What will mansion tax mean for us?
Agents assess the market for £2 million-plus property
THERE’S A nasty l i t - tle tax plan brewing t h a t s e e ms p e c u - liarly designed to hit the house-owners of north London. Is yours a £3 million property? It’s going to cost you £3,000 a year to keep it under Labour. That’s the only detail of the proposed “mansion tax” released so far. The tax is aimed at owners of property worth more than £2 million. It is likely to be on a sliding scale, a flat charge per band, starting at the £2 million valuation and rising at thresholds such as £3 million, £5 million and £10 million.
Estate agent Hamptons expects a tax of this kind to affect property prices but only of those properties close to the thresholds. It also expects price “distortion” to take place once and not continue unless thresholds change.
Hamptons predicts that the threat of the tax may encourage people to sell before the election. However, its Stanmore subsidiary, Preston Bennett, reports no problems in the sale of the gated scheme of five-bedroom houses with double garages at The Cloisters in Stanmore, which are priced from £2.425 million.
The effect of a mansion tax will be small enough to be absorbed into other pressures on prices. Research from property specialist Hanover Private Office indicates that the central London market has already shifted in favour of buyers, moving from “property bubbles” to “cooling conditions”. It says prices of larger houses with more than four bedrooms are already likely to have been reduced.
Even though London heads “The World’s Most Influential Cities” by Forbes, “Cities of Opportunity 2014” by PWC and is second in the Z-Yen report on Global Financial Centres (pipped by New York), even Hamptons reports that this is a fragile time for sales. Housing transactions have been waning across Hamptons’ offices and a downward trend in mortgage approvals suggests there may be more of that to come.
Despite being part of Hamptons, the core of Preston Bennett’s business remains unchanged. The Stanmore estate agent’s team and original principals and directors are still at the firm.
Will Stanmore suffer from the mansion tax? Confidence remains high. “The new-homes team has exceeded expectations in terms of number of launches and sales of units throughout the year and the coming year is set to be just as busy,” says Preston Bennett managing director Sue Fisher.
The threat of the tax did not stop Banner Homes opening the doors to two six-bedroom homes at Bentley Priory in Stanmore in early November. They have indoor heated pools, spa baths, steam rooms, changing rooms and gyms and are £4.95 million. Banner’s Viburnum Gate in Radlett is another to sell well. Just one home remains (six bedrooms, £2.295 million).
For a clear sign of confidence in the market, look at Clearview Homes, which has secured planning permission for a 102-unit “Gateway To Bushey” scheme, with help from Preston Bennett. Elton House will create the kinds of flats that no government has plans to tax beyond the usual levels of stamp duty and council tax. Next to Costco on the A41, the former office building, empty since 2004, will become 34 onebedroom, 63 two-bedroom and five three-bedroom apartments.
It may be worth betting that Labour will not form a government in May 2015. With that in mind, the mansion tax is an empty threat. But a political party that has seen how well the mansion tax plays with ordinary voters will probably come to power one day.