“We haven’t heard the last of the Mansion Tax despite Labour’s defeat in the House of Commons today. London’s ‘accidental millionaires’ have been given a reprieve for now but the tax could well form part of the Liberal Democrat and Labour manifestos at the next election.
“Headlines inevitably focus on the super prime properties valued in the tens of millions, but over 40% of the London homes which sold for over £2 million in 2012 were in the £2-3 million bracket. In reality, such properties in Central London look very little like most peoples’ idea of a mansion, encompassing three bedroom terraces houses in many areas. In fact according to the Land Registry the average sale price of a terraced house in the Central London prime core was £3.44 million at the end of 2012.
“Such properties are home to large numbers of ‘accidental millionaires’, who find themselves in so called ‘mansions’ by simply staying put in their long term family homes. They are typically home to high value workers in the capital in the finance and business services sector, those very areas which have helped underpin the economy of London and indeed that of the UK during the recent years of economic stagnation.
“It is our view that the relatively limited funding that might be raised from crude instruments such as a Mansion Tax, in whatever form, are trumped by the damage caused to London’s standing as a place to do business. Transparency and consistency is regularly trumpeted as a key driver of domestic and overseas investment in the UK, but a growing penchant for tinkering with tax regimes undermines the capital’s credibility and appeal. The concern is of course: what next? “