Background Image
Table of Contents Table of Contents
Previous Page  25 / 33 Next Page
Basic version Information
Show Menu
Previous Page 25 / 33 Next Page
Page Background

25

10

Additional considerations

Considering the complexity, extent, and level of uncertainty surrounding the mansion tax proposal a

number of additional considerations arise. Some of the most crucial ones are outlined below.

10.1

Projected revenues

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 Whales 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 for those

homeowners in 2016 would be £24,052.

Such a substantial leap in mansion tax payment amount will create a cluster of properties valued at just

below the £3m threshold as buyers look to fall into the lower payment category. This clustering will

further affect prices at the top of the market.

10.2

Home revaluations

One of the first steps in the implementation of the proposed mansion tax would likely prove most

controversial and perhaps rather costly. The Labour Party’s proposal suggests that property values will

be self-reported. While the bracket structure eliminates the need to estimate the exact property value,

the series of property revaluations would likely still be subject to dispute; especially for properties valued

near the threshold values. The difficulty in assessing property values is evidenced by the range of current

estimates regarding the number of affected properties. This report puts the number of properties

affected in 2016 at 96,592. Other recently released estimates regarding the number of affected homes

vary greatly and are displayed in Table 17 below.

Table 17: Number of homes subject to the 2016 mansion tax estimates

Source of estimate

Number of UK homes affected by 2016 mansion

tax estimate

Knight Frank (estate agent)

110,000

Savills (estate agent)

97,000

The Labour Party

70,000

Hometrack (residential property advisory)

58,000

10.3

Cost of implementation

When projecting revenues from the proposed mansion tax, it is also important to consider the costs

associated with property valuations and how much this would cut into the revenue. If self-valuation is

utilised this will somewhat limit the valuation costs, but other expenses, including handling potential

appeals regarding bracket placements, remain. Other expenses include gathering data on low income

home owners exempt from mansion tax and calculating back payments owed by those homeowners

upon sale of the property.

© Centre for Economics and Business Research