More than 95% of the burden of the tax would fall on homes in London and the South East as they are worth considerably more than in the rest of the country, according to new research from Zoopla.
Indeed, 67% of the revenue would come from just three London boroughs where the country’s most expensive residential properties are located. Some 35.8% of the UK total would be paid by home owners in Kensington and Chelsea, generating $427 million from 18,660 homes. Another 32% would come from the boroughs of Westminster and Camden.
Proposals have indicated that the tax would affect properties worth £2 million or more. The average would be £14,500 per household but the top of the market homes would pay considerably more.
The property firm also said that over 82,000 properties would be affected by the tax which would generate £1.2 billion in tax revenue a year. But it also said that the Liberal Democrat Party, which is backing a new mansion tax, has overstated just how much money it would raise.
So, the proposed tax would effectively be a ‘London tax’ with 87.4% or £1.04 billion coming from Londoners, the rest of the South East contributing 7.9% or £94 million and the whole of the rest of country combined liable for 4.7% or £56 million.
‘Home owners in London and the South East already pay the lion’s share of UK property taxes with the stamp duty thresholds placing a heavy burden already on higher priced properties. Implementing an additional charge based on higher property values over an arbitrary threshold would only serve to further distort the market,’ said Lawrence Hall of Zoopla.
‘Not only have the Lib Dems and Labour over estimated the amount the proposed tax would generate at up to £2 billion versus a more realistic less than £1.2 billion, but also under estimated the number of home owners that would be affected at 70,000 versus over 82,000 currently and growing daily,’ he explained.
‘It is also hugely misrepresentative to call it a mansion tax when most of the burden will fall on relatively modest family homes and flats in London,’ he added.
