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Continued talk of a mansion tax hitting sales at top end of UK market
The possibility of a mansion tax being introduced in the UK has not disappeared despite many in the industry believing that recent changes to Stamp Duty would rule out the need for it. The shadow chancellor Ed Balls has confirmed that the annual tax on homes worth more than £2 million would be introduced in Labour’s first budget if it win the May 2015 general election. The plan would mean that the Treasury would start collecting the money in the 2015/2016 financial year. People with homes worth between £2 million and £3 million would pay about £3,000 a year. Those in more expensive homes would pay more. He claimed that Treasury officials were working on the proposals, in line with the civil service’s normal practice of making plans to implement the policies of parties that could win the general election. The Labour party plans to use the money to boost the National Health Service. ‘I would like to see that revenue coming in in the first year of a Labour government, before the end of the financial year,’ Balls added. This is despite a general feeling that the changes introduced in early December to make the Stamp Duty tax more even would mean there would be no need for the so called mansion tax. Alex Newall, managing director at Hanover Private Office, had been among those who believed that reform to stamp duty would replace any need for a mansion tax which has been widely criticised as grossly unfair. He pointed out that the tax would be a blow to families who, by no fault of their own, have ended up owning houses which have risen in value and gone above £2 million. ‘In London, this may only be a two bedroom flat, where house prices have risen over 20% in the last year,’ he said. He also explained that sales volumes in the prime market in London have already fallen due to fears over a mansion tax being introduced. ‘Notting Hill has seen a decline of 48% in transaction volumes over the last 12 months following the fears of a mansion tax as people worry about the annual costs,’ he said. He added that while increasing stamp duty will make it more expensive to buy a house at the top of the market, he believes that the wide majority of existing owners will favour this approach. ‘Compare taxes in London to those in New York City, and London will still remain a global draw. Security, education, business, a completely multi-cultural society, and despite operating a tighter tax system, it is in fact one which is now more in line with other global cities, such as Hong Kong where stamp duty is as high as 8.5% and in Singapore where it reaches 15% for foreign buyers or 10% for Singapore buyers acquiring a second home,’ he said. Winkworth estate agents believes that the revival of talk of a mansion tax will hit sales in… Continue reading
CML says just 1.5% of mortgaged sales will pay more under new property tax rules
The Council of Mortgage Lenders has welcomed the stamp duty changes which have now come into place in the UK and revealed only a small number of mortgagees will be affected. CML director general Paul Smee said although there are losers as well as winners, the vast majority of mortgaged transactions will benefit from lower tax as a result of the change. CML data suggests that, among mortgaged transactions over the past year, 21.6% were for less than £125,000, 47.9% for £125,001 to £250,000, 29% for £250,001 to £925,000, 1.1% for £925,001 to £1.5 million, and 0.4% for over £1.5 million. The proportion of mortgaged transactions that would pay more tax under the new system is around 1.5%. He also talked about work that is being undertaken by the CML and consumer organisation Which? towards the creation of a new a set of measures that both organisations hope will aid transparency, understanding, and decision making for consumers when they are considering the overall costs of different mortgages. Smee explained that although the Financial Conduct Authority rules on the presentation and transparency of cost information are comprehensive, consumers do not always find the cost disclosure easy to understand. So this initiative is about looking at whether there are some practical steps, outside the scope of regulation, that can help. The CML and Which? have agreed to work together to consider practical steps on a number of issues including transparency and presentation of fees and charges to help improve consumer outcomes; standardisation of terminology around fees and charges; consumer education; and setting administrative charges so that they reflect the cost to the lender. The Treasury is taking an interest in this work. The CML and Which? have agreed to provide a progress report by the time of the Budget 2015. The overall project is expected to take up to six months to complete, and will produce a programme for future action, to be taken forward through industry guidance. ‘With the largest and most competitive mortgage market in Europe, UK customers are well-served for choice. We recognise that for this choice to bring the greatest benefit, consumers need to be able to understand and compare products confidently,’ said Smee. ‘We welcome the opportunity to work with Which? towards measures that can make this easier for them,’ he added. Continue reading
Cumbrian village named best place in UK to live due to affordable homes
St Bees, a coastal village in Cumbria, has been named as the best place for families due to low crime rates, excellent school education and affordable housing. The number of top 20 places in the Midlands and North of England has risen by 15% due to rising house prices in the South at a time of low increases in average salaries, according to the annual family hotspots report from finance firm Family Investment. The annual report, which was first launched in 2012, analyses postcode data across 71 different data sets from education, safety and childcare costs to local amenities, affordable property and green spaces to reveal the top locations for families. Located 50 miles from the Scottish border and with a population of just 1,800, St Bees in Cumbria earns the 2014 top spot. A newcomer to the report, it owes its success to a low crime rate and a lower than average house price of just £139,000. In second place is the market town of Wokingham in Berkshire, 33 miles west of London which was the top location last year but has gone down the rankings due to increasing house prices. An average two bedroom property now costs £254,000. Faringdon in Oxfordshire is third due to its excellent schools. The town, which is located in the Vale of the White Horse, also holds the accolade of being the first Fairtrade Town in the South East of England. ‘The rural village of St Bees is well deserving of its title as the best place in the UK for families. It has a heritage that stretches back over 1,000 years, the schools achieve excellent results and locals tell us that it has a small but very close-knit community making it a great location for families,’ said Steve Ferrari, head of customer insights at Family Investments. ‘Deciding where to live is one of the most important financial and lifestyle choices families will make in their lifetimes. Our report is designed to help people navigate this decision by showing them how areas of England and Wales score on some of the major factors that play a part in everyday family life whether that’s the quality of local schools or the area’s crime rates,’ he added. Four locations within the top 20 are positioned along the M6 corridor between Birmingham and Manchester, making them convenient for commuters to those cities: Sandbach in Cheshire, Hixon in Staffordshire, Holmes Chapel in Cheshire and Cheadle in Staffordshire. No London location makes it into the charts for 2014, largely due to the cost of property in the capital. However, the top three locations in Greater London are Bexley, Banstead and Epsom with no inner London locations made it onto the list. Continue reading
