'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?

Many wealthy people work hard and take personal risks to create the jobs that other people rely on.

Hopefully this will have a significant chilling effect on the ever expanding property bubble🎈📌

What about those with large mortgages on the property, who maybe bought the property last year.
Should they pay the same property tax as someone who owns the property outright? maybe the owners bought the property 30 years years ago and have the ‘gain’ you are talking about.

Presumably however they did it with the council tax bands in the first place.

Moving because of personal circumstances is one thing, having to move from your family home that you actually own because of random and unforseen circumstances created on the whim of a government which may turn out to be just a fleeting policy is ridiculous!

The mansion tax is payable as well as council tax.

Sorry, but why should people now be forced to pay additional tax, just to live in their family home? Or be forced to sell their family home? These homes were already paid for from taxed income and stamp duty was paid on the purchase price so to now charge people for simply living in their family home is outrageous.

Yes, we need a disincentive to discourage the bidding up of property prices.

And if you are in a moulldy bedsit in a crappy part of the cheapest town?? Can't afford that get a cardboard box I suppose

People who rent then have no money can usually get help with the rent. Old people is social housing can get all the rent paid even if the place is too big for their needs.

Oh the humanity

2mln is not the price of an 'ordinary' home. Even in London. Are you mad?
I live in London and I can guarantee that even here a £2mln home is a luxury home in a very nice neighborhood. Sorry granny, I have very limited sympathy. Just like the rest of the population if you can't afford to live there you'll have to think about moving.

Lots of people have to downsize when they dont want to she could buy a bungalow in a different area with the proceeds . Or are you more concerned thats your inheritance down the drain ?
Could you not move in and take over the costs and build her a granny flat or build her a granny flat at your home using proceeds from the house ?

She doesn't have to move. She could release some of the equity in her home to cover the additional tax and this would be repaid (with interest, obviously) from the house sale after she dies.

Actually no they can't they get bedroom taxed at 14% for one bedroom and 24% for 2 or more this is to encourage people to downsize when they no longer need a larger house .

Given that your mother won't have to pay any of this tax, at all, until she dies (at which time she won't need it), and your friend will be able to postpone the payment until she realises her house's massive increase in value, this is an entirely confected problem.

As PPs have said, we need to find the money from somewhere. Will this fix everything? No, but it's money we then don't have to take from people who are struggling to make ends meet or keep businesses going.

It doesn't sound like it will affect older people who are living in big houses in London and the southeast, but if it did give them an incentive to move somewhere smaller and free up a house to be used more efficiently, is that the worst thing? Most areas of London in particular have a mix of smaller flats and houses, so downsizing wouldn't necessarily mean moving to an unknown area.

Could you help your mum to manage the house and make it work for her?
Rent off a room or two to a student? There are schemes that match students with elderly people. That should pay the council tax and it might be company for her.

Labour is a party of jealousy - it hates people who are successful..

she did mention something about delaying paying.

it’s essentially a wealth tax - it’s a dry tax charge..

Total incompetence. Typical Labour spunking money up the wall.

Sorry but no. A 2mln house is not and never had been 'modest'. God. Check your privilege.

I can’t imagine she will want to shared her home with a student.

There’s so many spiteful attitudes on this thread. My mother will only be ‘living beyond her means’ because her house increased to such a crazy value - and now this government have decided that, despite her paying tax when she bought it, paying tax over her whole working life (not to mention the tax that will be paid when she eventually dies), that’s not enough.

Yes, I know she HAS a home and many don’t. I know that there are people living in poverty and it seems appalling that anyone with such an asset could struggle. But no, she can’t magic up more money to pay it (some people don’t seem to understand that), and yes - the move in itself (if it comes to that - hopefully not if one can indeed defer) would be massively, massively detrimental to her.

In her eyes, she’s not ‘sitting on 2 million’. She’s sitting in the only place she feels safe as she approaches the end of her life. It would be much better if the house were worth far, far less and she could remain there.

I understand her position is quite unique - but it sickens me how this government seem unwilling to levy taxes on the super rich (‘because they don’t want them to leave’) but will introduce policies like this one.

What is the size of a modest home? What square footage before it becomes a mansion?

Not really. I know tons, literally tons of people who are either in well paid jobs or poorly paid jobs who are living it up spend for today, holidays, flash cars, constant treats. Living it up big style. They have the option of not having holidays, but saving instead, not constantly treating themselves, but sacrificing so they could afford to buy the cheapest property, or grafting, no chance, they have no intention as they all say “the state can look after me”. “Not being a wage slave” when you say “how about getting a 2nd job” “how about not having kids if you can’t afford them” “how about working hard?”. No planning for the future. Well, you live with the consequences. Renting when a pensioner is a sign of a hedonistic life you deliberately chose when younger.

I can have empathy for both of those cases but ultimately they are sitting on a huge pot of equity which was made largely through luck...
I'm sorry your friend had an inheritance and chose to put it all into one property. Buying a smaller property and investing for an income would have given her freedom and support also but meant she was self reliant. Putting it all into one property Means she is now facing an upkeep bill she can't afford.
It's got to come from somewhere. The alternative is a huge Inheritance tax when they pass on to rebalanced the books.
I've seen so many posts on here today that say it's jealousy... its not... they are sitting on assets and it needs to pay its way.

She could afford it before the novel tax. And now she can't and may have to leave her home. In order that benefits be increased to non working people.

Benefits like the triple lock for pensioners….

@shellinthesea but if she can defer what is the issue? So the super rich should pay more but not the rich?