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Effects of mansion tax set to triple

Robyn Hall

September 2, 2013

The findings of its report showed that to raise the targeted revenue the threshold would need to be reduced from £2m to £1.25m which would take the number of affected properties from 55,000 to 140,000.

Liam Bailey, head of Research at Knight Frank, said: “Our calculations point to the real threat of the mansion tax threshold being lowered substantially in order to meet the revenue targets of the political parties.

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

The research by Knight Frank concluded that the proposed threshold and tax rate would deliver a gross annual receipt of £1.3bn, 24% below the Liberal Democrat estimate of £1.7bn and 35% below Labour’s £2bn estimate. This represents an average annual payment of £23,595 per property.

The tax would be levied overwhelmingly on London and the South East of England with 86.4% of all £2m plus properties located in those two regions.

In terms of property type one in ten of all “mansions” worth £2m or more are one or two bedroom flats.

Bailey added: “Over the past 10 years house prices have risen by 69%. Assuming a similar rate of growth in the future all houses worth more than £1.2m today would be paying a mansion tax 10 years from now meaning that the number of homes covered would nearly triple from 55,000 to 157,300.”


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