live in a £2 million house in London when they could have a HUGE property somewhere else in the UK. I often look at the property pages in the Times, or wherever and fantasise about how we could live in a beautiful Georgian house in the middle of Gloucestershire or wherever. Not that our house is worth £2 million, but it would still convert very nicely into something amazing elsewhere. But we can't because DH's job means he has to live close to Central London. He doesn't save lives, or teach your children. But he does an extremely senior and important job and his input benefits most of you through the work he does in a particular area of technology.

Yes, we could choose to re-train and go and be a florist (I think that was the example given a while ago) and go and live in that Georgian pile. But given that DH is in his early 50s and we have a young child, changing jobs in order to go and live elsewhere in the country and prove I'm not sure quite what point, is not really an option. Unless we are also selfish for wanting to maintain and protect his pension.

redpipe With Equity Release the debt just quietly grows - you do not have to pay to service it. When you die / g into residential care then the bank / insurance company takes their cut first.

It's rubbish if you are a grasping relative who has been eyeing up Aunty's lovely big house for the past 10 years but it does mean that people can stay in their homes and don't have to worry about the cost of their shopping.

Whether the mansion tax comes in or not, your one eyed pensioner neighbour should be thinking about whether it is sensible to keep such a lot of money tied up in his house.

It really depresses me when people go without for their entire lives and then leave some ridiculous amount of money when they die.

mumoftwoyoungkids

There is risk attached to equity release though. Say the bank goes bust, say the house price subsequently falls and certainly the rates are not great so the amount need to pay mansion tax would be at least doubled through long term interest every year. There is an element of risk attached.

You say "It really depresses me when people go without for their entire lives and then leave some ridiculous amount of money when they die."

You seem to think that my neighbour would be happier if he sold and moved or did equity release so he'd have more money. I don't think you can see passed the £ signs at all. He is very happy with his life and money is not important to him. Living on the street, for emotional and support reasons is the only thing important to him, he has no desire what so ever for more cash. I am surprised you can't understand that not everyone thinks money is so important, especially older people with a different perspective on life.

I agree owlady - not cutting the top tax rate would have made a lot more sense.

Home equity as a solution to the mansion tax is not a solution. It's still taking the homeowners money.

Cash by it's very nature is safer than property (where his money is currently invested whether he recognises it or not). By limiting the cash in each bank / building society to £85k then you are protected by the government if the bank fails.

So this is a solution that would enable him to:-

1 Pay his mansion tax
2 Stay in his home until he dies
3 Still have the same amount of pension

If he took out (say) half a million I think that would cover mansion tax for a very very long time.

The amount of equity in his house will be reduced but you said early on he doesn't care about that. So what's the problem?

I don't necessarily think that he would be happier with more money and I don't think he should be spending millions. But what he could do - and what would improve his quality of life - is each year take £5k out of the half a million I have suggested he withdraws from the house. That's about £400 a month. With that he would be able to stop being careful about his shopping and turn his heating up 2 degrees in winter without worrying.

I'm not suggesting he changes his life - I totally get he wants to keep it the same. But it could be the same but without worrying about fuel bills and being able to buy posh biscuits.

Another solution would be to not take an unfair tax in the first place.

People should not have to sell their home or get into complicated equity release schemes to pay tax.

All sorts of exciting ways you can extend this sort of thing to punish people for owning assets that have increased in value. Say someone buys a painting they love from an unknown artist for peanuts. 20 years later the artist is world famous, perfect opportunity for the government to knock on their door and demand a 1% annual payment for their continued right to hang the painting on their wall. And if they can't pay it...fuck 'em, they don't deserve to own it. They should sell it to someone who has sufficient resources to own it, someone rich who deserves to own a valuable painting. Perhaps they could buy a cheap print of the painting to hang in the same spot on the wall (and they can stop fucking complaining that's it not the same and that they loved that painting, they've got the money now so should shut up and count themselves lucky).

I love the way this country's going.

Just to repeat, for information's sake, the proposed mansion tax is 1% of the value over £2M
If your house is worth exactly £2M, there's nothing to pay, if it's £2.1M, the tax is £1k per year.
I know it spoils a good argument, but for those "poor" London dwellers whose properties are just over the threshold, the tax is not very much, certainly not enough to put people on the poverty line.

Just for the avoidance of doubt, I was not intending to say that people who work in the public sector do not make a valuable contribution and I certainly don't think they are "dreadful": it's just that the money for the NHS etc has to come from somewhere and I think the contribution of those who generate that wealth is just as valuable.Wealth generating jobs are often not much fun so the money has to be good in order to get people to do them. If the financial security had been equal I would have been an archaeologist- not generally great generators of wealth for the country.

Thank you for the kind thoughts about downsizing etc.. I'm afraid part of the problem is that although we came to London to work I do now feel that London and my house in London are my home; and I love them. I also, for reasons that have nothing to do with buying privilege or hobnobbing with the helicopterati, am pretty committed to paying the school fees. Likewise, most more enjoyable jobs (rather taken with florist idea) would still require childcare; and if I am to stay in my beloved house I will need to earn enough to save up for the mansion tax. Once all that is dealt with, I do have some plans.

I'm not trying to make out that I'm not fortunate (although it has more to do withmaking pragmatic choices and really hard graft); and I do understand that wealth means there are all sorts of things about which I do not need to worry. I just think that this tax is unfair. I also agree with those who worry that it will ruin London.

Must do some work!

Inmy spare time Is that definitely the case? I have seen that reported in some places and in others that it would be 1% of the whole value. If you are right, then the tax will, surely, scarcely be worth collecting? I still think it is wrong in principle.

A thousand pounds a year is a lot for anyone to pay to live in their own home, especially when they bought it with money that has already been taxed, and they already paid stamp duty.

From today's telegraph

www.telegraph.co.uk/news/politics/nick-clegg/10310489/Mansion-tax-will-be-die-in-a-trench-policy-Nick-Clegg-suggests.html

"The Lib Dems want to impose a 1 per cent annual levy on homes worth more than £2 million in Britain."

Nothing about above 2M.

There are a couple of slightly different discussions going on:

• Does owning a £2m house make you rich?
• Is the mansion tax a good idea?

IMO the answer to the first is that yes you are rich. Whether it's a good idea or not I'm not sure about. There are issues of fairness, whether there will be undesirable side effects (e.g. pushing up other house prices), will it deter investment etc.

A thousand pounds a year is a lot for anyone to pay to live in their own home, especially when they bought it with money that has already been taxed, and they already paid stamp duty.

This.

I am getting so worked up over the presumptuousness of the suggestions on this thread that I should take a break - "why don't you just move? why don't you just take a reverse mortgage?"

Because it's their house, bought and paid for, perhaps?

Argh.

In the article I posted, there's a further analysis by Knight Frank (estate agents, so to be taken with a grain of salt) that suggests the mansion tax has to be extended to people owning 1.25M houses.

Absolutely BrokenSunglasses. An "asset" only has real economic value if you are using it as a means of exchange, gifting it or otherwise exploiting it to earn income. The government already uses all those opportunities to leap in and claim a sizeable share.

I'm in the process of buying my first house, very modest by a lot of people's standards but at London prices (far far below £2m!). I've never benefitted from owning a place that's risen in value, but I'm having to pay the government thousands and thousands of pounds out of my hard saved and previously taxed income for the pleasure of buying it. If I ever sell it then someone else will have to give the government thousands of pounds more to buy it from me. If I leave it to my child they will have to pay the government thousands in inheritance tax.

That house is already a cash cow and successive governments will continue to milk it every time it changes hands until the teats are raw. Apparently that isn't enough though, and they are now suggesting that they deserve money if you simply continue to own a house with a paper value that exceeds some arbitrary sum. If the market started fluctuating and your house was on the cusp hopefully they would tell you which days you had to pay them for and which you didn't.

That was if the tax had to raise £1.7m. I didn't realise that the numbers were so small. So it's not a revenue generator for the government. Only reason for it is to stop runaway prices, but I'm not convinced that it will work.

New Statesman Article says it's just the value over £2M.

(Replying to Crowler)

onlytheonce I don't believe for a second that it will slow price rises down, more overseas investors will buy up the properties and let them out. A friend of mine is an ex-pat working in Doha for tax free salary, he and every other expat he knows are looking to invest, or have already invested in London property, with no intention whatsoever of ever living in it. The mansion tax won't deter them.

Bluegrass your post comes across as incredibly self serving. How about you put it like this: I can afford to buy a house in the most expensive place in the country and any inheritance I leave will be over £325k (at today's prices). Sounds like you're doing pretty well to me.

theonlyonce: I found that surprising as well. Why bother?

Of course this is all a work in progress, who knows how the mansion tax will work.

I expect of course that housing associations based in Central London will be exempt? Do we know how this would impact landlords of large buildings who would be hit very hard vs landlords of many small buildings who would not be hit at all?

How will this even work?

Both parties are responsible for this mess. Labour started it by keeping interest rates low, whilst their friends in the banks were offering 125% mortgages and attracting BTL at the expense of first time buyers.

The Tories have perpetuated it with things like Help to Buy and Funding for Lending.

Really it seems that both parties are in thrall to the banks for some reason. Seriously, this is all to keep banks in profit.

The very same banks that got us into the crisis are now sitting pretty with the arbitrage on what they pay (and get from the taxpayer) and what they charge and because the government has given them so much money for liquidity (Funding for Lending) they can offer paltry savings rates to those who have been prudent.

The moral of the story = don't save or be prudent. Spend recklessly, buy a home you can't afford and you will be rewarded by the government.

theonlyonce, maybe Bluegrass didn't even google the inheritance allowance - maybe she was speaking theoretically. Who knows. Her point is correct, that with each transfer of the property, the government takes a chunk - it is in fact a cash cow.