Increases in the number of impacted homes
Under Labour’s new proposal, the £2m property value threshold above which homes will be subject to a
mansion tax is to grow in line with high-value property prices. However, the very introduction of a
mansion tax is likely to slow down price growth at the top of the market creating a ‘fiscal drag’ effect.
This is especially true considering the magnitude of the mansion tax payment for homeowners with
properties valued above £3m.
Based on the Labour Party’s remarks, the proposed mansion tax would raise £1.2bn in 2016.
Homeowners whose properties are valued £2m-£3m would be subject to a £3,000 yearly payment. The
number of homes that fall into that category across England and Wales is 54,147- which makes the
revenues from that property bracket approximately £162m. If the remaining £1.04bn is to be collected
from homeowners whose properties are valued above £3m, the average mansion tax payment in 2016
would be £24,052. This very high amount is likely to reduce average prices at the top of the market,
meaning that the mansion tax threshold is expected to grow relatively slowly, making additional
properties eligible for mansion tax payments.
As Table 7 shows, by 2020 an additional 2,163 homes across the UK will be subject to the mansion tax.
This is the net figure for the country- it reflects the fact that 4,736 new homes in London become subject
to a mansion tax payment, while homes in other regions that paid mansion tax in 2016 fall below the
Table 7: Number of homes subject to the proposed mansion tax
Source: Land Registry, Cebr analysis
2,124 80,763 11,244 1,349 96,592
1,900 83,636 10,996 1,112 98,361
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