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?

Let’s see where this shit show gets us.

I like it! 😁

The basic outcome will be that younger people stretched by mortgage debt costs and general COL are no longer going to want to buy these expensive houses off older folk who thought they were sitting in a lottery win, tough luck all round I suppose?

Most older people I know intend to live in the house until they die so the value is irrelevant to them!!

when we bought our current place we saw so many private properties that hadn’t been updated in decades. A lot of these older people aren’t living in luxury!!

Fair enough, but some do think they have lucked out, I know of older people who thought they could get a council house while their empty house sat on the market for sale.

We're relocating to be nearer our DC, or we'd be staying in the house we love and saving the costs of moving. Estate agent, conveyancing and SDLT add up fast.

It's very common practice for employers to try to do it.

At no point have I said this isn't an issue that needs addressing. I've said the opposite, and that it's complicated. I was asked what I would do and answered honestly "I'm not sure". I'm still learning. You may know everything about it, but I'm not ashamed to say I don't. I have plenty of ideas about individual parts of the problem, but I don't yet have a combination of policies that I think works across the whole system without simply shifting costs or problems elsewhere. And I don't have to have the answers to understand a policy suggestion or have an opinion on whether I think it could work.

Your suggestions are essentially compulsory pension contributions and means-testing the State Pension. Is that just the full State Pension or Pension Credit as well? I've already asked what happens to the incentive to save beyond the compulsory minimum if building your own pension reduces what you receive from the state. And tumbleweed... People saving beyond the minimum are less likely to be a drain on state resources and younger generations we should be encouraging that not create a workforce significant numbers of workers thinking that there is no point, like the £100k cliff edge.

But pensions are only one part of the problem. People don't have to wait until State Pension age to leave the workforce. They can reduce their hours or use occupational pensions and savings to bridge the gap. If we're concerned about the burden on the young, keeping more people economically active for longer matters. There is some interesting ELSA research around pension wealth and early retirement, including DB pension wealth. These days the public sector has the most DB schemes, I believe. I'm still reading it, though so wouldn't want to comment too much on that.

Removing the State Pension doesn't remove other Pension commitments either. Unfunded public sector DB pension schemes remain a huge commitment for future taxpayers. How do you reduce the burden of those? Or is ok for a smaller workforce of young people to have those round their neck on top of their student loan?

Add in disability, social care, healthcare and economic inactivity, alongside young people not being in productive employment and the potential future impact of AI and automation on the workforce. These are interconnected problems. That's precisely why I don't think “means test/ remove the State Pension” on its own will solve the problem.

Good, the asset rich must pay their fair share.

Or maybe the time rich could contribute to pay their fair share?

We went to view one in 2018 or 2018 that was previously owned by a man in his 90's. The windows were rotted so badly that there were huge gaps between the wood and the glass. The house had small ancient single panel radiators and it must have been horrific in winter. The electrics were so old that there wasn't even a fuse box. It was wired directly into the mains.

It's quite sad that there are old people living like that in private accommodation without anybody knowing about it.

That 3 bed semi was on the market for 'offers over £550k' and the estate agent subsequently told me that it went for £550k.

People outside London just have no idea what the market is like. There think we're all flipping houses for huge profits, rather than living basic lifestyles so that we can pay the mortgage.

In 2024 there were only 97000 properties valued at over 2 million in England, so the figure for 2.5 million will be tiny, those dwellings occupied by a 'couple' even smaller, it's a none argument. Equally, in what way, how would you know they use less?

If you have two million pounds worth of gold bars you are not entitled to moan about being hard up. If you own a house worth two million pounds it is the same.

Which episode of Grand Designs were you on? I would just love to see how you live inside gold bars.

Do you live in those two million worth of gold bars?

Are they your home?

No.

It’s a nonsensical comparison.

I'm short of money. I live in poverty. I can't sell any of my gold bars because I've owned them for years and I wouldn't be happy not owning them, or having any fewer.

Does that sound sensible?

A lot of old people live in poverty despite having access to hundreds of thousands ( or even just £50k ) via equity release, or similar schemes.
These assets should be taken into consideration when trying to claim any benefits from the state.

There is about five trillion £ worth of unmortgaged property in the UK. That’s a lot of untaxed wealth the government will eventually tap into.

Housing is emotive. A lot of people work all their life to be mortgage free and have that security in old age. The thought of. Borrowing against it is devastating for a lot of people

I don’t agree that the government are entitled to tap into that £5tn. Where does it stop?

What is does sound is embarrassing for you to keep insisting on the ridiculous analogy.

These are people’s homes. Their lives.

Exactly.

A better analogy would be your car or your 3 piece suite. Can you imagine if you had to pay an annual tariff on your car which means you effectively never own it

Devastating or not, as long as they don’t expect any state benefits then they don’t need to worry.
Nowadays where we have voted in big government, responsible for everything, then tax receipts need to increase to cover the costs.

Given the state of their houses it’s likely they are stretching out their state pension to survive tbh

if you’ve bought something out of taxed income and there is a large unrealised gain it is kind of irrelevant to you until you can realise it. I don’t think people should be made to borrow against something that may or may not happen.

eg the £1.5m leasehold flat that’s on a 100 year lease. If the person dies in 20 years it’s likely the property will be worth a lot less.

at £2m this is going to hit few people but as with all new taxes they’ll keep pushing the threshold down because that’s the only way they will make enough revenue from it

There is about five trillion £ worth of unmortgaged property in the UK. That’s a lot of untaxed wealth the government will eventually tap into.

Can you let me know where the tax free houses are? (Asking for a friend)

Do you really expect people to believe that £5 trillion of unmortgaged property is somehow £5 trillion of “untaxed wealth”? The majority of those homes were bought out of income earned by people who paid income tax and NI. Many also paid stamp duty and took on a mortgage. Mortgage interest generated profits for lenders, on which they themselves were taxed. Then there is the VAT and further economic activity generated through decades of extensions, renovations, repairs, utilities, insurance, lawyers, estate agents and tradespeople. That before we consider the value created by people who settle in an area for long periods of time.

Paying off the mortgage doesn't suddenly erase all of that and turn the house into “untaxed wealth”. As convenient as it seems to be for you to pretend that. Sure there is a perfectly legitimate debate to be had about whether housing assets should be taken into account when assessing entitlement to means tested benefits, particularly where someone has substantial accessible equity. There is also a legitimate debate about whether large gains in property values should be taxed differently. There is also an argument for the elderly to still pay NI, many do pay tax. But those are very different arguments.

If your concern is the windfall created by rising property values, then address the windfall. Taking the whole current value of a mortgage free home, and labelling it “untaxed wealth”, so you can to justify supporting disproportionately taxing the people who happen to own them has nothing to do with fairness and reason and everything to do with greed and envy. Many of those people spent decades putting already taxed earnings into their homes, while that spending generated further jobs, profits, taxes and economic activity.

@NorthXNorthWest you don’t need to convince me, you need to convince the government, who are desperate for cash, and there is £5t of assets sat there.