An annual tax of 1% on the value of houses over £2m would hit long-term homeowners who have settled in Brook Green.
That’s the feeling of Bective Leslie Marsh sales negotiator Tanya McFeely, who fears the so-called mansion tax proposed by Labour and the Lib Dems would disproportionately clobber London.
Labour’s Ed Miliband says he would introduce the tax if returned to power in 2015, or if he ends up sharing power with the Lib Dems. Only the Conservatives oppose the concept. In some parts of the UK, £2m would buy an entire street, but in Brook Green you are looking at a family house.
As proposed, the levy would be an annual 1% tax on the amount any house is worth above £2m. So a £2.1m home would be charged £1,000 a year, and a £2.5m home would pay £5,000.
With an estimated 70,000 properties worth over £2m in the UK, and the lion’s share of those in the capital, the average annual mansion tax is calculated at a whopping £24,000.
The tax would not just apply to oligarchs, however, but also to asset-rich, cash-poor pensioners who may have bought their home for a few hundred thousand pounds two decades ago.
“Mansion tax will disproportionately affect London as more than 80% of property sales worth over £2m take place in the capital,” said Tanya. “It will penalise long-term homeownership, especially in areas like Brook Green and Hammersmith where £2m will buy you a family home, not a stately home.
“Brook Green is becoming increasingly popular, yet although buyers do get more for their money than in areas like Kensington and Chelsea, £2m will not buy a castle. It is normal families we are dealing with here who will be heavily affected by this tax.”
She believes a fairer way to impose any mansion tax, if there has to be one at all, would be to increase the threshold to take account of higher London prices.
Interestingly, the recent rise in stamp duty from 5% to 7% for £2m+ homes had little effect on Brook Green – reflecting the fact that good houses are so sought-after in the area.
There is a risk that setting the threshold at £2m would be a disincentive to people in homes at, say, £1.75m to modernise and improve.
Two of the big three political parties want an annual tax on £2m+ homes, but as Tim Harrison reports, it could hurt ordinary families
This Bolingbroke Road home was sold recently by Bective Leslie Marsh (020 7603 5181) for £1.97m… a good example of a house which could, with extension or inflation, risk straying into the threatened mansion tax bracket.
Before any such tax is introduced in the area, Hammersmith & Fulham Council would be required to undertake a costly revaluation of all properties, potentially sparking a wave of land valuation tribunal appeals.
If introduced on today’s figures, a mansion tax would raise £1.7bn a year, but the threshold might eventually slip down to ensnare homes worth £1m or even lower.
Fans of the tax (and it’s hard to find many) claim half the homes in the UK worth over £2m are second homes or investments, with many remaining empty for months at a time.
But although that may be the case in the heart of London, where overseas investors prop up the market, it isn’t the case in Brook Green, where most houses are still bought to live in.
Marsh & Parsons agrees that a mansion tax would hit long-term homeowners the hardest. Peter Rollings said: “The average £2m property would have been worth less than £350,000 in 1995. This would constitute yet another regional tax burden on London residents.”
Picture: This Bolingbroke Road home was sold for £1.97m by Bective Leslie Marsh