A new mansion tax analysis is questioning whether the Liberal Democrats have got their sums right over the controversial levy on homes worth £2 million or more.
The proposal calling for a 1% a year tax on the amount a property is worth over £2 million was first put forward by the Lib Dems and is backed by Labour.
They expect to raise between £1.7 billion and £2 billion a year from wealthy property owners.
However, number crunchers at property consultants Knight Frank have scrutinised the figures and feel the politicians have not worked through the numbers properly.
The firm reckons the tax will raise no more than £1.3 billion before exemptions.
To hit the tax target, the values of homes in the mansion tax net world have to come down, forcing more homeowners to pay up:
To raise the intended £2 billion, the property value threshold would have to come down to £1.25 million or £1.5 million to hit the £1.7 billion minimum assessment
Lowering the mansion tax bar will more than double the number of affected homes, from 55,000 to around 140,000.
Most of the homes would be in London and the South-East, where almost 90% of the homes of this value are located.
Knight Frank also points out that the tax would hit ‘heritage properties’ as 16% of homes worth more than £2 million are listed buildings.
Around 10% of the homes paying mansion tax would be one or two bedroomed flats.
“If the £2 million threshold was adopted and not increased in line with house price inflation, over the next 25 years, a total of 775,500 properties would be dragged into the mansion tax net, including all properties with a current value of £540,000 or more,” said a Knight Frank spokesman.©LandlordZONE® – legal content applies primarily to England and is not a definitive statement of the law, always seek professional advice.