Chelsea and Fulham MP, Greg Hands has voiced concerns that a future Labour Government, or a Lib – Lab Coalition in 2015, could hit local residents with a tax on their properties. Tens of thousands of local residents face being dragged into paying the Homes Tax, or “mansion tax” championed by the Liberal Democrats, and Labour.
Labour and the Lib Dems say their proposal would initially only hit homes worth over £2 million, with a one per cent annual charge on the value of the property over this sum. However, to make their sums add up, independent Treasury figures released last summer show that 55,000 homeowners across the UK would have to pay the tax, who would be overwhelmingly concentrated in London and the South East. Homeowners, according to Treasury figures, would need to pay between £30,000 and £36,000 a year.
Nick Clegg’s party sought to play down fears that the tax would gradually hit less expensive homes by stressing the £2 million threshold would rise in line with average house prices. However, in London house prices are growing significantly faster than the national average rate, and so each year more and more homeowners would be hit. The Conservatives estimate that there are 100,000 homeowners in the capital with properties worth between £1 million and £2 million.
Moreover, although the tax is designed to hit the super-wealthy who live in ‘mansions’, in inner-London areas like Chelsea and Fulham, where the average property price is £1.2 million, the tax would apply to relatively modest homes, including small terraced houses and quite a number of flats.
Local MP Greg Hands said: “Labour and the Lib Dems’ proposed mansion tax is an extremely damaging idea. Far from hitting just the super-rich who may be able to afford such a levy, it would attack anyone in a modest home in my constituency, many of whom wouldn’t have the income to pay it, including ordinary families in ordinary homes. There is a real danger that if Labour were to get in at the next election, either by themselves or supported by the Lib Dems in a coalition, that they would implement this policy.”
It would also not just be home owners who would be saddled with the new tax burden. In Chelsea and Fulham, over a third of residents rent their homes from private landlords. The new tax would clobber renters too, as the costs of the tax are likely to be simply passed on to them.
Greg added: “Just as the economic recovery is getting going, the last thing people need is yet another tax in order to pay for profligate Labour spending. People need to keep more of the money they have worked hard to earn, and to spend it in the real economy, not surrender it to the tax man. Our economic plan of reducing tax and rescuing debt is helping the country to back to its feet after 13 years of hard Labour. A future Labour Government would jeopardise all that.”