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4

Executive Summary

This report investigates the impact of the Labour Party’s proposed “mansion tax” on family homes in the

UK. By drawing on detailed data from the Land Registry and Cebr’s in-house economic models, we examine

the type, location, and number of homes subject to the proposed mansion tax. Additionally, the report

investigates how the number of affected houses changes from its proposed introduction in 2016 to 2020.

A mansion tax is just one issue that homeowners in the UK are facing. Rising house prices are pushing

more and more homes into higher stamp duty bands, increasing the costs of purchasing a family home.

Between 2016 and 2020 the proportion of London homes in the 0%, 1%, and 3% Stamp Duty Land Tax

(SDLT) bands shrinks while the proportion of homes in the highest three bands increases, assuming no

changes are made to the stamp duty thresholds.

Of the 96,592 total UK homes that would be subject to the tax in 2016 95% are in London and the South

East.

Of those homes in London subject to the 2016 mansion tax, 46% are terrace houses, while detached

houses, semi-detached houses, and flats account for 21%, 18%, and 16% respectively.

Under the proposed mansion tax, 80,763 homes in London will be subject to the 2016 payment. Due to

a ‘fiscal drag’ effect, by 2020 this figure will have increased by 6% to 85,498.

Of the homes newly

subject to a mansion tax post-2016, the highest proportions are in the London boroughs of

Hammersmith and Fulham, Kensington and Chelsea, the City of Westminster, Richmond, Wandsworth,

and Camden.

In order for gross revenue raised to equal the estimated £1.2bn, the average mansion tax payment in

2016 for home owners whose properties are valued above £3m is £24,052.

This is substantially above the

£3,000 payment for properties worth £2m-£3m.

68 per cent of London homes subject to the 2016 mansion tax are in parliamentary constituencies with

a Conservative MP, while 28% are in areas represented by Labour.

Of the London homes newly subject

to the mansion tax post-2016, 58% are in Conservative and 33% in Labour constituencies.

The proportion of over 65s in the SW3 postcode district, the district most affected by mansion tax, is

17% - nearly twice the 9% average for inner London.

W8 and NW3, the second and third most impacted

postcode districts also house more than the average proportion of over 65s at 12% and 14% respectively.

Many of these individuals will be asset rich but on low incomes and unable to pay the mansion tax.

As the mansion tax pushes down prices at the top end of the housing market, £343m will be lost in 2016

stamp duty revenue.

Total stamp duty revenue losses over the forecast period are over £1.9bn.

2016

2017

2018

2019

2020

Number of homes

in London

subject to a

mansion tax

(change from 2016)

80,763

82,172

(+1,409)

83,636

(+2,873)

84,265

(+3,503)

85,498

(+4,736)

Number of homes

in the UK

subject to a

mansion tax

(change from 2016)

96,592

97,717

(+1,125)

98,608

(+2,015)

98,361

(+1,769)

98,755

(+2,163)

© Centre for Economics and Business Research