Mansion tax to hit 775,000 homes
Published by Max Salsbury for 24dash.com in Housing and also in Central Government, Finance
mansionImage: Mansion via Shutterstock
The proposed mansion tax will hit 775,000 homes over 25 years but its revenue targets will not be met by the current plans for a £2 million threshold, a new report has revealed.
The research, by property consultancy Knight Frank, concludes that the proposed threshold and tax rate would deliver a gross annual receipt of £1.3 billion, 24% below the Liberal Democrat estimate of £1.7bn and 35% below Labour’s £2bn estimate.
The figure represents an average annual payment of £23,595 per property.
The report says that in order to raise the targeted revenue, the value threshold for the tax would need to be reduced from £2m to either £1.5m (to raise £1.7bn) or £1.25m (to raise £2bn).
According to Knight Frank, the tax would be levied overwhelmingly on London and the South East of England, with 86.4% of all £2m+ properties located in those two regions.
One in ten of all £2m+ properties are one or two-bedroom flats.
Liam Bailey, head of research at Knight Frank, said: “Our calculations point to the real threat of the mansion tax threshold being lowered substantially in order to meet the revenue targets of the political parties.
“Even if the threshold is not lowered, it seems a fair assumption – given that it has remained at £2m since 2009 - that it would not be raised in line with future house price inflation thereby substantially increasing the number of properties affected by the tax.
“Over the past 10 years house prices have risen by 69%. Assuming a similar rate of growth in the future, all houses worth more than £1.2m today would be paying a mansion tax 10 years from now, meaning that the number of homes covered would nearly triple from 55,000 to 157,300."
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