Eagle-eyed readers may have noticed my name wasn’t on the site quite as often as usual last week.
That’s because I was visiting New York City for the first time.
I saw the bright lights – the Empire State Building is still impressive 90 years on – though I later wandered into an area of Brooklyn (a borough of New York) that was as rough as anything London has to offer.
Thankfully I escaped to the nearby Brooklyn Brewery a relieved man.
New York has a busy and bustling atmosphere that puts me in mind of the UK capital, though interestingly there are some other parallels.
Like London, the high value market of New York has had a sluggish few years, with falling house prices and transactions, which begs the question how highly should you tax high value property markets?
Mansion Tax
New York brought in a Mansion Tax in July 2019, which charges 1% on top of the purchase price on homes worth more than $1m.
This summer that’s set to progressively increase the higher you go up the house price spectrum, as it will be 1.25% on homes over $2m.
Back in the UK, it’s heavily rumoured that the Conservative Party plans to introduce a Mansion Tax in the Budget on 11 March.
It would be another example of the Tories introducing a policy you’d associate with other parties – Labour proposed putting an annual levy on properties worth over £2m before the 2015 election, and took a somewhat hysterical amount of flak for it at the time.
If the tax goes through it needs to follow the US lead by being progressive, otherwise people will struggle to sell properties worth just over the threshold.
While they’re at it, the Tories may also want to look at Council Tax once again, where bands haven’t been reviewed since 1991, and assess the relationship between the two.
Introducing a Mansion Tax is a difficult one to sell to the electorate, but I think a lot depends on how the raised funds would be used.
If the Tories put them towards affordable housing and infrastructure projects, it could be beneficial to society.
However the trick is finding a sweet spot.
If you tax so highly that nobody has any interest in the buying properties at the top end of the market the government could lose money, as the housing market grinds to a halt, which would harm investors and the general public alike.
Ryan Bembridge, Editor, PropertyWire
