Mansion Tax would be a penalty on London and South-East

Thursday 23rd February 2012

Any ‘mansion tax’ would be an unfair annual tax burden on property owners in London and the South-East, who have already paid through the nose.

Knight Frank said that buyers in the £2m-plus bracket paid 17% of the total Stamp Duty revenue raised in 2010/11, despite comprising just 0.5% of total transactions.

According to the latest HMRC and Land Registry data, 81% of properties valued at £2m-plus – the threshold at which the Lib Dems want the tax levied – are in London. Most of the remaining 19% are in the South-East.

Within London, 40% of £2m-plus properties are in Kensington & Chelsea, 20% in Westminster, 13% in Camden, 4% in Barnet and 4% in Richmond.

Liam Bailey, head of research at Knight Frank, said: “Those who own a home valued in this bracket have already paid substantially more Stamp Duty than other segments of the market. 
 
“This is especially the case if they have bought their home since April last year, when Stamp Duty was raised from 4% to 5%, increasing the bill for the purchase of a £2m home by £20,000 to £100,000.”

He went on: “In light of this, to ask all of these home owners to pay an effective annual ‘service charge’ to the Treasury seems like a penalty. This will certainly feel like the case for those living in high-value homes but who have modest levels of annual income.
 
“As it stands, this proposal very much looks like being an additional tax on property in London and the South-East.”