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?

Do you mean you have a two million pound house?

True

That’s true for every tax & it’s part of the problem. Everyone wants someone else to pay. I’m not immune to it myself, I was relived when dc got a selective place so we didn’t have to go down the private route. Granted that wasn’t just for VAT, fees alone are insane now.

I would never in a million years buy a 1.5 million property if I had a City of London salary of 300k with minimum equity. It is just madness. It is typical for people who never did this type of work to assume that those doing it are going to be over leveraging, when everyone knows that very high earners often have little to no long term job security. Most certainly aren’t banking on earning highly for 25 plus years. Mostly they save first and people buying expensive properties have either already built up equity, have a huge inheritance or are actually much higher earners (the market for the latter is very small these days). So if you deliberately depress the market for the stamp duty spinner, good luck to Healey. Also foreign investors look at places like London and how it is doing and a big property crash there just sends the completely wrong signals to the world. When are we ever going to get a real economist in who actually gets growth? Where are they and why are none of them in politics?!

@BeardySchnauzerI pay marginally more vs my previous borough but find it better here. I have colleagues who live in Surrey etc & was pretty gobsmacked at what some pay.

I think you are right.

I can see this biting them in the arse - especially amongst the Islington set.

How many people are buying 2m houses with a low deposit? Ime not the majority.

That's the difficulty though isn't it. Those that people think should be paying more, are already paying more!

Well, the Wandsworth 94% CT rise is subject to legal challenge.

@Araminta1004 I agree with you, everyone I know who have bought in that ballpark in recent years are much higher earners eg MC partner, have large equity gains or family help.

@FirmSnake& I said upthread I don’t want to pay more income tax & the cliff edge impacts DH & I’: behaviour.

Thinking about it I’m not 100% against more income tax for myself but what I don’t like is the burden doesn’t feel equal & I actually want services to improve.

Never the majority, no.

But in the City, it’s relatively normal to receive a ‘modest’ base salary, with your year end being a multiple - hence some running high leverage, also premised on HP appreciation.

Currently, residential property is a lousy illiquid ‘investment’, of course.

My last council was exceptionally well run tbf

this one seems keen on spending time and money on ‘nice to haves’ rather than necessities tbh

Plus it’s piss poor economics from Labour. They can’t work out why every tax leads to more taxes.

@bingobangs - like you my DC are state selective and we won’t be caught by a mansion tax (for a while yet I hope). It is still obvious to spot class war fare and economic madness. I guess Burnham thinks he got in for being Northern is now going to make a point of sticking it to the SE. Given so many of his voters live there, seems very weird. Because it is symbolic to crash the London housing market further. It pisses people up when they do it deliberately. It is not about those who have to pay 200 quid extra a month in council tax, the rest of us are going to feel our house prices going down caused directly by Burnham and Healey and when we remortgage if the loan to value is worse we certainly are all going to feel the pain. The fact that some people cannot think this through is beyond me.

It isn't policy motivated by economics though is it? It's politics of envy. Eat the rich....

Except it's not the rich being eaten.

Currently, residential property is a lousy illiquid ‘investment’, of course.

We actually decided last year that we aren’t going to move again (would be looking in the 1.4/5m cat) because it just isn’t worth it. Property hasn’t kept up with inflation for years so there no guarantee you will be able to “cash out” later.

Interest rates means servicing so much more debt & that’s pointless. Utilities, food prices, taxes aren’t ever coming down. We can work less, retire earlier & enjoy more holidays etc. Plus god knows what uni will cost in a decade.

@Araminta1004I don’t understand why they are doing it tbh, it doesn’t make sense to me. I did think VAT on private schools was to offset the cuts to benefits so they could argue we are targeting everyone but the cuts obviously didn’t go through as planned.

Yeah getting actual millionaires to pay tax is very nasty. Poor you.

Actual millionaires have already paid more than most of us ever will.

We bought a run down bog standard 3 bedroom semi in Zone 4 South London for £550k in 2017. We took out a £500k (5x earnings mortgage).

We lived in a hovel for two years that wasn't really fit for human habitation because we had no money for renovations. We did a bit of work in 2019 to make it livable - new central heating system, new bathroom, DIY IKEA kitchen, replastered and decorated.

We've just finished a major building project and the house is now a six bedroom home with a large rear kitchen/diner/living space.

That was funded by savings and £100k of additional borrowing.

The house is now probably worth between £1.1 & £1.2 million. Our mortgage is £3,300 per month (£40k per year). Council tax is £3k a year.

Now we're in danger of being snared in this envy driven 'tax the rich' bullshit for the temerity if daring to aspire to a better quality of family life.

Fuck off.

We're not rich. We've funded our home purchase and improvements with debt.

This is going to kill the building trade, because you'd have be a total moron to extend your home and get dragged into this shit.

Again it does depend.

Labour are the party of the benefit class, and the Teflon-coated but virtue signalling upper middle classes. They do not represent the working classes (and I don't mean blue collar, I mean literally all people who get up, go to work) for decades.

@ThisOldThang

but you can afford £3300 pcm on a mortgage so you must earn a lot to pay that