To think that the new tax on £2m will eventually be harmful to ordinary folk?

[IwishIcouldski]

I'm concerned that the new tax on properties over £2 million will push more buyers toward homes below that threshold. Increased demand at lower price points could intensify competition at £1.5 million, £1 million, £500,000, £300,000, and so on, as buyers adjust their expectations downward in response to pressure higher up the market but still below the £2 million mark.

It also raises the question of who will actually buy the £2 million-plus homes. I can imagine many sellers pricing their properties just under £2 million to attract buyers, which could drive prices down at each prove level across the market. Meanwhile, some of the remaining £2 million homes may end up being purchased by the very wealthy or by landlords who convert them into multiple flats. There may need to be big drops in prices because when you buy, you would not want to be dragged into the £2m mark after a couple of years because of inflation.

I feel it will eventually harm ordinary people over time but the wealthy will be able to weather the storm.

You are barmy

I can’t see anyone that can afford a £2m home being put off by a £2500 annual charge.

If you can afford a £2m house, you can afford a bit more tax

This is not about whether those who are living in £2m homes can afford an extra few thousands. In any case, some of the people in these houses could not afford to buy these houses as the value may have been entirely be driven by inflation.

The point is that everyone below the £2m will suffer. People will be put off from buying homes at £2m to avoid the tax. So they will compete those in the £1.5m out and then those who would have bought £1.5m homes will look at the next level down and so on.

Do you really think those who are looking to buy at £500k will not be affected? I think they will because there will be a pressure on demand to look at houses priced in prices brackets below £2m.

Furthermore, who will be buying up the £2m when those who cannot afford the extra tax sells? Many people are in £2m homes because of inflation, not because they are wealthy. They will sell and look to buy more affordable homes pricing you and me out of £500k homes, etc. But who will be buying the homes they sell?

Our suburbs are going to be turned into houses of multiple occupancies or flats.

Has it been announced how the value of a home is going to be decided? I assume you can’t buy a house for 1.9m and say that’s the value that HMRC or whatever department must use for mansion tax and that they will assess it independently like with council tax.

Good question but regardless, it will place downward pressure on the prices of houses. Fewer people will want to buy million pound homes to avoid being dragged into the new tax burden within a few years.

As I said, when people start offloading these expensive homes, who will buy them? Will we see more lovely homes turn into flats or buy-to-lets of multiple occupancies. The very wealthy who are buying multi-million pound homes won't be affected.

It won't be long before the average home is around £1m. In many places, the average home cost around £500k. With inflation, that could easily each £1m in 10-20 years.

Well if you are so sure you know how to do the budget better get into politics and aim to be Chancellor of the Exchequer and then you can do what you think is best.

If it encourages retired people to sell their big homes then I think that could be a good thing. I know lots of older couples still living in houses with lots of empty bedrooms years after their kids have moved out, meanwhile there's a shortage of family homes.

Everyone says “let’s tax wealth”, then when they attempt to tax wealth, there’s all these complaints. Yes, lots of fairly normal people are fairly wealthy, they can’t just tax the Duke of Westminster.

Yes, there will be impacts on the housing market. The most obvious being bunching of property prices just below £2m, which is probably good if you were planning on buying a just-over-£2m house and not so great if you were planning on selling one.

This: “Our suburbs are going to be turned into houses of multiple occupancies or flats” is ridiculous hyperbole.

Ordinary folk don’t own £2million homes

HMRC has an estimate of the "actual" value of any given house. My mate works there and gets sly requests on property estimates.

But stamp duty on a £2M property is around £150k. An additional £2.5k annual tax is gonna mean fuck all to the housing market!

But who will buy these homes? Are there a shortage of family homes in the £2m mark.

It will be a cliff edge and people don't like to be the wrong side of a cliff edge. Look at all the wrangling that goes on with the £100k salary cliff edge. Even if people can easily afford to pay the tax they will still come up with ways so they don't, like a slightly cheaper house, it will affect the housing market that is for sure

The biggest risk surely is fiscal creep and that the thresholds end up being frozen. Combine that with continued inflation and the inevitable increase in the tax from £2,500 to £3,000 to £5000. In 10 years that £2 million will be the equivalent of £1m today, and then millions not hundreds of thousands of properties will be liable for a £5,000 bill. £5 billion to £10 billion for HMRC.

Also,don't rule out either 2 mil being reduced, or frozen so that overtime more normal houses get pulled into the tax

So taking big houses and dividing them into more affordable flats is bad for ordinary people??

So you think the bunching of properties at the just below £2m mark will have no impact down the chain? What will happen to house prices? You think only those around the £2m will be impacted and there will be no downward pressure on all prices? What was £1.8m will need to be priced at £1.7m and so on and so forth.

Who will buy these "family homes" that are now available given the shortage? Ordinary folk? If there is shortage of family homes for ordinary folks, how does more houses on the market at the £1.9m mark solve this?

The greater supply of homes at that high end will simply depress prices all the way along the value chain.

Do you really think the only impact will be at the £2m mark?

People just need to cut back on lattes and cancel Netflix, to quote somebody somewhere.

That is a good question. We had negative equity, needed to sell, had to argue with our lender because they claimed we didn't have negative equity because the internet valued our house at twice what it was actually worth.

(House had cost 80k, more than halved in value with the crash. Fun times.)

Driving prices down would be a bad thing? Since when?

Plenty of ordinary folk in London own £2m houses. In London even £1.5m gets you an average mid-terrace 3-4 bed home. Many people who bought such a home 10 years ago would not be able to afford to buy it now.

Think of the pressure on the infrastructure. Roads are narrow. Imagine cars parked alongside roads. Think of the impact on schools and health care/doctors surgery.

We live in a connected world. It's like a water bed. You press on one side and the other side is impacted. Increase the number of people living on a street by just a handful of cars and it can be mayhem.

Some of these people won't have access to a garden, then what.

In the end, the very wealthy landlord or developer wins. So wealth is taken away from normal people and given to those who are even more wealthy. They buy up the properties, split them into flats or rent them. Either way, it will be a very wealthy buying from a wealthy.

The point is that people bought for a lot less. I bought my house 25 years ago in London. It has made a theoretical profit of just over 2m (Zoopla estimate). I don’t know how HMRC will value it, we’ll see.

Yes, it’s the fiscal creep I worry about.