Latest mansion tax should be on top % homes locally not nationallu

[Lionfisher]

Rachel Reeves is front running yet another class warfare policy in the press, this time suggesting everyone who lives in a home over £2m should have to pay 1% on anything above 2m.

First - I’m fine with this. I live in SW London and would probably have to pay some.

But I’m ONLY fine with it if everyone round the country does too. Meaning that it should be on the top 5% of homes by REGION (I’ll leave it to other people to argue what region means, all the data is there to do it).

We could happily sell our 4 bed home and move somewhere else in the country and buy a 10 bed castle. Or just buy another 4 bed home and stash the rest in the markets. TBH we might even do that if this comes in.

But people don’t want us to do this because it prices them out of local homes etc. Which is pretty much what this policy would do, price people out of local homes so they move elsewhere and prices up somewhere else instead.

But more than anything you can be far more rich on far less money in other parts of the country. So this isn’t a tax on property it’s a tax on the south.

As long as top X% of homeowners elsewhere are paying their 1% above their threshold I’ve no issues with this.

But people won’t agree with me as it’s easier to think it should always be “other people” who pay…. or will they?

Just enjoy your unearned wealth. People from the north don't need to be shafted even more.

The whole mansion tax idea is rubbish anyway.

The whole country has unearned property wealth, the point is that wealth is relative. And property is relative to the local market not the national market.

Tax should be relative too, especially on an asset that’s so driven by regionality.

If it comes in there will just be more and more people moving away from the tax to other areas of the country - like the north. Especially given how many people can work remotely.

It's another badly thought through Labour policy of envy rather than a prudent tax policy.

How is it that a person with a £2 million house and a £1.5 million mortgage has to pay it but someone with a £1.2 million house doesn't.

If you want to raise tax revenue from housing then simply introduce CGT for main residence. You could even have it kicking in after a CGT threshold of x, so that it only bashes the poshos and boomers down sizing.

We could happily sell our 4 bed home and move somewhere else in the country and buy a 10 bed castle.

All the best with your castle purchase, Rightmove for t’north is full of them just lingering on the market, waiting for someone from ‘the south’ to move here to escape the mansion taxes, which don’t apply anywhere here as we all live in tiny terraces in walking distance of t’mills.

They need to remove stamp duty for downsizers or the boomers won’t move on.

Lol no one has a £1.5m mortgage.

Im in London area and well off, but my house is below £2m. These people may not like it but can def afford it. BTW it’s not just London, there are a lot of multi million pound houses in the New Forest and they sell like hot cakes. There are some seriously wealthy people out there.

What makes you think it is unearned?

My point is that if introduced it should be on net wealth- value of property minus debt not absolute value.

But if you did that it would disincentivize paying off your mortgage

Basically it's another Labour policy where they haven't thought through the secondary impacts or practicality of implementation (eg who decides if a house is worth £2.2 million or £1.8 million)

£2m is mega money anywhere - and I say this as a Londoner. You do not need to spend that much to live a 4 bed house even in zone 2/3.

"Poshos and boomers". FGS.

good luck when there's no one left to tax

What do you mean “no one has a £1.5 million mortgage”. Of course they do. I had a £500k mortgage as a lone parent on a salary that wasn’t that high. Plenty of my work colleagues are in couples with both earning high salaries and can afford that sort of mortgage. They are not “ wealthy” - they are just pumping all the money from their 14 hours a day mega stressful jobs into property.

I agree they need to tax the equity not the value, but I think really this needs to be total wealth not just house value.

I could imagine a system where all wealth is registered. Bring in a national ID card, hold that number against every bank account, loan, credit card, land registry, company, share etc and make them all report to HMRC for wealth tax. Add that people can see their spouse’s records online- would save a lot of stress re hidden debt/hidden funds on divorce.

I don’t think the regional idea works at all, it would drive richer people out of poorer areas, which is the last thing poor areas need.

But people do move around the country so property values aren’t just relative to the local market. You’ve said it yourself, you’ve got the option of moving elsewhere and buying a bigger house or releasing a lot of capital. But people in other regions can’t afford to move south.

The older retired household that bought and live in their property for less than £50,000 in the Eighties may not be able to afford this yearly tax. They are part of the local community, so what would happen to them? This tax like VAT on school fees seems to create an elite class, which seems an unexpected byproduct of Labour policy.

It makes a lot of sense to remove stamp duty and have an annual % tax on property values.

@wisbech who would do the valuations? How would that work?

Would this make people with land sell to developers to turn one house into an estate ?

In the US (where almost all states & counties have property tax) it is done by assessors, normally updated every 4 years. Fair market value. No different (say) to a home report in Scotland, or a mortgage valuation in England. Owners can dispute the valuation if they think it is wrong.

Firstly, it's not Labour policy, more like paper talk, but your idea would only work if everything else was equal such as good public transport, education and other general services. There's a reason why people live in London and why the house prices are so high.

Yanbu. What you get for £2m in the south can be way less than what you get in the north. Plus if they introduce it, the cap can be say £2m, but in a few years it will come down and they will sting more people in the south. It’s ludicrous.

If more money came in from the regions there would be more money for local services. House prices are analysed relative to local income which already reflects differences in how much people want to live there. There’s simply no justifying why people who are disproportionately wealthy v area shouldn’t pay more, because they’re not deemed to be disproportionately wealthy compared to the south.

To the point around elderly couple who bought home in 80s for 50k and can’t afford - it’s an interesting point. They had ALL the years of price rises and are now sitting on a small fortune of unearned and untaxed wealth. Why shouldn’t they pay? Perfectly easy to take the value of the property against the selling price in the future as is done with care home fees sometimes.

To the point around scrapping stamp duty and paying property tax - the issue here is that everyone has already paid stamp duty, and a lot of it if we are looking at the above 2m bracket. This could only work for new sales and therefore wouldn’t generate anything substantial for years partly as people would never move!!!

To the person who said wealth is not locally relative because someone from south could move house - I suspect you’re not from the south and would advocate “tax the poshos” (which was what I sort of expected).

The idea that there are 2m houses in other areas is EXACTLY why it should be regional. The threshold should be x times average house price / top 10% of homes for example, so maybe in NF it could be c. 800k … you’d pay much more in this tax because you have something so disproportional to where it is.

And to the point of taxing equity rather than value - I totally agree. Someone with 100% equity in a small house is far better off than someone paying a mortgage on a big house.

The market on anything over 2m has been stagnant here for months. Things are just not selling even if asking prices come down. It makes it incredibly difficult to value anything that would require a specific number like this. I think they’d have to do bands every 250k or something.

The single best idea is CGT, I don’t know why they won’t do it.

Nobody deserves to have any level of unearned and untaxed wealth imho. And the people who have made the most are the ones who should be paying… ESPECIALLY Because there will be a huge transfer of intergenerational wealth over the next 30 years and inheritance tax won’t catch much of it.

Reeve’s has totally screwed herself over by saying she won’t increase VAT. She has no idea what to do at all.

What an odd comment.

Following your logic, how do you define share growth?

Meanwhile, tax net asset value, and people will simply leverage up. Large houses will be split into separate dwellings/flats etc.

Labour do not understand the law of unintended consequences.

It's not a policy, it's an idea.

If tax is put on £2m properties, who will buy yhem when they go up for sale? If they prove unsaleabke, they won't be worth £2m any more. Another chip towards destroying the economic wellbeing of the entire country and not just the rich.

Last time this was threatened we moved out of London and bought a house that done up is worth less than £2m. That was nearly eleven years ago. Price increases in the last 11 years have been minimal compared to the orevious 10 and the 10 before that.

The market is beginning to correct. It's always cyclical. The last time was 1989/94. It doesn't need this level of misery imposed upon it althiugh I think there wouod be merot in scrapping stamp duty for downsizers. Space or value though?