Mansion Tax at £1.5m - what will this mean?

[MaureenOHara]

Does anyone have any idea what this might mean for an individual and what it might do to the market. What happened to the £2m market and will that be replicated or is it different?

It will create the same issues as at £2m, just earlier!

And capture a lot more people - a lot of people in London / the South East would be caught by a mansion tax at this level, in my area that’s a 3/4 bed terrace.

The word ‘mansion’ is ludicrous in this context - a £1.5m house in my area is a £300k house in most of the UK.

This is merely a tax on the South East - and given Andy’s ‘pro North’ stance, this will eviscerate support for Labour in the South of the country.

I’m no expert but think:

what this might mean for an individual - it will cost them if they live in a property of this value. They will find it harder to sell.

what it might do to the market - slow it down further for a while and then it’ll probably settle. Lots of properties on for 1.4m I’d expect.

We were in a 3.5 bed London terrace in a fairly rough part of zone 2 that cost this. I wouldn’t call it a mansion, but could we have paid the extra, yes. Although we already paid a huge amount on stamp duty and generally through PAYE tax.

It means that everyone Oop North will be fine and huge numbers Dahn Sarf will be paying through the nose, I guess. For what is essentially the same house.

Given they’ve reduced the threshold before it’s even been introduced I suspect what it means is that they will keep reducing it and it will just be another tax on home ownership.

good old Labour

As with all new taxes which are meant to catch the rich they will eventually make sure everyone is paying it

as soon as they introduced it it was obvious the threshold would be pushed down

so far they’ve not done anything to help the housing market so things are only going to get worse

Presumably a lot of older people will have to sell or can the payment be deferred?

This will likely dampen values but houses are completely out of kilter with salaries.

I believe it can be deferred until you sell the house/die. Unfortunately it also doesn’t deal with the reasons old people don’t sell.

this is going to make the housing market very sticky

It will mean that the south get punished yet again and will make the housing market worse.

I think this is right . He is taking from the South to give to the North . On one level I can understand redistribution however he shouldn’t be taking from anyone he should be growing the economy . All I can see so far is spend spend spend of other peoples money . You cannot run an economy based on ideologies and why he was spending millions on rejigging councils boundaries and the North 10 I have no idea , no-one ever had that at the top of their agenda .

Well there’s talk of an early election so he can get a mandate for raising income tax

unfortunately That’s the only way they can raise what they need. The mansion tax will raise around half a billion. That’s not going to touch the sides.

It will depress prices significantly around the 1.45 level and depress prices on a sliding scale beneath that.

To take examples, something that is currently worth let’s say 1.55 will go for 1.45 to get under the threshold. Meanwhile something that is currently worth 1.45 will have to come down (as people can now get that bigger house for 1.45) to eg 1.375, and so on.

Distorting markets generally is a disaster and procedures unfair outcomes and this will be no different.

• ’Produces’ not procedures!

Aren't house prices too high though so this might be a good thing?

Good if you’re starting out. Less good if you have a huge mortgage on a house that now is worth less than what you paid for it.
I’d love to see this government come up with some ideas that stimulate growth instead.

As pp said this raises £800m which in the scheme of how much debt we’re facing is tiny.

It will however cause behaviour changes in that people close to the value won’t upgrade their homes and it’ll cause stress for many in average sized terrace houses who don’t have cash to spare with all the other hits to income.

And there’s no guarantee they won’t keep lowering it.

It means I won’t go continue my renovations which results in:

1 window company loosing a job
1 roofer loosing a job
1 plasterer loosing a job
1 painter loosing a job
1 joiner loosing a job
1 heating company loosing a job
1 bathroom company loosing a job

and the associated people with these

plus the companies that the materials would have come from loosing a sale.

and I’m not paying VAT on materials or trades so less to the exchequer their too.

I thought there was talk of a land value tax replacing council tax and Stamp duty. I thought that was a better idea and would maybe mean that because the worry of stamp duty being taken away would stimulate the housing market. I wonder what happened to that?

It will make minimal difference to the actual problem, given the size of the debt. Presumably, he's gambling that people in London/SE are less likely to vote for him anyway, so the votes he loses there won't be enough to vote out Labour in an election. Which is a big gamble because once in place, it will presumably keep going lower, so anyone with a property of 1m plus should assume its coming their way soon, and according to Google, that's about 50.6% in London, or roughly 1 in 11 homes. (I'd argue that's not a scaremongering assumption given they're talking of dropping it to 1.5m already before it even became implemented at 2m)

Anything that has a “cliff” is a bad idea as in you pay nothing at 1499999 and x% at 1500000 as it kills demand directly above and ( see the income tax cliff) until you get so far above that people accept it ( likely around 2 million in this case). I’m not against tax on property values per se but it needs to be on a sliding scale and ideally also take into account regional disparities in house prices.

There’s also the question of how upgrades are treated- for CGT they’re deductible and arguably they should be here too because people upgrading puts money into the local economy- you don’t want to have a super dated housing stock and people going to Barbados instead.

The issue with taxes is that in order to have substantially better public services everyone has to pay more tax, not just rich people because there aren’t enough of them as this shows.

Who will decide on the value? Will there be Stasi style inspectors sent from the government going round snooping and then deciding on a value?
What about if a lot of work needs doing which is not obvious from the outside?

Is someone decides to sell their property worth £1.5 million rather than pay the tax, but can’t sell it because no buyer thinks it’s worth that much, then will the owner no longer be liable?

Yes, I didn’t mind this idea but it seems they need all they tax they can get!

How was it decided for council tax?

See it wouldn’t stop me maintaining my house, doing an extension? Yes but a window clean? no.

What happens when they inevitably crash the housing market, and the prices drop?

will we get a refund?