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?

I've always thought the opposite would help the north south divide. Bit off topic. Lower business rates, corporation tax and anything that might attract wealthy people to the North East (for example). The fair thing to do would be to set the basic rate of tax on houses and then lower it for impoverished regions.

Not advocating for a mansion tax btw.

Taxing £2m houses isn’t going to raise enough. That will be the gateway; who owns a £2m house? Hardly anybody so most of us will shrug. Until….. next it’s the £1m house. A bit less shrugging. But too many houses valued at £900k and then -tada! £500k + and of course a bit of garden tax thrown in to really shaft those pesky southerners.

No, the house price to average salary ratio is not the same. It’s much higher in London. 7.8 times average salary in London, 3.6 times average salary in Yorkshire.

The market has never ‘corrected’ anywhere I’ve lived. The prices keep going up. They don’t ‘correct’ in popular areas.

Do you think northerners don't have gardens?

The idea that you pay tax simply for owning a house is setting a new precedent.

What is stamp duty then?

Probably because people with a 1.2m house wouldn’t be able to get a 1.5m mortgage because they’re not rich enough.

The problem in this country is not inequality it’s that everyone wants someone else to pay. And they vote accordingly

True

Or even better, just increase national debt so that our children and their children pay.

I think we have run out of road here, not enough kids for one.

Yes exactly Un modern 4 beds are 1 million

they never raise up the thresholds for these greedy taxes

But that still equates to a higher salary, and that's a typically London-centric viewpoint anyway. There is more to the south east than London.

That's a sales tax. Like VAT. It's not an annual tax applied to ownership

It's impossible to introduce CGT on primary residences fairly. The only way to do it is that it applies only to properties purchased from 2025 onwards. Otherwise people wont have retained receipts etc to prove their expenditure.

If they only apply it to properties purchased from 2025 onwards it will crash the market instantly. Nobody will want to move unless they really have to.

We have been in our house for 20 years. It's worth double what it was when we bought it but a big chunk of that is just inflation and another big chunk is renovations we have done which we can't possibly evidence. New windows new roof, new detached garage, new kitchen all new bathrooms, work to septic tank, new driveway. We just don't have the receipts from any of that. Most of it was over 15 years ago. What looks like a large gain is actually us not going on holiday etc because we needed to invest that money into our house. Whenever anyone is doing work to their house they factor in the fact that whilst its a sacrifice, it isn't completely wasted money because it will increase/maintain the value of their property.

If they apply a mansion tax to houses worth over £2m it will lead to a lot of houses for up for sale for £1.99m

What all of this does mean though is that surveying looks like a good career for young people..

It’s not true to say other countries apply CGT to main residence sales.

While I’m not a tax expert I did attempt to search for the details and from what I can see very few countries do so and those that do have multitude of exemptions (eg in Germany it doesn’t apply if you’ve lived in the house for more than 10 years) and in the US there is a cap on the maximum you can pay.

The reason most countries don’t do it is simple - it doesn’t work and does more damage to the economy in stalling the housing market.

I live in the south east (not london) and the house price is around 10 times average earnings.

I think salaries are much more similar across the country than they used to be. Small differences but not as big as the house difference.

Exactly like a tax on education. Costs more than it raises, damages lives and livelihoods, distorts the housing market and very few other countries do it. That didn't stop RR.

That's not true in the North East at all.

I literally know of people with £1.5m+ mortgages. So people do have them…

Factually the earnings to house price ratio is far worse in London and the South East than the North. This is why I would be very wary of any so called levelling up if I was a Northerner. Yes, you may get a bit of investment and wage growth, but your house prices will shoot up and your standard of living may well drop. If you complain then you will be told to go and live in Wales or Scotland where house prices are still low. Be careful what you wish for.

Yes it’s a higher salary but your comment made it sound like you thought the ratio would be broadly similar. “Yes houses are more expensive but you get a higher salary”. With ratios like that you’re paying a lot more of your salary on housing costs.

The rest of the SE is 5.6 times salary. With the area around London being 6.2 times.

Wages where l live are nothing like SE salaries.

But is your cost of living the same as the SE? I don't live in the SE and our cost of living is considerably less. Lots of wages are broadly similar (public sector especially and minimum wage type jobs).

I don’t think you could do it regionally, we live an hour away from London because property is cheaper here, we’re not in top 5%, probably top 20% and we do pay far more council tax than we would in a property of this value in London, transport is expensive and inferior to London. While someone in Hampshire in a house worth just under a million may be a similar size to a £2m in London, their level of wealth and lifestyle is not comparable.

We need a wealth tax, inequality is so huge now, we also need a massive social housing programme, we’ve not built enough housing for 40 years and the cost of housing is now driving inequality.

@user4750 I agree - our house price increase is solely improvements - well, actually only maintenance really. Had to have new windows last year as a couple of panes fell right out their rotting frames.

In Italy you get a rebate (20% I think) for (proven) home maintenance. That encourages people to keep their homes in good condition and because receipts are required discourages black market.

In summary, you want a wealth tax on other people.

It can't get much worse in the NE. There's such a small professional eco-system that there's only a tiny wealth base. Vast numbers are employed by the state. I don't think there's much danger of things improving and young people wanting to stay there. There's no jobs.

But thank you for writing us off on the investment front! We know our place...