You are here: Home - Mortgages -

Savills: Mansion tax could wipe 10 per cent off value of top London homes

Written by:
Labour's mansion tax could knock millions off the value of some streets in prime central London, according to a report by Savills.

If Labour wins the election, homeowners whose properties are worth more than £2m would face a monthly levy of £250 upwards.

Savills said the new tax could mean a price drop of up to 10% for properties valued at £10m or more, while those valued above £5m could see an 8 per cent fall. It predicted a property worth £7,500,000 now would rise to £8,424,043 in 2017 without mansion tax but just £7,601,040 if the tax was introduced.

“Rarely have the prospects for the prime property markets potentially been so dependent on the tax policy adopted by a future government, making it impossible to give a single forecast for the UK’s prime housing markets without a plethora of assumptions and caveats. Much hangs on the fate of proposals for a mansion tax,” said Savills researcher Sophie Chick.

“Already we’ve seen previous increases in the tax burden on prime property curtail price growth in London, interrupt the flow of wealth into the prime regional and country house markets and create a two tier market above and below a £2m price threshold.”

Chick said that increased stamp duty rates for high value homes and a clampdown on property owning non-doms had already compounded buyer caution.

Savills estimated there were about 40,000 properties valued between £2m and £3m, 30,000 between £3m and £5m. and another 17,000 between £5m and £10m.

To raise £1.2bn, the tax charges for properties worth between £3m and £5m might be in the order of £7,000 per year, rising to £125,000 for properties over £20m.

“Because of the expected graduated scale of charges it is likely that a mansion tax will have different impacts in different parts of the market, potentially having a more modest effect in the lower bands,” said Chick. “Correspondingly, it has the potential to have more of an impact in prime London than in the lower value prime regional markets.”

If Labour come to power and the tax is introduced, Savills expects a sharp fall in prime prices initially and then values to recover to more accurately reflect the financial impact of the liability.


Tag Box

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

The savings accounts paying the most interest

It’s time to get your finances in shape, and moving your cash savings to a higher paying deal is a good plac...

Everything you need to know about being furloughed

Few people had heard of ‘furlough’ before March 2020, but the coronavirus pandemic thrust the idea of bein...

The experts’ guide to sorting out your personal finances in 2021

From opting to ‘low spend’ months to imposing your own ‘cooling-off period’, industry experts reveal t...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Having a baby and your finances: seven top tips

We’re guessing the Duchess of Cambridge won’t be fretting about maternity pay or whether she’ll still be...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Money Tips of the Week