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?

I understand that social housing will be excluded, naturally…

They only need it because they’ve failed to do tax policy that works. We don’t have to say yeh take more due to your failings.

And then expect the same again as that won’t work either.

What utter nonsense.

The government can choose to take measures to stimulate the economy. They don’t, they have done the opposite.

The government have chosen to mothball the North Sea industries.

They are chasing away people who create wealth and employment.

They can get their hands on money other than yours or mine. They choose not to.

Give us your f’ing money!

Said like Bob Geldof in the run up to live-aid….

That’s this socialist government.

At least Bob Geldof sang for his supper.

It also doesn't take into account how much money someone has actually put into their home over the years: stamp duty, mortgage interest, maintenance, renovations and improvements. All of those costs were paid from income that had already been taxed. And many homes bought over the last 50 years were fixer uppers. Their current value isn't just passive house-price inflation. Many owner have spent lots of their own money improving, extending and maintaining them. Just comparing the original purchase price with today's value therefore significantly overstates the real financial economic/ economic gain. It effectively treats the entire value as a windfall, while ignoring decades of spending that helped create and preserve that value.

That's before we even get onto the social value that stable communities create. People don't just invest money in the places where they live; they invest their time. They volunteer, fundraise, support local organisations and look out for neighbours. It was particularly visible in Covid. Communities organised support for elderly and vulnerable people, raised money, delivered food and medicines and supported front line staff with more than just clapping. People who are invested in their communities help improve them. There is a value to putting down roots that doesn't appear on a balance sheet, but that doesn't mean it has no value.

If the government wants to capture some that windfall the logical point is at sale when the actual profit is known and the person has the funds to pay. Taking a % of the uplift minus any costs would be fair.

If the government wants to capture some that windfall the logical point is at sale when the actual profit is known and the person has the funds to pay. Taking a % of the uplift minus any costs would be fair

So remove the PPR relief and apply capital gains tax? That would probably raise a lot more than the "mansion tax".

It would stagnate the market - the costs of selling/buying and tax would mean you wouldn’t really be able to afford somewhere more expensive and would mean people downsizing aren’t benefiting by much

we need less friction in the market but I really wouldn’t be surprised if they went for PPR

Exactly. Apparently people believed them when they said “fully, funded fully costed”. Why anyone then makes it easier for them by constantly suggesting which taxes to hike is bizarre.

Fairness shouldn't mean choosing which generation deserves protecting. That is not the social contract nor what the welfare state is supposed to be about. Fairness should mean designing a sustainable system that considers ability to pay, need, incentives and contributions across generations.

I like what I have read about Norway's pension system.

No not remove PPR, a nominal fee on the uplift in value minus costs.

So CGT with a lower rate?

I don't think it is necessarily any more damaging to the housing market than the chronic shortage of housing we already have.

We need substantially more homes, in the right locations, at prices people can actually afford. Those price points and margins that may not provide the returns developers and their backers/ investors currently require. They would still make a return but for some investors it won't be high enough to be attractive to commit capital. Short of the government having its own building company to do the building we will need more creative solutions to fund building the homes and people who are prepared to accept a modest return for the greater good.

We are in London zone 2 and most 3+ bedroom houses cost over 1.5m here (even a standard terrace with no front garden or parking). Birth rates have dropped drastically in our borough and several schools have closed or merged. A lower mansion tax rate will mean even more families will choose to move away (or young people moving before starting a family) and the pupil numbers will drop sharply. There will still be wealthy families who remain (because it's a desirable area with good amenities and private schools), and those who live on the same streets in local authority housing, but there will be fewer middle class families.

That appears to be is acceptable to many people on here.

Yes much of London is already inaccessible for many young buyers. It’ll make areas more so.

No we want house prices to fall. But nearly everyone is already priced out of houses worth 1.5 million plus. It makes no difference to house affordability

@Farialar - it is what Labour want though, isn’t it? They want middle class people and their pushy elbows to move up North and put some ambition into the school system and job market there. They seem to think some business owners will move too and create job opportunities and better schools there and make demands for infrastructure. There is a lot of wishful thinking in all of it.

I do wonder what they are thinking though. I would be looking at Germany right now and shitting my pants and coming up with a plan. Going too left didn’t work for Germany. If France/Germany/Sweden are all right wing, we will be too as the electorate will conclude that even more immigrants will come here if chucked out there/benefits etc cut there. Our political system does not operate in a vacuum.
Unfortunately I think the social policies post WW2 have run their course and a lot of Western economies are out of funds. Personally I would be putting security first - national and internal security as well. It is sort of obvious the situation we find ourselves in. Taking from a few more middle class people is not going to work. And the young people with talent are already leaving anyway - a lot of young talented people have multiple options and passports. I doubt they will be going “North”, especially those born to foreign parents in London.

Some good news for FTB, right? Right?

Landlords are quitting the lettings market at the highest rate in a decade following the introduction of Labour’s Renters’ Rights Act, data show.

Around 44,000 rental homes have been sold across Britain since the start of July, according to property data company TwentyCi.

All of these expenses have to be tax deductible.

A similar principle, but a nominal fee. Eg 1%.

The government is arguing that higher value homes represent greater property "wealth" and should therefore be taxed more heavily. If that is the principle, surely a fairer way to do it would be a small levy on the actual uplift in value when the property is sold, after taking account of the costs and investment that went into the home.

An estimated market valuation isn't money sitting in someone's bank account. It doesn't mean the current owner could afford to buy their own home at today's price, and its value can change considerably year on year. The one point at which we know what the property is actually worth is when somebody is willing to buy it. At that point you also have a real transaction and can calculate the actual uplift: what the owner paid, what they legitimately invested in the property and what they eventually sold it for. A small nominal levy could then be charged on that uplift.

I don't think somebody should pay substantially more towards local services simply because their house is worth more. Residents already contribute through council tax for the local services they use. If the additional tax is really about accumulated property wealth then tax the realised uplift as wealth rather than pretending an estimated paper value is equivalent to available income. People always want a system that feels "fair" based on using the money of anyone that earns more than them. Basing a modest charge on an actual sale price and an actual uplift, while retaining council tax on a per head basis as the , seems a much fairer and more transparent way of achieving that.

If you come down south you will realise that the difference in price between houses here and houses in the north is staggering. Thousands up north affected, but many hundreds of thousands down here.

I agree with all the posters that have commented that the state pension needs to become means tested. I think its inevitable that will have to happen within the next decade or so.

It would be cleaner just to deduct what is spent.