The new measures will impact properties worth more than £2million
The deputy leader of a North London council, whose home is reported to be worth more than £4million, has described the so-called mansion tax as “an absolute disgrace”. The measure is part of a range of tax rises included in Chancellor Rachel Reeves’s Autumn Budget and affects properties valued at more than £2million.
The Conservative Leader of Harrow Council, Cllr Paul Osborn, tabled a motion at a recent Full Council meeting (November 27) to “condemn the government’s disastrous budget’ and highlighted in particular the proposed High Value Council Tax Surcharge – commonly referred to as the mansion tax.
The motion was seconded by Deputy Leader, Cllr Marilyn Ashton – who she claims is one of “a number of people” on the council who have properties valued at more than £2m. Her Stanmore property is said to be worth £4.27m, according to The Move Market – £3.25m more than when it was purchased in 1997. This means she would be in line to pay an additional tax of £5,000 per year from 2028.
The annual charge will come on top of existing council tax, and will increase depending on the price of a property – with four separate bands. The lowest band covers properties valued between £2m and £2.5m, which will have to pay an additional £2,500, while the highest charge of £7,500 will fall on homes valued at £5m or more. Those between £2.5m and £3.5m will be charged £3,500 and between £3.5m and £5m will be taxed £5,000.
Addressing the council, Cllr Osborn said: “This is not an attack on mansions, it’s an attack on people who happen to live in London whose property prices have gone up more than other parts of the country. The government could have done something that probably is needed and look at council tax bands and valuations – we’re all working on the valuation of 1991. But they didn’t do that.”
He added: “I have already had a number of residents from across the borough emailing and phoning me. These are pensioners who are afraid that they are going to have to sell their house because they can’t afford to pay this arbitrary tax.
“When they bought their house it was worth nothing like the amount it is now. They are stuck with this, they don’t have the income to cover the cost. The only way they can do that is by either selling their house or having it as collateralised debt against their property and having their estate pay it when they die.”
How people ‘struggling to pay’ will be helped
The government has said that it will ensure a support scheme is in place for those who may struggle to pay the additional charge. A public consultation on details relating to the High Value Council Tax Surcharge – including how a support scheme would work – is expected to be held early next year.
There are likely to be options for homeowners to defer payment until they sell the home or upon death if they cannot afford to pay – which would mean people wouldn’t be required to sell their property if they don’t have enough annual income to make the payments.
During the council meeting, Cllr Ashton called the proposal “an absolute disgrace” and one that a lot of the affected homeowners “cannot afford”. Speaking to the Local Democracy Reporting Service (LDRS) following the meeting, Cllr Ashton said if payment can be deferred then “that’s great” but believes it’s “not what [the Chancellor] said”.
She added: “Our understanding was that the local authority would collect an additional amount of tax that would be paid on properties over £2m and £5m would be even more. On that basis we are opposed to it.”
If, as expected, it is possible for those struggling to pay to defer the payment until the time of sale, then, using Cllr Ashton’s situation as a case study, if she remained living in the property until 2038 for example – ten years after the implementation of the policy – she would be required to pay £50,000 to the Treasury when it is sold – which equates to 1.5 per cent of the current appreciated value of the asset.
The Treasury expects the measure to apply to fewer than 1 per cent of properties in England. Reacting to the announcement, estate agent Savills said it was “probably the least worst outcome for owners of prime property”, whilst the Institute for Fiscal Studies (IFS) think tank criticised it for not going far enough. The IFS said: “There’s a reasonable case for levying more high-value homes, but the design of this tax leaves much to be desired.”
‘Pensioners in a £2m house who cannot afford to eat or [pay] their bills’
Responding to the motion, Leader of the Harrow Labour Group, Cllr David Perry, said: “If there are pensioners who live in a £2m house and cannot afford to eat or [pay] their bills there should be flexibility within a system to cater to some of that.”
Speaking to the LDRS after the meeting, he added: “It is disgraceful that Conservative councillors chose to prioritise a non-urgent motion debating the proposed £2m property Mansion Tax due in 2028 at the full council meeting over major local issues in Harrow.
“It is even more concerning that Conservative councillors bent procedural rules to allow their own councillors who own £2m+ properties to stay in the room, debate and vote on the motion. I have serious concerns over the governance of this procedure and will investigate if conduct rules have been broken”.
Cllr Ashton described this claim as “unfair” and said the opposition “know damn well I’ve done nothing wrong”. She told the LDRS that, as the motion contained information relating to the wider tax increases laid out in the Budget, the monitoring officer gave her permission not to declare any interests via a dispensation – an exemption from a rule or usual requirement.
She added: “There are a number of people on the council whose house is worth over £2m and not just me. What we did was we contacted the monitoring officer and they said that, because the motion was not just about [Mansion Tax], we would all have a dispensation.
“Why should I stand there and say it’s going to cost me money, it’s going to cost us all money. […] A lot of people living in London have got houses worth over £2m – they didn’t pay that for them.”
Don’t miss out on the biggest stories from across the city: Sign up to MyLondon’s The 12 HERE for the 12 biggest stories each day.
