'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?

It literally isn't. See my post below!

They should relax planning so some people can convert their London house into flats again and any grannies can stay in the flat and have a nice little income too on a flat or sell the flat to a developer and release funds that way.

@DeedlessIndeed - yes, 2 per cent extra on your marginal tax rate.

But let’s be honest here, anyone with a bit of extra is being shafted. Not just the granny in the mansion. Anyone who has savings outside an ISA, who was sacrificing for pension, who had a second property etc - it really does not pay to stay in the UK as a professional anymore so watch the exodus continue. 250k plus and counting. There really is the highest marginal tax rate above 100k - it has become utterly ridiculous. It is simply too expensive to stay and pay for anyone who is financially savvy and driven. The only hope is that this is temporary, but it was actually a Tory Government that introduced the highest progressive tax rates in the higher brackets (not Labour).
So for anyone with kids who will be professionals I just do not think this country is a good long term prospect anymore. Unless you do have a granny who can release a few hundred thousand to you and you have that help onto the housing ladder or pay off your uni debt. If you are talented and on your own entirely, this is no longer a good place to be.

This is total bollocks. The real/hypothetical granny has lived there for 50 years. The house isn't worth £2m because she worked hard, it's worth £2m because house prices in certain parts of the south-east have been untethered from reality for far too long.

Why would an elderly person be forced to sell their home of 50 years It may not even be a proper mansion

So instead my generation should pay through the nose, with none of the benefits?

The ageism on MN is shocking, but sadly not surprising.

Much the same as I shouldn’t have to go without literally everything in order to afford a somewhat decent standard I living?

@Dollymylove While the OPs mum certainly worked to pay her mortgage I doubt very much she "scrimped and saved" all her life for double digit house price inflation. I'm a home owner in London ad o one in London has really "worked hard" for the full value of their houses TBH. Scarcity and mad government policies has done most of the work.

Also working hard is not a excuse not to be taxed, I work very hard for my salary - it is still taxed.

Just out of interest, how is your fragile, elderly mother managing in such a generous sized house @shellinthesea . I live in SE England / London borders and a £2M house whilst probably not a mansion is still going to be generous sized, not a small manageable property for a fragile elderly person. How is she paying the bills for it at the moment?

The changes are not going to be introduced immediately, so perhaps that gives your Mum time to consider downsizing? Presumably she could stay in the same area so that she remains connected to her community. Or if she is adamant that she will end her days in her family home, then she could consider equity release so that she has funds to pay her bills?

I guess my point here, is that she does have options and has probably been very fortunate that her council tax has remained at the 1991 property valuation for so long.

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?

Sell her home, buy one outright in a cheaper part of the country. Plenty of people have to do that if they can no longer live within their means.

Surely they have to revalue all homes for this to work as bands are based on 1991 valuations?

I've not heard of any plan to revalue all the homes in the UK.

Who wil want to buy them though if they are starting to be taxed? And how are they doing the valuations anyway

@ChardonnaysBeastlyCat It's not ageism to note the sad face tales of poor, elderly widows in massive £2m houses are edge cases.

@Christmaspuddingsss the surcharge is not coming in immediately - delayed until 2028 - so the relevant revaluation of homes in the upper bands can be done.

If it's not being introduced till 2028, Labour are unlikely to be in government then.

But, as I've just posted, the valuations are only credible when your house is up for sale. I've not heard anything about a re-valuation being done.

The re-valuation would be very difficult and based on location, because certain areas of the country have increased hugely because of demand, yet some larger homes (eg in the North) have hardly increased at all.

People will.

im sorry but the wealthy need to start paying their fair share

Why is the attack on housing so uneven handed? Ok lets have a mansion tax but what about immediately stopping the sale of all council and social housing. why should it be sold for a massive discount to someone just because they were lucky enough to be given accommodation in this way in the first place. its the politics of envy I just cannot abide and no I dont live in a £2m house and am never likely to. but the "well why dont they just move" brigade probably wouldnt say this to someone living in a huge social housing property with more bedrooms than they need. they would be whining "but its their home they cant just move out because all their kids have left home its not fair"

Thats what winds me up. if it were fair across the board then Ok.

and as for the "we dont have any money" the NHS pisses money up the wall for fun. it doesnt need even more thrown at it. It needs someone with guts and intelligence to redesign it and come up with something different because the throwing money at it is NOT the answer. I have just had a physio appointment at my hospital after waiting 22 months. I need an xray because without it no one has a real clue what is going on. but I cant just get an xray I need an assessment first. the physio took one look at me "you need an xray before I can come up with a plan" oh good is that now then. "No unfortunately we need a band whatever nurse to sign it off and I am one band below so what you need to do is go away today and wait to be called back again and then have the xray" and the xray unit at the end of the hall completely empty no one nada. and thats not a waste of money?

@Thechaseison71 Just like higher energy bills, higher insurance premiums, large council tax bills, large service charges etc.. that often come with higher value properties, prospective buyers will factor it in to their affordability calculations.

Most people buying £2m+ houses are pretty fucking rich TBH.

You ought to be ashamed of yourself.

Why?

This

I appreciate that but it is very unfair because houses in the SE have increased due to a shortage of housing and there is a a huge inequality between regions.

I genuinely don't see how houses can be revalued accurately because even if you use inflation that doesn't cover the huge differences between North and South. And values are always subjective anyway.

Personally, I am wondering how they got away with all these accounting tricks and revenue coming in in 2028/2029 “possibly” and markets swallowing it all up like it is going to be hard cash now. When we all know employers will structure around salary sacrifice on pensions, for example.

They literally sat there and made a fortune while successive governments mismanged the property market which allowed their property value to reach stratospheric levels while new market entrants couldn't afford a property at all.

In what way is this "working hard" or at least "working harder" than anyone else ?

Which situation would people rather be in (scratches chin) ?

Owning a 2 million place that they can sell or release equity from or be completely unable to house themselves due to unaffordable property prices ?

I know which one I would rather be in.

@ChardonnaysBeastlyCat I'll save my shame for families living in mouldy one bed flats or people living on the streets in London TBH