According to Danny Alexander MP, interviewed by the BBC news yesterday, the answer is no. Not for the Liberal Democrats at any rate.
The Conservative element of the Coalition have made a pre-emptive strike in the hope that “look, we’ve hit the rich once, why do it again?” Danny Alexander, however, when asked if these latest changes to stamp duty now meant that the mansion tax would be shelved was emphatic. He said that the latest stamp duty changes were a separate subject and that Lib Dem policy remained to add two or three council tax bands. Notice the omission of the phrase “Mansion tax”…the Lib Dems merely wish to press the “refresh button” on council tax. Expect Labour to follow suit with a similar re-branding exercise.
So, a one off penalty increase if you buy, not (yet) an annual tax increase if you own a property over £2m. Nevertheless, the latest changes to stamp duty will hit the top end of the market hard. If you add into this mix the increase in tax on “non doms” and Kensington and Chelsea’s drive to forbid “mega basement extensions”, one can see that the head winds are piling up into the perfect storm. All this without even an increase in interest rates!
What is frustrating is that the penalties keep increasing for those that move. Those that sit tight and do nothing including the elderly “grannies” that Mylene Grass referred to in her interview with Ed Miliband, seem to be ok, for now. What the politicians have failed to notice that it is precisely when homeowners move that the wider economy benefits. People are more inclined to upgrade kitchens, bathrooms, change carpets and curtains when they start afresh.
The property market used to be a well oiled machine in the mid to late 1990s. Now the oil has dried up and we are in danger of a total seizure. Fewer and fewer people with expensive homes will sell, which would, on its own, normally hold prices up. But other factors are beginning to play their hand and so prices over £2m will continue to be under pressure. But don’t think for a moment that homeowners sub £2m will be immune.