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A mansion tax in the UK would mostly affect owners in London and South East
The announcement by the UK’s Shadow Chancellor that the Labour Party will impose a mansion tax on homes over £2 million will put a heavy burden on home owners in London and the South East. Ed Balls has announced that if Labour wins the general election next year the tax will be introduced and the revenue used to increase spending on services such as the NHS. ‘We will do it in a fair, sensible and proportionate way, raising the limit each year in line with average rises in house prices,’ he said. He claimed it was not right that a ‘billionaire overseas buyer of a £140 million penthouse in Westminster will pay just £26 a week in property tax’. Labour would not say how much the mansion tax would raise but the Liberal Democrats who have also raised the idea of a mansion tax calculated it raise £1.7 billion a year, but Labour’s higher bands for homes worth tens of millions could raise more. But with property prices having shot up in the past decade, families who moved into relatively affordable homes could suddenly face huge tax bills because their home has increased in value even if their income has not. Indeed, according to figures from the Halifax House Price Index, a property in Greater London bought for £500,000 in 1994, would now be worth £2,056,381 and according to the Centre for Policy Studies think tank, almost one third of properties worth more than £2 million have been owned by the same people for more than a decade, and around a sixth for more than 20 years. Almost 96% of the mansion tax burden would absorbed by London and the South East with more than 108,000 households nationwide affected by the proposed tax, according to leading property website Zoopla. After conducting analysis of all properties in the UK currently valued at more than £2 million, Zoopla found that in excess of 108,000 households would be liable for the annual levy, at an average of £15,000 each. Properties in London and the South East would account for the vast majority, 95.9%, of the additional £1.63 billion cost with the rest of the country contributing just 4.1%, or £66 million, of the total contribution. ‘The introduction of a mansion tax would disproportionately penalise home owners in London and the South East who are already responsible for the vast majority of property tax take in the UK,’ said Lawrence Hall of Zoopla. ‘With more than 100,000 homes to be affected by this new levy, it is somewhat misleading to call it a mansion tax when many three bed family homes in London and the South East would find themselves caught by it,’ he added. A mansion tax would distort the realities of who own homes in the £2 million plus bracket, according to Nick Leeming, chairman of national estate agents Jackson-Stops & Staff. ‘This will affect people all over the country, not just in… Continue reading
Expectations for future house price growth in the UK eases to 13 month low
Home owners in the UK still perceive that the value of their home increased in September but at the slowest rate for eight months, the latest property market sentiment index shows. Some 26.7% of the 1,500 households surveyed across the UK for the Knight Frank and Markit Economics index said that the value of their home had risen over the last month, while 5.5% reported a fall giving the HPSI a reading of 60.6, the eighteenth consecutive month that the reading has been above 50. However, the reading was down on the 61.8 achieved in July and was the fourth consecutive month that households’ perceptions about house price growth have moderated. Households in all 11 regions covered by the index reported that prices rose in September, with those living in London perceiving that the value of their home had risen at the strongest rate at 67.7, followed by households in the South East at 67.5 and the East of England at 64.4. The future HPSI, which measures what households think will happen to the value of their property over the next year, fell in September to 69.2, its lowest level since August 2013 and well below its peak of 75.1 in May. Expectations for price growth weakened in ten of the 11 regions covered by the index, with households in Wales the only ones more confident of future price rises than the previous month. In London expectations fell to a seventeen month low. Some 5.7% of UK households said they planned to buy a property in the next 12 months. This is down from 5.9% in August. Looking at the figures on a regional basis reveals that 9.3% of households in Yorkshire and the Humber plan to purchase a property in the next year, compared to just 3.4% in Scotland. Men are more likely to be considering buying a home in the short term, with 6% of such respondents saying they planned to purchase a home within the next 12 months compared to 5.4% of female respondents. House prices are rising across the UK, but our index signals a continuing slow-down in the pace of growth. The index started to ease in June and the trend is continuing. Some 46% of respondents expect the price of their home to rise over the next year, the first time this proportion has been under 50% this year,’ said Gráinne Gilmore, head of UK residential research at Knight Frank. ‘The strengthening economy, job creation and low base rates are helping underpin property values, but there are signs that households across the board are becoming more circumspect about the scale of price growth they expect,’ she added. According to Jack Kennedy, senior economist at Markit, these figures continue to lead other indicators and point to ongoing evidence of a cooling in the UK housing market. ‘With the index tracking property price expectations easing to a 13 month low in September, expectations weakened across all regions with the exception of Wales,’ he said. ‘The prospect of… Continue reading
UK govt announces new deals for private rented sector
Tenants renting privately in the UK will get a better, fairer deal under measures announced by Housing Minister Brandon Lewis. He said that people looking to rent a home will be better informed, have greater choice and more confidence they will be treated fairly thanks to a range of ambitious initiatives. But Lewis said this will not strangle the industry in red tape and regulation, which would destroy investment in new housing, push up prices, and make it far harder for people to find a flat or house to rent. Instead, the new measures will both provide the help tenants need, without jeopardising the millions of pounds in investment already lined up to build new homes specifically for private rent. ‘The private rented sector plays a vital role in our housing market, providing a flexible option for millions of people across the country. The last thing we want to do is strangle it in red tape but tenants and landlords should have confidence that they will be treated fairly,’ said Lewis. ‘This package of measures is designed to do just that, putting power in the hands of people to get the deal they serve, without punishing the vast majority of good landlords while still encouraging more investment in the sector,’ he explained. ‘I would urge all landlords to take account of the new code of practice and look to offer our model tenancy agreement while the Build to Rent deals demonstrate how committed we are to getting homes built specifically for this market,’ he added. In the package is a new model tenancy agreement which Lewis said will empower tenants to agree longer deals with their landlord and has the added benefit of avoiding the need for landlords to leave properties empty and pay fees to letting agents for finding new tenants. The new code of practice, produced by the Royal Institution of Chartered Surveyors, makes clear the legal requirements of landlords and letting agents alike, leaving both in no doubt about their responsibilities to their tenants. This is on top of a new requirement for letting agents to belong to one of three approved redress schemes, to ensure that any landlord or tenant who gets a raw deal has somewhere to go with their complaint and could even claim compensation. The minister also argued that the key to creating a bigger, better private rented sector is to secure more investment and encourage more professional landlords to enter the market and offer their homes to tenants. He announced three new deals to deliver homes specifically for private rent under the government’s Build to Rent scheme. He announced £17.7 million to Notting Hill Housing Trust to build 181 homes in Newham and Southwark, £4.8 million to Carpenter Investments to build 101 homes in Liverpool and £4.8 million to Derwentside Homes to build 114 homes for private rent in Durham. In total the Build to Rent scheme is well on track to deliver up to 10,000 new homes for private rent by 2015. The new… Continue reading
