TV property guru Kirstie Allsopp led furious criticism of Rachel Reeves’s plan to hammer homeowners with a new mansion tax today, accusing the Chancellor of ‘crippling’ the housing market.
The Location, Location, Location presenter joined a chorus of economists and experts in urging Labour to rule out the proposal to slap a punitive levy on high-value homes in next month’s Budget.
Under the plan, revealed by The Mail on Sunday, the owners of properties worth £2million and above would face a charge of 1 per cent of the amount by which the property exceeds that value.
Those with a property worth £3million would be lumped with a bill of £10,000 every year under the idea.
But rather than just affecting high-end earners, experts today warned the ripples would be felt across much of the housing market.
Ms Allsopp lambasted the proposal, branding it a ‘fantasy’ that would not work because there is no way of valuing property in such a ‘fragile’ market.
She told the Daily Mail: ‘At the moment, there is no efficient way of valuing anything because the market is in such a fragile state, so this is fantasy.
‘Someone needs to tell Rachel Reeves to stop talking about homes – they are not little piggy banks for the Government.’
Ms Allsopp accused Labour of having ‘wrecked’ the market, and said a healthy economy has a ‘mobile housing market’. She urged the Chancellor: ‘Don’t do it.’
Ex-Bank of England governor Mervyn King suggested Ms Reeves should think the policy through first – and that the UK needed more than plans ‘written on the back of a fag packet’.
‘That is not a coherent tax strategy and you could do a great deal by thinking it through first,’ he told Sky News.
‘Property taxes are an interaction between stamp duty, council tax, capital gains tax, inheritance tax. You don’t solve that problem by just adding another wealth tax to it.’
The idea, the latest in a string of soak-the-rich measures being touted ahead of next month’s Budget, would require complicated and bureaucratic property revaluations as the current council tax bands are based on the property values of 1991.
Budget preparations are being led by Treasury Minister Torsten Bell, who worked as Ed Miliband’s director of policy when, as party leader, he included the mansion tax in Labour’s 2015 general election manifesto.
Property experts warned the policy would distort the housing market and disproportionately affect older households, while the Tories slammed it as class-based and counter-productive.
Jeremy Leaf, north London estate agent and a former RICS residential chairman, who said a mansion tax could be ‘self-defeating’, while Mark Harris, chief executive of mortgage broker SPF Private Clients, added: ‘A mansion tax will slow down an already sluggish housing market. The government should be trying to stimulate the economy, not suffocate it.’
Julian Jessop, economics fellow at the Institute of Economic Affairs, warned that a new mansion tax could increase uncertainty and be complex to administer, saying: ‘For example, many asset-rich but income-poor households might not be able to afford a large annual charge. This could be deferred until the house is sold, but that could discourage house sales and downsizing in particular.’
Trevor Abrahamson, of Glentree, the London estate agency, said: ‘If this tax is implemented in a punitive way, driven by the politics of envy, it will do a lot of damage, pushing more wealthy people out of this country. ‘
And Amy Reynolds, head of sales at Richmond estate agency Antony Roberts, said: ‘In areas such as East Sheen and Richmond, £2million doesn’t necessarily buy a mansion – it buys an ordinary family home.
‘A so-called “mansion tax” would unfairly penalise people who are property-rich but cash-poor. Many long-term owners here have simply benefited from rising property values over decades, not from high incomes.
‘An annual charge based on property value rather than income would hit retired homeowners and families already stretched by high living costs, and could even force some to sell their homes just to pay the bill. It feels like a blunt instrument that risks destabilising the local market rather than generating fair revenue.’
Amid the Budget speculation, Health Secretary Wes Streeting admitted today that the public finances are in a ‘challenging state’.
Mr Streeting acknowledged there were issues with the economy and said households were also feeling the squeeze.
But he insisted there were ‘green shoots’ of economic recovery ‘but we’re not out of the woods yet’.
Mr Streeting said he would not be drawn on ‘wild speculation about the Budget’ ahead of Ms Reeves’ statement next month.
He told GB News: ‘We’re going to wait for the Chancellor to set out her Budget. People can see the public finances are in a challenging state.
‘So is the economy, but also so are family finances, so are business finances, we recognise that, we’ve got to get our economy growing again.’
