'Mansion tax' - what if you just can't pay it?

[shellinthesea]

My elderly mum lives in a London house worth about 2million. She's been there for over 50 years, and is physically and mentally fragile. There is no way she would EVER want to move, the house and her neighbours are her whole world. She has no spare money - at all. (Neither do I, before anyone suggests this!) How is she supposed to manage this? It's not exactly her fault that the value of the property increased so much since my parents bought it all that time ago.

I also have a friend, also in London. Both parents sadly died in an accident about 15 years ago, and she used her inheritance to buy a family home which has also increased massively in value. It's probably also worth over 2 million now! She's a single mum on a lower income with 3 kids who very happy at their local school and within their community - what's she supposed to do?

It's just not as simple as 'you live in a high-value house, you can obviously afford to pay several grand a year' as RR seems to think. And for anyone who is about to say 'oh tiny violin, their houses are worth two million' - both of these situations are complicated and quite sad in many ways. Neither my mum nor my friend can simply just sell up and move...anyone have any thoughts on this?

I also read that it's likely it can be deferred until it's sold for whatever reason.

I didn't think I needed to answer that. Someone who can afford it surely!
Honestly this is not a complicated situation, if you cant afford something you don't have it, whether it's a takeaway, a new pair of boots or a £2m house.

Yes but people aren't paying £2m for an ex council flat in Holborn and so it really is only the ultra wealthy who are being hit by this.

The very rich who can afford the mansion tax (or pass to on to tenants) and who will swoop in to bag a bargain. Pushing out the aspirational middle class who want to upgrade to a nicer area or a bigger property in exchange for their time and efforts in the workforce, but can't stretch to an additional penalty every year for doing so.

@Thechaseison71 In fact if you a quick rightmove search you can find a fair few studio - 2 bed flats in the Holborn areas for under a million. So £2M is much more at the higher end of the flat market even for central areas of London like Holborn.

Why does being the 7th largest employer mean it should be skint? It means it has the 7th largest employment bill in the world (give or take adjustment for actual salaries) and only UK tax as its income.

Surely it’s not that baffling??

Idiot.

But you said no one needs to live in Holborn and it's expensive. But all the council flat tenants live there don't they ?

Admittedly I wouldn't pay £2 million for ANYWHERE in London but a 2 bed flat is not a mansion by any stretch of the imagination

And how so?

Pensioners should be protected after working hard and paying in their whole lives. Your kids have a lifetime ahead of them to make a success of their themselves without robbing granny.

Yes I know I also saw flats at 30 million plus . Admittedly in a better area.

@Thechaseison71 FFS it is not about "mansions" it is about value. Yes £2M gets you less space on Holborn than the outer Hebrides, so what? It is still a property worth £2M.

I suppose youngsters crammed into exorbitantly priced rental flatshares, or living with their parents far into their 20s, are in living situations they do want??

This is the problem, people who bought modestly priced homes years ago happen to have a property worth £2m because of housing shortages, or certain areas going up in value. And now they’re being stung with more council tax.

Everyone will just ignore this bit though and continue to complain.

Why should they! It’s their home, what sell up because of a greedy government, it’s disgusting

This will be the last generation the country can afford like that unfortunately. We will pile on debt for future generations to pay for today's pensioners. And future generations will have to work much harder and longer than todays pensioners too.

She absolutely should and does not have to move.

She can take equity release and her beneficiaries have to accept that there will be less in the pot when she goes.

This is beyond a first world problem.

‘It's probably also worth over 2 million now! She's a single mum on a lower income with 3 kids who very happy at their local school and within their community - what's she supposed to do?’

buy a cheaper place! Honestly, are we genuinely supposed to feel sorry for someone with an asset worth more than £2 MILLION on a ‘lower income’ . Come on. Sell it. Borrow money against the value. Re-mortgage and use the money for building work to change it into 2 flats and rent one out.

I agree with this. However, if this becomes a permanent change (and very few taxes are repealed once introduced) perhaps it will act as a spur, as others have already said, to make people in their 60s and 70s think about moving while they still have enough health and strength to do it. I am in my 60s and a great many people we know who are within ten years of my age either way have parents who are now very frail and elderly, stuck in homes that are no longer suitable but unable to face moving, adamant they won't go into sheltered housing or residential care, refusing to get rid of surplus belongings, etc etc. If they have capacity, it's their decision and some of them are making their children's lives a misery by refusing to face facts.

There have probably always been people like this but life expectancy has risen so much in the last few decades that it's now a significant issue. This is a good thing overall, but just living to 96 is not much good if your quality of life in the last few years is very poor. Living in a suitable place could help there.

OP how big is this house? How’s your DM looking after it?
I don’t think anyone on here believes that someone living in a house worth that amount, and coping with the cleaning, repairs etc somehow will be unable to afford a property tax on it.

These houses were likely not worth anything like £2m when brought. The fact they've appreciated to that is not these peoples' fault or within their control.

Not within their control, but to their benefit. And they can use a little bit of that benefit to pay via equity release or some sort of deferred payment. As hardships go, it's trivial.

This is a more typical £2m London house. It’s a 4 bed family house, it’s nice, and in a nice area, though the garden is tiny.
I doubt you’d find anyone who’d call this a mansion.
The typical people who live in a London house like this are either boomers who got lucky (but are unlikely to have a high income now they are retired), or two-income working couples in the top 10 per cent of earners whose tax bills are responsible for over 60 per cent of government income. They pay about £2k per month, per child, for childcare in order to facilitate the work they are taxed profusely on. As higher earners, they don’t get funded hours towards this until their child is three (and the it’s only 15 hours and barely any London nurseries honour it as their overheads are too high). They also don’t get child benefit. They also start losing their personal allowance at £100k.

They now are being asked to pay £2500 a year just to stay in their home that they literally already own.

Of course they could move. But not anywhere local, as the equivalent houses are the same price. They can’t downsize if they have multiple kids needing bedrooms; they can’t go back in time and have fewer kids or buy a smaller house. Yes, they could uproot their kids from their schools and communities and leave London and go and live somewhere cheaper to avoid the tax.

All of this to raise £400m? They couldn’t have found that from banks, energy firms, HS2, or savings in any one of our massively inefficient public services, before coming for these same people? Again??

Sorry, but as I said - I think it is batshit.

https://www.rightmove.co.uk/properties/167672408

Sorry for slow response - work meeting 😅 Love all the people presuming my mother's house is 'massive'. It's far from it - it's got 2 proper bedrooms and one tiny single room.

Lodger would seem logical, but as I mentioned she has significant health issues (both mental and physical) - I can't imagine that anyone would pay to live with her, in all honesty! One of the bedrooms is often used by me or my siblings when she's having a bad spell.

God knows really. I'm sure there will be some kind of solution but it just seems so unfair when she's living out the remainder of her years in a place that suits her. She didn't ask for the property prices to become so ridiculous.

This is also true for salaries though.

People who used to earn £50k a year a decade ago are now earning £500K through no fault of their own and are getting stung with much higher income tax.