'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?

They really are not fucking higher!

Sorry but can you explain why flats are more isolating than bungalows?

They aren't at all. People just have their pride and prefer to own a house rather than flat. Unfortunately they are going to have to accept bungalows aren't really available, and buy flats instead. Lots of complexes of flats are the opposite of isolating as they have shared communal areas, some even have stuff like hairdressers or a cafe!

On a practical level, I assume moving will become harder. Houses valued at £2mil and over will be less desirable. Whereas houses just under the threshold will be harder to find as some people will prefer to pay less and compromise more in order to avoid the tax. That may mean some people that want to downsize struggle to sell.

Many houses are not selling. It is hard and it will get worse.

Flats are almost always leasehold, which puts many people off.

Of course they are. In a bungalow you come out into your front garden and you interact with your neighbours. You have a garden to potter around in. In flats you barely see a soul (I know I used to live In one). You have limited outside space. It is immensely isolating living in a block of flats. I vowed never again when I moved out. My elderly neighbour was committed to move to one recently but pulled out at the last minute because of this. I often chat to her as she’s passing and we chat in our front gardens. Our road all know each other and look out for each other. It doesn’t happen as much in blocks of flats.

very few have communal areas that people interact with each other on the regular in London .

I'd say people will be wary of houses just under as they (if the values steadily rise) fall into it and buyers will want to avoid that risk.

Yep I can attest to that- when I left my last role they advertised it as remote so anyone else in the country could apply for the same salary I was earning in London. Almost zero London premium these days

Have you heard of stamp duty?
If she sells up and buys something for £1m she's going to pay way more.

For a main residence in England or Northern Ireland purchased for £1 million, the standard Stamp Duty Land Tax (SDLT) is £41,250. If it is an additional property (buy-to-let or second home), the SDLT is £71,250.

Equity release?

This government suits you well. Make the most as they are out in the next elections.

Not sure if this has been addressed. But what if it goes on the market, and no one will buy it for more than £2m, only offers are under this (because buyers don’t want to pay extra tax either) does this change the extra tax due?

It could kill her. It's a known thing for old people to die if they are moved.

Well....that would have been good advice for this particular budget!

Im not sure it should be up to Rachel Reeves to make that decision for your mother.

Actually I think there is a little hysteria over this.

Our property is just below the threshold, but if you have £2m to spend (with or without a substantial mortgage, underwritten by a high salary), are looking at council tax of £4k pa and the associated running costs etc… you really can find £2500 a year. It’s £200 a month. It’s completely affordable on our income. I may resent it if our property value increases in the next few years (ie. in time for the 2028 enactment), but we - and people like us - really can afford it. Which is the point, isn’t it?

And the only reason I do resent it is because it’s going into the ever growing welfare budget, and not the things that matter to us as a family - education (particularly SEND provision) and the NHS.

And once DH retires we’ll either down size or accept that there may be an accruing tax charge on the property to be settled upon our deaths.

I am not a labour fan at all (I will never vote labour again in my lifetime), but this tax really isn’t as bad as people are making out.

It’s a blunt instrument sure, but no one is buying £2m+ houses in London these days unless at least one of the following applies: (a) they got a big inheritance, (b) they got a big financial gift from parents either in the form of a deposit or rent free accommodation, (c) they have benefitted from crazy house price inflation having got on the ladder years ago (and no, stamp duty doesn’t correct for those gains).

I’m a top 1% earner and am nowhere near able to afford a family home because none of those apply to me.

The issue with socialists is that they believe that what you think is your own property and money actually belongs to the state. And the state decides what you can keep of your own property. The state has an entitlement to swipe whatever it wants.

Whereas capitalists believe you own your own property and money and the state decides the level of a reasonable tax.

Your post encapsulates the entitlement a socialist feels to other people's stuff. Thats what I personally think is immoral. You obviously disagree. Unfortunately we have a socialist government but hopefully not for too much longer now.

I know you hate pensioners, but you will be a pensioner fast. Pensioners have paid into the system and paid in over the amount their whole lives, so they are fully entitled to their pension. Also, a pensioner is usually disabled by that point & can hardly go out to get a job at that stage of their lives, they are half comatosed all day long.

Ok but say they got equity of 20% of £400k and mortgaged the rest. That still means that only have wreath of £400k however they got it. How much their house is worth is irrelevant

I'm sure they could cover that from the extra million from the sale though.

Theres no "entitlement" to a state pension. A government could abolish it tomorrow. Public sector pensions are an entitlement however so theres not much scope of reducing those for the time being. So the focus will have to be (once a proper government gets in) ending the triple lock and raising the pension age.

The government has to start making decisions for everyone including the young.

I seem to remember in 2007/8 the Capitalists got a massive bail out and thats before we look at the current situation

People living in glass houses etc

In a thread that is about a tax imposed on houses worth £2m+, what their house is worth is very relevant.

Not sure what your point is.

Yes that was a bad idea too. The bigger boys did do a bad thing as well.