Homes worth £540,000 today face paying a Mansion Tax within 25 years

Research data shows that homes worth £540,000 today could face liability for the Mansion Tax within 25 years should the government fail to adjust the tax threshold for house price inflation.

The data, compiled by estate agent Knight Frank, estimates that in order to raise the Liberal Democrats’ estimated revenues of £1.7bn or Labour’s estimate of £2bn, the Mansion Tax threshold would need to be lowered to £1.5m or £1.25m.

The estate agent says house prices over the last decade have risen by 69 per cent. It says if the £2m threshold is kept and house prices continue to rise at historical rates, homes worth £1.2m today will be paying a mansion tax within ten years, almost tripling the number of household facing the tax from 55,000 to 157,300.

Knight Frank argues “cash-poor, equity-rich” homeowners who have seen their homes increase in value over the long-term but still earn low to middle incomes may be liable to pay a mansion tax with no obvious means to do so.

Knight Frank head of research Liam Bailey says: “Our calculations point to the threat of the mansion tax threshold being lowered substantially to meet the revenue targets of the political parties.

”Even if the threshold is not lowered, it seems a fair assumption – given it has remained at £2m since 2009 – that it would not be realised in line with house price inflation thereby substantially increasing the number of properties affected by the tax.”

Breakdown of homes affected by the Mansion Tax by Borough or Parliamentary Constituency
Rank LocalAuthority Region Now 5 years 10 years

1

Kensington and Chelsea

London

11,955

20,683

35,781

2

City of Westminster

London

8,119

14,046

24,300

3

Camden

London

3,973

6,874

11,892

4

Elmbridge

South East

2,746

4,751

8,219

5

Hammersmith and Fulham

London

2,103

3,638

6,294

6

Wandsworth

London

2,078

3,596

6,221

7

Barnet

London

2,073

3,587

6,205

8

Richmond upon Thames

London

1,839

3,181

5,503

9

Merton

London

1,696

2,935

5,077

10

Haringey

London

646

1,117

1,932