'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?

She's living in a £2million house. She can afford it. Sounds like it's completely unsuitable for her needs too

When our mortgage went up by nearly 50% because of interest rate rises, we were lucky enough that we didn't have to sell up and downsize but it massively impacted us and our standard of living. I genuinely feel sorry for people who, for whatever reason, live in expensive houses but don't actually have a lot of money. But nonetheless, there are OPTIONS. They might not be nice options, or preferred options, but they are options.

This is this year’s version of vat on private schools - more about class warfare / a bone for their more left leaning supporters than it is about raising revenues. Highly disruptive / painful for a small portion of the electorate, raises next to nothing (especially after considering admin costs) and loads of unintended consequences- all for the political optics of sticking it to the ‘rich’

Sell up and move house, the government should also offer an option to pay from the estate after death, or pay when they move (but should include interest payments for option 2 and 3). It's not fair for households with cheaper houses to pay proportionally more council tax.

Because why is someone who resides in a house worth £2 million who has £400k of equity wealthier and expected to pay more tax then a person who owns a house outright worth £700k

pensioners paying a sizeable chunk of their salaries their whole lives have a right to a state pension as they’ve paid into. How plain are my words? If you pay into a system privately that refuses to pay out they would be lawsuits, or insurance to cover the loss.

Besides, a third of the population doesn’t have any private pension & are reliant on the state pension as their sole income when old. If they chopped that, the govt would have to pay benefits to a third of the elderly population, or else you would have a third of the population, elderly, homeless.

Pension age is 67 and you are not describing the 67 year olds I know. You are not even describing the 77 year olds I know. My nearly 90 yo parents now use Zimmer frames and take an afternoon nap but would rightfully resent being classified as half comatose.

I agree that breaking a compact with people who have paid into the system for a promise of future support decimates trust in government and is a terrible idea for that reason.

"Capitalists" are perfectly happy with planning regulations that preserve asset prices while denying other people homes.

A good few of those crying over people being "forced" to leave their homes have probably said things like "what's wrong with renting?" when younger people talked about never being able to afford a secure home. They might have complained about a new estate that spoiled their view or the "character of their village".

So spare me the tears from the generation that talks about the horrors of having to downsize into a million pound house while they've sneered at the generation that can't dream about having any secure home.

It’s shit.
but it’s less unfair than what RR did to farmers last year!
there are provisions for your mothers situation that make it manageable for you. When you mother moves out and you later inherit, it’s a cash exercise. No one is losing their future livelihood too.

Sadly a state pension doesn’t work like that. You don’t pay into anything at all. You just pay national insurance which does into generally taxation. There is no ringfenced pot. You pay the pensions of the elderly when you are working and likewise the younger generations pay your pension. That is why is is classed as a benefit and that is why it can be removed.

So ok some of you say tough shit move except the housing market is completely shit and after this budget even worse 🙄

We bought our house just over the threshold in zone 2 a couple of years ago (an ordinary 4 bed Victorian terrace). No inheritance or family money here, and we made no money in real terms on our first property as flat prices have been stagnant for a decade. But DH is a very high earner and has benefited from large gains in company stock prices - all the money has been earned. Most families at our dcs prep will be affected by the tax - some have family money, but many of them work in law, finance, tech, entertainment or are entrepreneurs, and they are paying for their homes out of income and investments made from earnings. We might be a minority but it helps no one to pretend we don't exist.

For most of our friends the extra tax is an annoyance but it's affordable, we put a lot away in savings and it will just mean less savings for us. However, our previous home was a much more modest 2 bed flat in zone 1 which would be well under the threshold, and if the tax meant we couldn't afford to live here then there are still properties in the same area we could move to.

I get this - and feel the same way on some level, but the point is the person with the £2m house and who is able to afford the repayments on the max mortgage available (actually the loan to equity ratio tends to be 60% so they are more likely to have a 1.2m mortgage and 800k equity as my mortgage advisor stated today) would be considerably able to pay the additional £200 pcm tax charge and at the end of their working life they will have an asset worth 2m - and possibly decades to enjoy living in it. By contrast the person with a fully paid off asset worth, say £700-900m, may no longer be working or be near retirement so they will have less income and the asset they will own at the end of their working/natural life may not be worth £2m.

I see the government’s logic (though, like you, am pissed off about it, after all the owner of the first property will have paid a ridiculously high stamp duty charge up front on the £2m total value, not the 800k they’ve invested).

If someone can afford payments on a £1.6m mortgage, they can afford an extra £200pcm of tax.

Yes, I know, but a third of the population is purely reliant on the state pension alone. What do they do with them? Turf a third out on the streets? 20m OAPs on the streets? Having to pay them welfare benefits instead, so no saving?

I really don’t think anyone in a position to buy a £2 million house is going to be deterred by a £200 a month charge somehow.

That is a lot of assumptions. When I bought my house which is still under the threshold we basically bankrupted ourselves . Literally it was a wreck and it took us 10 years to do it up as we gradually earned enough to do it up room by room. We took no holidays. We had to live in the renovation as we were doing it. I had 3 jobs, 2 small children and a lot of stress at one point. Worth it but no not everyone who has a high mortgage has spare money. We still have a whopping mortgage on it.

and I disagree that people who have paid off £700k property are near retirement. Between inheritance and house price inflation lots of people could conceivably have a property worth that paid off in their 40s

I decided to have a look on Rightmove at what sort of properties we"re talking about here.

I searched under Kensington and Chelsea and even in this ultra expensive area there are some gorgeous two or three bedroom flats for around a million or million and a quarter.

Two million pound flats EVEN IN Kensington are very, very nice indeed.

There simply aren't going to be masses of £2 million pound houses bought by people who were just doing modest jobs.

The mansion tax is literally theft and will destroy families.

The OP's mother is apparently not rich, yet lives in a £2m house. That is the very definition of unearned wealth. And now her daughter is whining that her mother has this unearned wealth and won't pay due taxes on it.
And people are defending her.

How are you paying that much council tax (at least band F) on a property that at that value should be band A?
I live in a band E property in NE England worth £450000 ish and pay just under £3000 a year

12.9 million pensioners in total actually which is less than 20% and most of them also have occupational or private pensions.

A lot of these people have no mortgage and very low incomes.

It costs a fortune to move. And you would pay more out in stamp duty. Did you not read that OPs mother lived in that house for 50 years. Why should she move?

That's good, prices need to come down.