Labour’s ‘mansion tax’ is coming under increasing fire from critics, as despite it being trailed extensively at their party conference, the policy appears to be lacking in detail, and the number of homes affected may be significantly higher than the shadow chancellor’s own estimate of 50,000.
Despite assurances the policy wouldn’t hit asset-rich but cash-poor homeowners who have found their properties exceeding the £2 million threshold by price inflation, research quoted by The Times indicated that 99 percent of all properties in that price bracket would be hit by the tax.
The arbitrary level of £2 million has been criticised by senior figures within Labour for failing to take into account regional variations in house prices. Labour party London-Mayor hopefuls Lord Adonis, Margaret Hodge, and David Lammy have all signalled objections to the scheme as despite only homing thirteen percent of the British population, 95 percent of the properties affected would be in the capital or southeast of England.
Variations in prices are so severe that in some parts of London a small family home, or even a two bedroom flat would incur the tax whereas significant properties in the North or Southwest of England, Wales or Scotland would not. A property search using a popular estate agency today showed dozens of castles, manor houses and estates complete with extensive land, medieval barns and historic formal gardens presently for sale that would comfortably escape the tax.
Although shadow chancellor Ed Balls has said the tax would hit 50,000 homes, research has shown the true figure would be well over 100,000, and with inflation the number would continue to grow. Jonathan Isaby, chief of the Taxpayers Alliance, has suggested once the measure is law, it could be tinkered with by future chancellors to bring down the threshold to ensnare more homes without a need for a parliamentary vote. In a press release from the pressure group, he said: “a Mansion Tax would be a vindictive gesture that will eventually find its way down the property ladder to hit much less expensive homes”.
As it stands, the average tax for homeowners under the law would be £15,000 a year. In London, the average could be as high as £17,000. According to the Daily Mail Ed Miliband himself is a prime example of the rate of housing price inflation bringing home owners into the £2 million band. When the opposition leader bought his own London town house five years ago, it cost him and his now-wife £1.6 million. It is now believed to be worth £2.6 million.