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Labour propose Mansion Tax

At the Labour Party Conference today, Ed Miliband announced plans to use a mansion tax to increase funds for the NHS, in what he hopes to be an attractive idea for voters at next year’s general election. The proposed tax on homes will apply to those over £2million and will be an annual charge that would likely raise about £1.2billion. This money would then be used to help raise funds for the NHS, with many supporting the idea that the wealthy should be subject to higher taxes in order to improve the lives of what Labour terms ‘everyday working people.’ However, while many will support this plan by Labour, others are concerned about the implications of a mansion tax and also about how much of a difference the money raised will make. For example, not everyone who owns a property over the £2million threshold have the finances to pay an annual tax on their property, which could mean that they would have to sell their home and move to a cheaper property. However, Shadow Chancellor Ed Balls, yesterday said that ‘there would be protection for those who are asset rich and cash poor’, however details of how exactly the mansion tax would be implemented are yet to be outlined. Concerns have also been raised about international investors being deterred from property purchases in the UK, which could have an impact on the London market in particular, as well as the value they bring to the economy. However many see the opportunity to secure taxes on foreign home owners in additional to the recent changes on capital gains taxes as a positive measure to ensure that they are fewer ways in which they can be exempt from charges. It also means that property prices in areas such as prime central London aren’t pushed up beyond the reach of UK residents. As James Moran, Director of Winkworth South Kensington, explains, “There are more homes coming onto the marketthan there has been for some timewhich helps with the domestic economic cycle of people gradually moving up the property ladder. Buyers are now able to dictate the price that they want to pay rather than having the prices dictated to them through competitive bidding which was synomnous with lower stock level.However,whilst this is good news for buyers,recent Capital Gain Tax changes and uncertainty due to the upcoming election is not great for those sellers who arelooking to sell and move up the ladder or downsize.Having just seen out the uncertainty that surrounded the referendum in Scotland, buyersare taking their time to see what the outcome will be in April and as such only those who need to sell are accepting offersbelow asking price. Uncertainty is currently the biggest problem for the central London market andweanticipate that caution will continue as more policies are announced in the coming months.” The proposition is most likely to be popular for the plans by Labour to put £1.2billion raised to go towards the NHS. However, there has been questions raised about what impact this will have on the budget, which compared to the English health budget of £113billion seems relatively small fry. People are also raising the issue that it is expected that by 2020 there will be a budget deficit of £30billion for the NHS, and that the small amount raised will not be enough to prevent this shortfall. Yet the money needs to be raised in some way to avoid cuts in the NHS and a depletion of services offered, so this may be one solution to help secure further funding. However, what is unlikely to be so hotly contested is the proposal by Labour to build a further 200,000 homes per year to help, in particular, first time buyers. In areas particularly in the south east the shortage of housing has led to concerns about sharp price increases due to high demand, so more properties being built should go some way to heed concerns about an unsustainable market. To find out more about the impact of a general election, both before and after the vote, click here to read our latest blog. For more information about the property market in your area or to discuss your property speak to your local Winkworth office. Click here to find yours.

The Labour Party Hold Their Annual Party Conference

At the Labour Party Conference today, Ed Miliband announced plans to use a mansion tax to increase funds for the NHS, in what he hopes to be an attractive idea for voters at next year’s general election.

The proposed tax on homes will apply to those over £2million and will be an annual charge that would likely raise about £1.2billion. This money would then be used to help raise funds for the NHS, with many supporting the idea that the wealthy should be subject to higher taxes in order to improve the lives of what Labour terms ‘everyday working people.’

However, while many will support this plan by Labour, others are concerned about the implications of a mansion tax and also about how much of a difference the money raised will make. For example, not everyone who owns a property over the £2million threshold have the finances to pay an annual tax on their property, which could mean that they would have to sell their home and move to a cheaper property. However, Shadow Chancellor Ed Balls, yesterday said that ‘there would be protection for those who are asset rich and cash poor’, however details of how exactly the mansion tax would be implemented are yet to be outlined.

Concerns have also been raised about international investors being deterred from property purchases in the UK, which could have an impact on the London market in particular, as well as the value they bring to the economy. However many see the opportunity to secure taxes on foreign home owners in additional to the recent changes on capital gains taxes as a positive measure to ensure that they are fewer ways in which they can be exempt from charges. It also means that property prices in areas such as prime central London aren’t pushed up beyond the reach of UK residents.

As James Moran, Director of Winkworth South Kensington, explains, “There are more homes coming onto the marketthan there has been for some timewhich helps with the domestic economic cycle of people gradually moving up the property ladder. Buyers are now able to dictate the price that they want to pay rather than having the prices dictated to them through competitive bidding which was synomnous with lower stock level.However,whilst this is good news for buyers,recent Capital Gain Tax changes and uncertainty due to the upcoming election is not great for those sellers who arelooking to sell and move up the ladder or downsize.Having just seen out the uncertainty that surrounded the referendum in Scotland, buyersare taking their time to see what the outcome will be in April and as such only those who need to sell are accepting offersbelow asking price. Uncertainty is currently the biggest problem for the central London market andweanticipate that caution will continue as more policies are announced in the coming months.”

The proposition is most likely to be popular for the plans by Labour to put £1.2billion raised to go towards the NHS. However, there has been questions raised about what impact this will have on the budget, which compared to the English health budget of £113billion seems relatively small fry. People are also raising the issue that it is expected that by 2020 there will be a budget deficit of £30billion for the NHS, and that the small amount raised will not be enough to prevent this shortfall. Yet the money needs to be raised in some way to avoid cuts in the NHS and a depletion of services offered, so this may be one solution to help secure further funding.

However, what is unlikely to be so hotly contested is the proposal by Labour to build a further 200,000 homes per year to help, in particular, first time buyers. In areas particularly in the south east the shortage of housing has led to concerns about sharp price increases due to high demand, so more properties being built should go some way to heed concerns about an unsustainable market.

To find out more about the impact of a general election, both before and after the vote, click here to read our latest blog. For more information about the property market in your area or to discuss your property speak to your local Winkworth office. Click here to find yours.

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