The survey cited doesn't mention the Mansion tax, so the Times points to a 'general feeling'
A spectre is haunting London – the spectre of Labour’s Mansion tax. Fears over the proposed charge on £2million homes are driving down house prices in London, despite a rise in prices in the rest of the country. The Times has the scoop: ‘Mansion tax fears depress house prices across London’.
If we leave aside for a moment whether house prices in London couldn’t do with a bit of depression, what evidence is there that ‘Mansion tax-dread’ is the cause of this drop in prices?
Well, there isn’t any – at least, not in the Times story, which cites a survey by the Royal Institution of Chartered Surveyors (RICS) for February, released today, which found a rise in house prices nationally, and a price decrease in London.
Trouble is, the survey doesn’t mention the Mansion tax, either in its sample of responses or in it’s analysis. Neither does the RISC’s press release on its website. In fact, the only link made between lower prices in London and the Labour policy is in the Times piece itself:
“London homeowners are wary about moving because of extra fees and taxes they might face from a new government in May. Labour has already promised a tax on properties worth more than £2million, and there is a general feeling that politicians will step up their efforts to tap into property wealth for money to fund public spending.”
Ah yes, a “general feeling”. No evidence is provided for this assertion, or for “wariness” among homeowners.
Of the scores of RICS members quoted in the survey, which are only a sample of the 324 responses collected, just two mention the Mansion tax, and only one of these is based in London.
And with house prices rising nationally, and Labour’s policy intended for the whole country, why is this fear of the Mansion tax only gripping London?
Besides all of that, a 28 per cent drop in the ludicrously high price of a home in London will be music to the ears of many potential buyers. A report from the charity Shelter recently found the average house price in London is now almost 15 times the average wage.
Plus the Mansion tax will only affect homes worth over £2million – less than 0.5 per cent of all homes in the country – and only when the owners earn more than £42,000 a year.
So if the Times is going to claim fears about Labour’s Mansion tax are driving down house prices in London, their evidence ought to be more than a “feeling”.
Adam Barnett is a staff writer at Left Foot Forward. Follow him on Twitter
64 Responses to “Media Watch: Times blames Mansion tax fears for London house price drop. But where’s the evidence?”
Lorne Gifford
here’s some evidence:
http://www.thisismoney.co.uk/money/markets/article-2989667/Luxury-homes-sales-stay-low-general-election-says-Foxtons.html
The thing about mansion tax is that just like ATED it is being introduced as a ‘tax on the wealthy’ but will quickly become a general ‘tax on home ownership’. ATED was introduced on properties valued at over £2m in 2014, the starting level was reduced to £1m in 2015 and is being reduced again to £500k in 2016. The amount payable has also increased sharply so that today a £2m property affected by ATED has to pay £23,000 in additional tax per year.
If you look into Ed Balls headline ‘£1.2bn per year revenue’ you find the only way he can achieve this is by matching the ATED tax rates. So we can expect this whole new arena of taxation, taxing what you own after taxing the money you earned to buy it and then taxing you again when you bought it, to be happily catching the average home owner within a few years.
The devaluation of a property subject to an annual property tax can also quite easily be calculated, as can the subsequent fall in annual stamp duty revenue. Today the government receives £12bn a year in stamp duty, but when you apply the property devaluation to ‘mansions’ alone you find stamp duty revenue will fall by £1.5bn a year. Apply it to all homes likely to be affected by this new tax and the drop is somewhat more dramatic.
Mansion tax can therefore be concluded to be a net revenue reduction to the government. However just by calling it ‘mansion’ tax it is rather a good vote winner for anyone not bothered about looking into what it actually means.
JamesTennant
Your evidence is because Foxtons says so?
Cole
The point is that The Times – formerly a proper newspaper – provided no evidence at all, and basically made up the story, not for the first time. Of course the point is to attack Labour with whatever the editor can dream up, presumably as ordered by R Murdoch.
Lorne Gifford
no James, that was just one example that took all of 2 minutes to find on the internet. My evidence is because I live in London and can see it with my own eyes.
Lorne Gifford
that I fully agree with. Shoddy reporting by the Times, but we don’t need to compound it with equally shoddy reporting by Left Foot Forward.