to think mansion tax is an unfair tax on London and the South East?

[goodnessgracious]

I disagree with mansion tax but regardless it seems to me to be unfair on Londoners.

Aibu to think that it may also force some people to sell their properties who are income poor but property rich?

I think a much fairer option would be a higher tax on those buying expensive properties to leave empty. As high as you like in fact.

I have no issue with BTL purchasing - yes, a rich person will ultimately become richer - but someone also gets a home.

Buying a house or flat to sit empty & make you a fortune is, in my book, very different to a person buying a £2m house to use as their actual home and should be taxed at a much higher rate.

There will actually be a lot of council and LA tenants living in 2m+ houses/flats in London.

So it's a bit sweeping to say everyone living in a 2m+ property will be well off. People's circumstance change.

Why should someone who works to earn and buy their property be forced to relocate away from family, schools and jobs because they can't afford mansion tax? I seem to recall there being an outcry when it was suggested council tenants relocate to more affordable areas.

I agree with *MaryWestmacott^. Tax people on the gain they make when they sell their house and the money actually hits their pocket. Don't tax people based on a notional paper value of their house that may go down as well as up and is not real money.

minipie,

But taxing people CGT on their primary residence would mean they couldn't move.

Imagine if you bought a house for £200K in Nottingham, the Nottingham market went up and then your house was worth £400K. If you needed to move for any reason within the area you would have to pay the CGT on the £200K plus obviously the stamp duty on the next one. And then you couldn't afford to buy house the same size as the one you already own and would therefore potentially have to down size.

People seem to be muddling a primary home with an investment. It's not an investment that can be realised unless you don't want a home any more or you're willing to down size.

I think it's wrong to tax an asset that has already been paid for. Once we've decided the principle is ok, who gets to decide which asset gets taxed? That's what concerns me.

Aside from the fact that I don't agree with taxing an asset you've already paid for (cars excepted) while you're still alive, I can't see that this will result in much revenue. Owners are expected to self-declare, but you can imagine the army of valuation surveyors and support staff that will be required in order to administer this and perform spot-checks, mostly based in London. That's before you consider that there will be canny individuals who will exploit whatever loopholes they can find to avoid paying.

What I'd also be concerned about is the impact this could have on our historical buildings. If you look at the Buildings at Risk registers then you'll see plenty of historically significant houses lying empty and deteriorating. One of these homes, an arts and crafts property, is on at £1,000,000. Any prospective owner will likely have to spend maybe half that again on refurbishment, which will have an positive impact on its value. If they have to pay tax of 4% on the end value of c.£2,500,000, plus any normal maintenance, then that's going to be a much less attractive prospect to a potential buyer. We end up either losing these properties to decay or they're sold to someone who carves them up.

I do however believe we should be increasing taxes on second homes.

I think it' s a good way to put a lid on the out of control London property market which is rippling out around the South East (plenty of 2m houses here in Herts).

The problem with putting capital gains tax on sale of your primary residence means that you could also offset any losses against your tax bill. (as is the case with any property other than your main home today).

And you can spread those losses over several years. So a government could be paying for a housing crash in lost tax revenue for years. Probably just when it needs the money most to stimulate the economy.

I object to it for a number of reasons, but the main one is there isn't a hope in hell of it being administered in a fair way.

If one house on a street breaks through the £2m ceiling, do all the other houses on the street suddenly become liable? Who decides what is a £2.2m house and a £1.95m house without selling them all? Estate agents can only judge sale prices within 10% on a good day, and given how common it is now for houses in London to go to sealed bids way over the asking price, they are often out by more than that.

Secondly, it is deeply, deeply unfair to people who have seen their houses rise in the 20+ years since they've been there, while their salaries haven't.
There are ex-council places in nicer parts of London which are now worth over a million. If prices keep rising at a similar pace over the next 10 years, something worth £1m today will be worth £2m in 8 years. The people living there will still be council tenants who bought years ago.

Thirdly, anyone who thinks this won't spread to all houses over the course of a few parliaments is utterly deluded. The next budget after its introduction will see it being extended to £1m+, then £500k and then £250k in line with stamp duty.

It all very well maintaining the 'fuck London, they deserve it' attitude, but there are only so many cheaper Northern towns everyone can sell up and move to before the whole country is paying it

I get what the OP is saying, and also what the objections are.

But maybe it would be fairer to do it as a "top 5% of houses in the area" rather than a bulk fee.

We were looking for our first house at the same time as dsis. We live south, expensive but nothing like London area. Dsis lives north.
Dh might get a job up north, but wouldn't have much choice. Dsis has one of those jobs that is needed anywhere.
Dsis' salary is about 3x what dh is (both of us had small dc at the time and had one sahp) and will continue to be about that probably.
We were talking houses. She said "We looked round this fantastic house today. Absolute mansion! We sighed after looking round and thought "if only" but it's really totally out of our price range... it was 120K". (can't remember how much exactly at the time)
At which point I stopped, and said to her gently "We would only get a one bed flat round here for that, we have to pay about 100K more than that to get a 3 bed (what we were both looking at)".

That sort of shows the situation there. She had not realised that to her what was a ridiculous amount to spend on a house, was less than we would be looking at. And the same was true when renting, we were paying roughly 3x the amount per month as she was for the same sized house-plus we had to give more in deposit etc.
This plays down to other things being cheaper as well-eg after school clubs.

We didn't say we'll live in the south because it will give us a more expensive house. Actually fiancially, if dh could get a job, it would be better. To then add to the bigger morgage, bigger other expenses, we'll add a tax because you have to spend more on your house does seem a little unfair.

It's like the

'This smacks of taking from the rich to give to the poor'

when did this become a bad thing?

mellicauli

Good point

I think its a great idea.

goodness two answers - first, I'd like to abolish stamp duty. Second, I'm not sure I agree you'd be unable to move. let's say CGT is 20%. on your example, you would sell for 400k, making 200k profit. You keep 80% of that - 160k. Add that to the deposit you presumably had when you bought your original place, which you'll still have when you sell it (and ideally would have added to by paying down mortgage). That should be plenty to fund another 400k house. Bear in mind that all buyers except FTBs will be subject to the CGT - so everyone will have a bit less to spend. might help with over cooked property prices.

They ought to sort the bloody council tax system out first. We pay about £1500 a year on our £400k property (i'm happy to pay, we can afford it), but they £30million place up the road on a private, gated estate pays about £2500 a year.

I am not a supporter of it for all the reasons above.
Eg my children's father got the cash (more than I did ) on our divorce and I choose to house his children in the family home with mortgage debt of over £1.3m. So someone like him could have 5 £1m flats and not pay this tax but the people who keep families together and need bigger houses and moved as I did from the NE to London to find work miles from family support networks and the like are penalised. So you could have a mortgage of over £1.3m, no savings at all and be over drawn and have to pay a tax or even have negative equity in the property in other words you have zero net assets and yet someone with 25 £1m flats all over the UK pays nothing at all or someone with a £500k house and £20m in the bank pays nothing. It is penalising those who love their families and keep them together, a tax on love really. whereas had I put the children in care and spent the money on cocaine and yachts I would not have to pay.

Not that I accept the house is worth £2m at all. There will be a big battle over that. I have analysed 3 streets near ours and mine and only 2 houses ever sold over £2m an the latest sale was £1.95m because at £2m stamp duty is suddenly a massive 7% so there is a huge hurdle already at the £2m mark. If the mansion tax comes in then houses worth a bit over £2m now will shoot right down in value.

The other options for people are splitting a house into two as 2 x council tax is less than 1 x council tax plus £11k mansion tax. Another option is if the house is used for business or a B&B remember this is a tax on residential dwellings only so that might be another way to ensure har dworking families are not penalised.

I feel sorry for people like I am and younger ones with massive £1m+ mo5rtgages, no savings facing the tax who have growing children than OAPs who have no mortgages and don't need 4 bed rooms to house children and have savings as well.

this article is interesting and raises some good points. Where are people who are asset rich but income poor meant to get 12k a year from?

www.hamhigh.co.uk/news/labour_mansion_tax_could_force_thousands_in_camden_out_of_their_homes_1_3791257

Would anyone on here feel differently if it was a higher threshold? Say £5 million instead of 2?

this is what is happening in the most expensive areas of London. that is what needs sorting. Tax on second homes could and should also be much more punitive.

The mansion tax will force people out of London. They will sell - most likely to an overseas buyer that will leave it empty - and probably go and buy something that actually resembles a mansion, but costs just under £2m somewhere else in the country. The notion of a 3 bed terraced house being a 'mansion' is already laughable, add a bill of £1,000+ every month for the privilege of owning it, when you have most likely already pulled out every possible stop to buy and pay stamp duty on is crazy. What about people with 80% mortgages, how can they be considered to own a £2m asset , the bank owns it!

Research has shown that most Londoners would like prices to come down because they are effectively stuck in their homes that have appreciated so much, because so has everything else around them - a step up the ladder is way out of reach for people, even those in the £2m houses - moving out of London is the only reasonable option to get more space. Leaving behind (as Marywestamacott said) the very rich and the poor. Not the middle class high earners that support schools, businesses and communities, just more empty or rented properties.

I'm so glad someone questioned why it's ok to slag of high earners. Seriously, you are taught to do the best you can in life and once you get there there's nothing but people with pitch forks out for blood.

More on topic though, London is a rare beast. Supply and demand pushes pricing up. Foreign investors are buying property and leaving it empty because it's like savings accounts, after a certain time frame they sell at a profit. But that said if you watched the recent documentary on it (BBC or C4) without foriegn investors buying "on plan" before the properties have been built we wouldn't have the revenue to build half of the new housing that's currently underway.

But I think if you are going to have a mansion tax it needs to be proportionate to the area otherwise it's just invalid and not logical.

I should add corporations in the UK pay tax already and I can assure you it's a fair chunk, the corporations who don't are based outside the UK and well that's something to consider.

The other thing is, is all those people forced to relocate out of London will be moving to your town :). Coming with their cash from the sale of their fancy london houses, no chain, outpricing you all out of your houses.

It will force prices up elsewhere in the country as London's money moves out of that housing market and into yours...

You= generic, obviously.

Yes, and don't go believing that the level will stay at £2m either, once they start milking this particular cash cow the threshold will start coming down...

micah

Unfortunately some people, especially those at the beginning of the thread, don't see anything other than 2 million and think rich, loaded = no empathy.

It's rather sad that people think like that rather than understanding the issue really.

Let's be honest - there is no such thing as a 'fair' tax, because however you arrange to take money from people there will always be someone affected who cannot pay without extreme discomfort.

The 'bedroom' tax and the 'mansion' tax have one thing in common - both can in theory be avoided by moving into a smaller property. That sounds fine in principle, but in both cases there will be some people who are not able to move and are therefore unfairly affected.

So depending upon your particular circumstances you could either BU or NBU about this tax or any other. And you'll have to pay up and live with it, like every other tax. Life is tough.

I don't agree with the comparison between the 'bedroom tax' and 'mansion tax'.
The difference is, the people affected by the bedroom 'tax' (which is not actually a tax) do NOT own their houses. They are in those state owned houses for a reduced rent subsidised by the taxpayer (or in some cases for free).
The bedroom 'tax' is not a tax at all, it is the recognition that (say)a couple do NOT need a 4 bed house all to themselves subsidised by the taxpayer. If you want a 4 bed house then go and earn the dosh to buy one like everyone else, otherwise move to a 1 or 2 bed place and reduce the burden on the taxpayer.

The mansion tax is an actual tax (as well as being unfair).
If you've got a £2m house then you have paid a very high rate of income tax on the money you have used to buy it, then you have to pay a stupid amount of stamp duty so please tell me why you should then have to pay an annual tax just for the privilege of living in a house you've worked hard to save up the money to buy?

As with most taxes though, the 'mansion' tax will only catch out the hard working middle class people who are not 'rich' but, through luck or judgement, have seen their house values soar after buying them for relatively modest prices.

Proper 'rich' people have the financial advisors on had to help them avoid such taxes (just as they do with inheritance tax).
DW and I live in a house worth well over £2m (handed down through my family) and according to my finance guy it's a fairly simple paper shuffling exercise to effectively 'convert' it into 2 or 3 properties without actually having to physically alter the place - so we can go on living here as we do now. Obviously this increases our council tax liabilities but avoids the new tax altogether, saving us thousands per year.

People affected by the 'bedroom tax' won't have paid a hefty stamp duty when they moved in to their property. They won't have to pay it again when they're forced to move.