'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?

Not council tax. That pays for services.

Property tax. A tax paid because you own property. It would be in addition to council tax.

I wonder how many of these people were moaning when there were Covid council tax rebates being dished out. That I didn’t bloody well get despite being in a £200k 3 bed semi because it’s band E whilst people in more expensive houses got it because the banding sucks!

So people that can’t afford rent should sleep in a tent? Or is it only people with assets that this applies to.

They can afford it though. They can borrow against an asset. They just don't want to.

So yes you can look on it as bitterness and resentment from someone who has had the house price boom pass them by.

Or greed and unwillingness to contribute from someone who has benefited hugely from that same boom.

Take your pick.

https://www.countrylife.co.uk/property/the-mansion-tax-is-coming-who-will-be-hit-when-and-for-how-much is there a reason you're ignoring the fact that the charges can be deferred until the death of the owner or sale of the property? Lots of posts have pointed this out.

Sell, and move nearby.
If your mum wants NHS services etc, unfortunately this money has to come from somewhere.

Its simple tough shit sell up and move if she can't pay it loads of people have to move downsize whatever even if they dont want to

Every five years apparently - the banding is mad at the moment with some 200k houses in higher bands than properties worth ten times that.

Who is going to buy these houses worth 2mil ?

People who can afford to buy and run a £2m house I guess.

The rich? Everyone else will be priced out of home ownership once the property tax is extended, and it will be. All part of the ideological shift.

Well quite. A £2m house today may be worth less in a few years’ time due to remaining unsold and uncared for because the market in that price range is depressed. The cost of a house is only what someone is willing to pay for it, and that’s an ever moving goalpost. Conversely, downsizing to below the £2m threshold in the price bracket that will be fought over, thus driving up prices in that bracket, might mean you are back up to a £2m valuation on your new house before you know it. Tracking the value of every house in the country on a regular basis to ensure people aren’t penalised if values drop/ people who should now be paying due to values rising are charged, is going to cost how much?

Um yeah, they can both sell up and move. It’s not as impossible as you paint it. They can both sell their mortgage free 2 million pound properties and find something extremely nice, out of most people’s budget, in the area they want to live in. It won’t kill either of them to do this, genuinely.

OP

A £2 million property is well into IHT (inheritance tax) territory unless it was put into a trust long ago. However, trusts will always be challenged.

Assuming you are the beneficiary, you will have to pay IHT and any other dues to the state before the balance becomes available. The mansion tax could be considered other dues.

Contrary to what some posters think, it’s possible to asset rich and cash poor at the same time.

Yes, I have sympathy with these homeowners that are suddenly going to find their property value plummet because of this new tax.

It will be interesting how they value the houses. We have a house in a area worth 300k. However the kitchen is 40 years old. So is the bathroom. So every house on the road could be 300k in theory but mine needs at least 30k of modernisation. The only true valuation would be a estate agent going inside. If you had a 4 bed terrace in certain places in London they might on paper look like 2 million but if it be untouched for 30 years it could need substantial work?

Who do you think will want to buy these houses with premium taxes attached to them? RR never looks ahead at what her policies will do. She's basically made any house over 2 million unsellable.

The reality is that if you mum lives in a 2 million £ house and can’t raise £2500 per year she can’t afford to live in that house. How does she finance emergency repairs that are not covered by insurance? The money you must need to have a house like that to maintain it?

Sorry to detail, but the extra taxes on EV’s ( pay per mile) is another conspiracy theory I am buying into. Once petrol and diesel cars are all museum pieces, we will all be paying it in order to get around and the 15 minute towns will be the norm ( along with the mansion tax being a thing for every house regardless of its value as mentioned below by others)
It is all so transparent , if many years off yet.
Ed Milliband looked please with himself today!
We are definitely doomed !

Do you genuinely think so? Because I don’t. People pay massive sums for stamp duty already so why would they care about a bit of extra tax? They can afford it.

Stamp duty is a one off. This will be annual. It’s going to cause huge disruption

Apparently this plus £2million house only has 2 bedrooms, according to OP, so maybe the price house is unrealistic and should come down.
if OPs mum has been there 50 years I doubt she’d end up with negative equity

Also stamp duty has had a hugely depressive effect on the property market and has actively exacerbated this exact problem of elderly people not wanting to move from big valuable houses because they don’t want to pay stamp when they downsize and would rather leave the house to their kids

Reality is that everyone should pay a bit more income tax. Don't just hit certain groups just because it's a vote winner.

The tax burden for low and middle income earners in this country is extremely low for the public services we receive and the welfare state that is provided.

The most ridiculous thing about this policy is the assumption that everyone owns a £2million house outright. How is someone who has £600k equity and the rest in a 30 year mortgage more wealthy than a person who owns a £800k outright. How does that work?