A tenth of houses in London would be hit by a ‘mansion tax’ on the sale of houses above £1.5m, according to new data.
In London, 10.9 per cent of houses are worth over £1.9m, according to Rightmove, compared to just 1.6 per cent of houses outside the capital, with prices ballooning in the last three decades.
Just over four per cent of houses in the South East are worth over £1.5m.
The levy, which Chancellor Rachel Reeves is reportedly looking at to fill a £40bn hole in the public finances, would introduce capital gains tax for primary residences in the UK.
This would likely happen at this year’s Autumn Budget and see higher-rate taxpayers pay 24 per cent of the value of any gain they make from the increase in the value of their property, while basic rate taxpayers would have to pay 18 per cent.
Mansion tax to ‘deter London movers’
According to The Times, which first reported news of the mansion tax, officials believe that a threshold of £1.5m would hit around 120,000 homeowners who are higher-rate taxpayers with capital gains tax bills of £199,973.
Colleen Babock, property expert at Rightmove, says it would “predominantly be a tax on the most expensive areas of London and the South East”.
“The London market is already feeling the effects of taxation more acutely than other parts of England, and this is likely to deter some moves at the upper end.
“While our data shows that only a small proportion of homes for sale are in this price bracket, alongside the proposed stamp duty changes, it could be a double whammy for the capital,” she said.
Trevor Abrahmsohn, managing director of Glentree International, said that proposed changes to property taxes, including the proposed mansion tax, will discourage selling.
“If this tax is imposed it would certainly not produce the monies needed immediately for the Exchequer and therefore, would be another imposition, driven by politics of envy, alongside the VAT on schools and the non-dom changes,” he said.