Labour's 'mansion tax' would actually hit flats the hardest

Three quarters of properties affected by Labour's planned 'mansion tax' in London would be flats or terraced houses.

by Jack Torrance

Ed Miliband’s populist plan to tax owners of homes worth more than £2m would mainly affect owners of flats and terraced houses in London, rather than detached ‘mansions' of the Downton variety, according to estate agent Knight Frank.

Its research found that 38% of all properties in the capital which exceed the £2m threshold are flats, followed by terraced houses on 36%. Just 14% are detached.

'The figures demonstrate the mismatch between perception, in particular the term "mansion", and the reality of the London property market, where three-quarters of £2m-plus properties are either flats or terraced houses,' said Tom Bill, head of London residential research at Knight Frank.

The research also demonstrated the disproportionate burden of such a tax on London, where the majority of £2m+ homes in the UK are located. In fact 46% are located in just two boroughs: Kensington and Chelsea and the City of Westminster.

Earlier this week, estate agent Glentree International warned of the impact such a tax would have on the building trade and property markets.

‘Anyone with a property near this threshold will not spend any money refurbishing since this could increase the value into Mansion Tax territory,’ it said in a blog post.

‘Even owners of properties higher up the price scale will not want to spend money for fear that this will increase their Mansion Tax liability.  The construction industry and building trades will go into freefall and, as the property market plummets, there will be a very tangible effect on the sale of white/brown goods.’

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