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A mansion tax for properties in the UK would not hit large detached palatial houses in London owned by exceptionally wealthy people but flats, according to a new analysis. The proposal has been criticised for its disproportionate impact on London so international real estate firm Knight Frank has undertaken an analysis of the two prime central London boroughs of Westminster and Kensington and Chelsea. The two boroughs contain 46% of the total number of £2 million plus properties in the whole of England and Wales, with the potential overall financial contribution likely to far exceed that. Furthermore, 26% of £2 million plus properties in England and Wales are flats in the two London boroughs, not the type of large detached property envisaged by the tax. More significantly, across the whole of Greater London, 38% of all £2 million plus properties are flats while only 14% are detached properties. Terraced houses are the second largest group at 36% while semi-detached properties make up the remaining 12%. ‘The figures demonstrate the mismatch between perception, in particular the term mansion, and the reality of the London property market, where three quarters of £2 million-plus properties are either flats or terraced houses,’ said Tom Bill, head of London residential research at Knight Frank. He also pointed out that any further property tax would also come on top of the large and growing contribution London already makes in the form of stamp duty. New data for the 2013/2014 tax year shows London properties contributed 81% of stamp duty revenue in the £2 million plus price bracket in England and Wales, up from 79% in the previous year. Additionally, £2 million plus London properties accounted for 14% of total stamp duty revenue in England and Wales while London transactions across all price brackets accounted for 42% of total revenue. Another concern that has been outlined is that house price growth, which is traditionally stronger in London than other areas of the country, means more properties would become subject to the tax over time. Since the idea was first floated five years ago, a property worth £1.08 million in prime central London would have grown to £2 million, based on price growth of 85% for properties worth between £1 million and £2 million within the prime central London index. Continue reading →
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