“Thank you for taking the time to email me.
I do not have an objection in principle to levying a tax on very high value property, especially where this is used as a mechanism for laundering money through the UK property market in a way that both avoids income and other taxes and distorts the market to the detriment on UK residents trying to get on the housing ladder – or simply find a home.
As you may know from my opposition to schemes like the King Street, West Kensington and White City developments – which are specified as high-density luxury properties primarily for the foreign investment market – I would like to see a more mixed economy of housing in the borough.
The Government is belatedly taking some steps to address this, such as the increases in stamp duty and infrastructure levies, but the market seems as buoyant as ever in Hammersmith & Fulham given the council’s irresponsible attitude to planning policy.
With regards to the specifics of the policy, Ed Balls has said that £2 million (uprated by the rise in property prices each year) would be the starting point, so there is no question of lower-valued properties being sucked in.
Secondly, I believe no one should be forced to pay, let alone move, because they are asset-rich but cash-poor so there will be a scheme to defer payment until the property is sold.
Whilst this information is helpful, I think a lot more work needs to be done to clarify on whom the tax would fall and at what levels it should be set. The objective of such a tax – as the name implies – is to correct the anomaly in council tax whereby ‘mansions’ are treated the same as modest family homes, because the banding system stopped abruptly at £320,000 (at 1991 values). The main beneficiaries of this are foreign investors who are paying nugatory sums annually for owning properties worth £10m or more.
Of course, the purpose is defeated if the tax catches more modest properties but is still relatively inconsequential for the super-rich. Ed Balls has addressed this also by saying there will be a banding system for the mansion tax.
However, I will be asking for more information on how the tax will avoid penalising residents for whom it would be neither fair nor affordable, and will be happy to share this with you in due course.
Thanks once again for emailing me.
Labour MP for Hammersmith”
This is an unsatisfactory response in various ways.
Here are just a few:
First of all he suggests that the increase in house prices in our borough is due to “the council’s irresponsible attitude to planning policy.” This is an outspoken attack from a Labour MP on his own Labour councillors. Perhaps given they recently left him isolated by voting to campaign against the “Mansion Tax” this is his revenge.
Secondly, the increase in house prices reflects a general London trend. So his explanation of blaming the local council is, in any event, implausible. If anything a more restrictive planning policy to wards more high value properties – which he seems to favour – would have constrained supply and resulted in scarcity driving up prices even higher.
Thirdly, regardless of the cause, given that the reality is that normal terraced house have valuations of over £2 million – why won’t Mr Slaughter state clearly that the policy is unreasonable and the reference to “mansions” a misnomer? The difficulty could be that he would have to resign as a Shadow Minister.
Fourthly, why does he regard it as acceptable that those of his constituents who he acknowledges to be “asset rich, cash poor” should be prevented from passing on their family home to their children when they die, by a mechanism that would be a second Inheritance Tax? Why does he want to break up communities and have family being forced to put up their homes for sale to Russian oligarchs?
Fifthly, though he says there is “no question of lower valued properties being sucked in” his fellow London Labour MP David Lammy says houses worth £1 million could be hit. Mansion Tax – The Homeowners Alliance have warned that the experience with Stamp Duty shows that what is imposed at the top end of the market then moves down. Anyone who believes Mr Slaughter’s assurances on this point is being naive – especially as he is not exactly Captain Honesty.
Sixthly, his response ignores all the practical difficulty. For example, people splitting their houses up – just as during the Window Tax era they bricked up their windows.
Seventhly, the reference to asking Mr Balls for “more information” is obfuscatory and weak. When will he be asking for this further information? Mr Slaughter is a Shadow Minister – if he doesn’t understand Labour policy, why should he expect the rest of us to vote for it to be implemented?