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14

4

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

threshold.

Table 7: Number of homes subject to the proposed mansion tax

Source: Land Registry, Cebr analysis

North

East

North

West

Yorkshire

& The

Humber

East

Midlands

West

Midlands

Wales

East

London

South

East

South

West

Total

2016

42

566

126

113

217

48

2,124 80,763 11,244 1,349 96,592

2018

38

546

103

84

158

36

1,900 83,636 10,996 1,112 98,361

2020

31

504

88

57

127

25

1,522 85,498

9,997

906

98,755

New

homes

impacted

2016-

2020

-12

-62

-38

-57

-90

-23

-602

4,736

-1,247

-443

2,163

© Centre for Economics and Business Research