Media Watch: Times blames Mansion tax fears for London house price drop. But where’s the evidence?

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

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64 Responses to “Media Watch: Times blames Mansion tax fears for London house price drop. But where’s the evidence?”

  1. Lorne Gifford

    here’s some evidence:

    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.

  2. JamesTennant

    Your evidence is because Foxtons says so?

  3. 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.

  4. 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.

  5. 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.

  6. Lorne Gifford

    here’s an example:

    “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?”

    I would have thought the answer is obvious; of around 108,000 homes valued at more than £2m 100,000 of them are in London. 87 apparently are in Wales, so I suspect the amount of fear in Wales is a bit lower.

  7. JamesTennant

    So you don’t actually have any evidence then.

  8. Lorne Gifford

    err, how can you say that when the very first thing I did was to present some evidence?

    here’s some more:

    and here’s some mathematics:

    With 108,000 homes valued at more than £2m this means each home will pay on average £11,000 per year to raise the £1.2bn. 108,000 homes is about 0.5% of the total housing in this country.

    Stamp duty is paid proportionally more on more expensive homes. It’s often quoted that the top 1.5% of homes make up over half the stamp duty revenue. The top 0.5% therefore make up about a quarter of the total stamp duty revenue. (sliding scale remember).

    Stamp duty revenue is £12 bn per year, so ‘mansions’ generate a revenue of about £3 bn per year.

    If mansion tax is introduced at the average £11,000 a year then that cost becomes a debt burden on ‘mansion’ owners. It’s a debt burden that is reflected in the reduced amount people will be willing to pay. (for examples just look at every country in the world that has this type of property tax).

    £11,000 per year, every year into the future works out as an equivalent debt of about £1 million. (Use an NPV into perpetuity calculation to work this out)

    108,000 homes all now worth on average £1m less than they were before the tax came in has quite a dramatic effect on the stamp duty revenue that can be garnered from them.

    The stamp duty revenue loss is easy to calculate. An average person moves about once every 10 years, so 11,000 mansion are sold every year. 11,000 x £1 million less each x 12% stamp duty = £1.3 bn loss in revenue.

    So reference, evidence, and mathematics. To be honest I find mathematics is the only language that speaks the truth so I’d go with that assessment.

  9. JamesTennant

    All the supposed evidence you point to is merely speculation. The reasons for movement in the housing market are not necassairly due to a potential impending property tax. You may be convinced but its not the same thing as has having evidence.

  10. Lorne Gifford

    yes, agreed, but any effects of a future tax are by their nature going to be based on a lot of speculation, assessment and the opinions of the author. That’s why I like to do the mathematics, and I have to say it doesn’t look good.

    You could also take the past history of this type of tax introduction, but that involves looking across to Greece where it was introduced in 2008, and I think we’d all agree Greece is not a particularly stable economy to draw judgement from.

  11. FairHomeTax Campaign

    “A future Labour government would never “in a month of Sundays” raise
    the £1.2bn it hopes to generate from the mansion tax to be levied on
    properties worth more than £2m”, Lord Mandelson has said.
    For the other side of the story – see @fairhometaxcampaign:disqus

  12. machine_elf

    I don’t understand the problem. Most of these homes have increased in value through no effort on the part of the owners. They will have huge unearned untaxed profits from their homes if they need to sell. They seem to be against any sort of mansion or property tax but have no problem taking the free profit that their house and other peoples taxes have made for them.

  13. FairHomeTax Campaign

    “What we need is what I think the ‪#‎Liberal‬
    Democrats are proposing and that is the introduction of further bands
    that relate to different values of property within the council tax
    system. That’s what I would like to see. It will take longer to
    introduce, that’s true, but it will be more effective and efficient in
    the longer term than simply clobbering people with a rather sort of
    crude short term ‪#‎mansion‬ tax.”

    Mandelson is the latest senior Labour figure to criticise the party’s plan to impose a tax on ‪#‎properties‬
    worth more than £2m to help raise £1.2bn towards the £2.5bn costs of a
    new “Time to Care” NHS fund. This is designed to support 20,000 more
    nurses, 8,000 more GPs and 5,000 more care workers by 2020.

    @FairHomeTax have been saying this all along…

  14. JamesTennant

    I can’t argue with you re the merits of otherwise of the mansion tax. But have you considered the impact on the population of vast house price inflation? Relative to that a mansion tax is a drop in the ocean.

    The astronomic rises we have seen since 1997 are largely driven by cheaper and increased credit availability. The result is a major wealth transfer from young to old and those with assets and a requirement to lease our housing stock at great expense from the banks.

  15. machine_elf

    Most people did not buy £2 million pound houses, they were just lucky to be born at the right time and see their homes rocket in value. So they have no problem taking an unearned, untaxed profit if they sell the property but have a problem with paying a small percentage on the huge unearned increase. Why is it better to tax someone earning £30k per year at 20% but not tax someone who has not earned their huge windwall less than 1% of that amount?. Why is it better to tax work than unearned wealth?

  16. Lorne Gifford

    yes, I agree wholeheartedly. Successive governments have not addressed the problem of an increasing population without an increasing housing stock. They’ve gone the wrong way in fact by selling off social housing and so reducing what’s available. Margret Thatcher started it all but no one has had the nerve to actually say, ‘hang on this is silly’.

  17. JamesTennant

    Mortgage lending since 1997 amounts to £3.54 trillion. This is newly created money, dilutng the value of exisiting money. The social housing sell off is a complete disgrace but the money printing that creates an illusion of wealth for homeowners and vast flows of cash for banks, at very little cost, is the real root of the problem.

  18. JamesTennant

    I should add that the issue is continually misrepresented by politicians and the media. Hence the idiotic speculation about causes of movements in the housing market.

  19. Lorne Gifford

    Again, I agree with you 100% on this. We have allowed the banks to become far too powerful.

  20. JamesTennant

    Glad we agree.

  21. JamesTennant

    I would argue that that was to some degree covert but entirely intentional. The economy is collapsing and one way to create an illusion of wealth (and possibly votes in an election) is money printing via housing.

  22. Cole

    I repeat. The point of the article is the sloppy reporting by The Times. If there’s evidence, can’t they be arsed to find it?

  23. Dave Stewart

    You could argue that it makes more sense to tax unearned wealth than work. Those who earn their living though working are actively contributing to production/economic growth and should be encouraged. Those who earn their living based on assets they inherited or which have grown enormously in value contribute not a jot to the economy.

  24. Dave Stewart

    I agree with this however the problem is it would take a lot of time and exspense to implement. You would need first to go through a huge amount of political rangling because it is deeply unpopular in a lot of middle income to affluent areas (the people also most likely to vote) as these are the people who will end up paying more. Also you would need to fund, organize and impliment a nationwide revaluing program. There are an awful lot of houses which would need to be re-valued and this would take an awfully long time. Only then could this be rolled out.

    The mansion tax however is pretty simply to administer it only affects the most wealthy in the country so politically it is easier to achieve and will be able to be implemented much faster. This means that the revenue would be raised much quicker for immediate use.

    I think in the long term we need to have a process by which we as a nation look at how we tax wealth but this would require a very slow and inclusive process requiring cross party consensus but hopefully will result in a simpler more progressive system than we currently have.

  25. Stop the Mansion Tax

    If you live in a £2.5m 4 bed semi in Hampstead and earn £43k per year you’ll need to find £5,000 a year of post-income tax earnings to pay The Mansion Tax. Let’s call that about £7,000 pre-tax or about 16% of the £43k pre-tax income. This is what Ed Miliband and Ed Balls call “Fair”.
    Stop The Mansion Tax – it’s supposed to target the ‘super-rich’ but it’s ordinary middle class Londoners who’ll be paying.

  26. Stop the Mansion Tax

    Because you can’t pay taxes with bricks and mortar.
    And you are not “lucky” if you have no plan to sell your house and move out of the community you live in – which is going to happen to a lot of people.

  27. Stop the Mansion Tax

    You forgot to mention that the UK has the highest property taxes in the world.

    “Britons pay the highest property taxes in the developed world, according to analysis by the Organisation for Economic Co-operation and Development.

    The OECD’s annual analysis of tax in top economies showed that while UK’s total tax burden as a percentage of gross domestic product fell to 32.9pc in 2013, from 33pc in 2012, property taxes continued to rise both as a share of national output and Britain’s total tax take.

    Taxes on commercial and residential property – including council tax, inheritance tax and business rates – were worth 3.9pc of GDP in 2012 – the latest year for which data are available.

    By comparison, property taxes account for 3.8pc in France, 2.9pc in the US and just 0.9pc of GDP in Germany.

    Taxes on homes and commercial buildings now account for 11.9pc of Britain’s total tax burden, up by 0.3 percentage points compared with 2011.”

    Daily Telegraph 10 Dec 14

  28. Leon Wolfeson

    So if you’re rich and you’ve managed not launder enough of your income this year, aw, there’s some tax to pay.

    Your response shows why it’s important – as you paint the 0.5% as “ordinary”.

  29. Leon Wolfeson

    “but this would require a very slow and inclusive process requiring cross party consensus”

    So you’re effectively saying “it won’t happen”.
    No, we need to change the voting system to get some change and a chance at decent tax levels for the 1%. Like, oh, more than someone earning say 15k. For starters.

    Also, no, you just need an effort like the census to revalue properties. Heck, you could do it area by area.

  30. Guest

    ATED is a tax on hiding assets in holding companies. It’s not remotely comparable unless you’re holding out for corporate natural personhood in law, as in America.

    Your crying about 0.5% of the richest having to pay some tax shows why it’s needed. And then you’re complaining about a needed adjustment down to house values, aww.

  31. Guest

    Ohnoes, some fifth homes will be sold! How will people cope!

  32. Guest

    So you’re using anecdote and back of the envelope math. And it’s based on some hilariously wrong assumptions like how often people move.

  33. Guest

    We don’t have a property tax, currently.
    You’re trying to conflate usage and tax on estate value (which has some broad exceptions for primary homes) with property tax.

    You’re talking about some of the few taxes which the rich can’t easily evade, which is why they’re going up as a proportion, of course, as the UK economy fails.

  34. Lorne Gifford

    Take a look at the ATED tax rates and how the kick in value has changed. Apply those rates to the general housing stock and you’ll see where £1.2 bn comes from, and get a good indication of what’s being planned with mansion/home ownership tax

  35. Leon Wolfeson

    …And there you have a key mutualist argument.

  36. Lorne Gifford

    This discussion has moved on a little from the original, ‘there is no proof mansion tax will devalue homes’. As Leon points out the top 1% own 50% of the worlds wealth and therefore should be made to pay more to ensure a more equal society.

    The thing is though, this is a global issue and not a regional one. And on a global scale it is completely true that the top 1% do own 50% of the wealth. On a global scale the top 1% includes every single person in this country that earns the average wage or higher, and every single person that has an average price home or higher.

    So, on a global scale, half the people in this country are part of the problem.

    The ATED tax rates give a very good indication of the solution to this problem. Introduce a new tax at only the super-rich, ie property valued at more than £2m, but the following year reduce the starting value by half, and then reduce it by half again the year afterwards. This is how Ed Balls makes his estimated income from ‘mansion’ tax work.

    So in essence a vote for mansion tax is actually a vote for property tax at 1% of value (payable every year) on any home that is average or better.

    Rather than one liner insults in response to this comment, please google ATED tax rates and take a look at what is in store for all of us – well the half of us that count as super-rich that is

  37. Guest

    Apply those rates in a nonsense way. To generate nonsense. As you create spectres.

    You’re trying to avoid paying a little tax.

  38. Guest

    “half the people in this country are part of the problem”

    Ah, minimising the issue of poverty here. As you talk about something completely different. And demand it’s how things work, magically.

    You are raising a spectre, 0.5%er, against paying tax on high-value homes. 0.5% | 50%. Get over it.

  39. Lorne Gifford

    Not really Leon. I work in Angola and the Congo a lot so perhaps it’s you who has an ‘out of sight, out of mind’ attitude to what poverty really means

  40. Dave Stewart

    I find this insistence that “ordinary” people own homes worth more the £2 million” odd. If you live in a home worth more than £2 million the likelihood is your a wealthy. I expect there are a vanishingly small number of people who are not cash rich who live in £2 million + houses and they are protected by the income level you need to earn before you are included in the proposals. If 0.5 % of houses are worth more than £2 million how can many “ordinary” people live in such homes?

  41. Guest

    So you deny poverty in the UK. Real poverty gets ignored because simply not deep enough for you. Never mind those non-essentials like food and shelter, in your world.

    While being a nice capitalist looter, crossing the border the right don’t want the 99% to cross.

  42. Lesmond Nyjacks

    Leon, you are not a “mutulalist” as you so often proffer, you are in fact a vile totalitarian communist, you are incapable of accepting that anyone may hold a different opinion to yours, your hateful coercion has not worked anywhere else in the world, from Cuba to Venezuela.

  43. Lesmond Nyjacks

    Leon, with you in charge people that you dislike will only move once.
    To the Gulag.

  44. Lesmond Nyjacks

    “You’re trying to avoid paying a little tax.”
    More projection, you vile marxist.

  45. Guest

    So you can’t even spell, as you scream you control what I believe, demanding I hold your views, which you go onto prove.

    You are one trying to speak for me here, Commie.

  46. Guest

    Keep fighting the Marxists in your mind.

    I pay tax due, unlike you. So sorry, I’m actually not anti-British like you.
    No surprise you pipe up against paying tax, of course.

  47. Lesmond Nyjacks

    “ordinary” is a term that could never be used to describe you.
    Leon/Guest, you hateful communist, the Gulag and the Killing Fields belong in the past, as do you and your appalling hateful leftist thinking.

  48. Guest

    Keep screaming nonsense, Lord Blagger.

    You’re the one obsessed with creating a Gulag and sending people there, and you’re the one who wants to be in charge.

    You’re blaming me for your views, as I’m Jewish. That’s all.

  49. Guest

    Ah yes, Jews are not “ordinary” for you, as you scream that I must hold your views, as you use PC bigotry against any kind of leftist thinking, as you call repeatedly for the Gulag and Killing Fields your genocide-obssessed mind constantly demands you call for.

    As you ***** in threads, using your genocidal calls against Jews in a discussion about your rich having to pay a little tax – it’s over the top hyperbolic Jewhate from you.

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