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Liberal Democrats plan to expand council tax bands

At the Liberal Democrat party conference this weekend, leader Nick Clegg announced they would be abandoning their previous proposal of a mansion tax for properties over £2million and would instead focus on introducing more council tax bands. The new policy would look to expand the bands beyond Band H, currently the highest council tax band, in order to ensure that those living in larger and more expensive properties would be taxed more than those that are living in properties in the same band but are considerably smaller and lower value. As Alex Thomson, Director of Winkworth Notting Hill, comments, “The most notable thing to come from the Lib Dem conference was their realisation that a mansion tax is simply unworkable and in many instances unfair.Mr Clegg has been quoted as saying: 'I went off, big time, the idea that you have a fixed levy as a percentage over a certain value. The more I looked at it, the more I thought, 'That's very crude.' It leads to eye-watering amounts of tax being paid." The Lib Dems remain intent on raising tax revenue from the higher end of the property curve, but are now focused more on adding higher council tax bands. Few can argue it’s fair that owners of multi-million pound homes in London pay the same level of council tax as those of small flats a fraction of their value. However it remains unclear what they feel the levels should be, we await Danny Alexander’s further elaboration on this.” The change in policy now proposed by the Liberal Democrats comes at a time when Labour have recently announced their plans to introduce a mansion tax in order to raise £1.2billion for the NHS. Many have concerns about the policy and how it can be fairly implemented especially for those that are asset rich but cash poor. As such the proposal by the Lib Dems may be more widely accepted. However, a recent poll by Rightmove says that 52% think that mansion tax is fair perhaps suggesting that many feel that something needs to be done about those in more expensive properties. “This proposal by the Lib Dems is an important shift as it is not unrealistic to imagine us reaching a situation next year where the Lib Dems use it as a condition of their leaping back in to bed with the Tories.” Alex Thomson continues.“The impact of this shift away from a mansion tax by the Lib Dems can only be viewed as a positive one as far as the property market is concerned, although it may fall short of reigniting a market stagnating under a cloud of uncertainty whilst Labour cling to this unworkable policy. Council tax is an existing tax, a cost of ownership which is accepted and its adjustment may be a less bitter pill to swallow for most than the alternative, so long as the bandings implemented are sensible tax raising measures rather than of levels which might be considered more punitive in their scale.” As the election draws nearer and the UK moves into a temporary period of governmental uncertainty with different policies being promoted by different parties, a slowdown in transaction volumes is anticipated as we move closer to polling day. In the run up to previous general elections, buyers have delayed purchasing until after the ballot papers have been counted and the new government has taken office. Therefore it will be interesting to see how the market with be impacted in this election both in the lead up to the vote and once a government has been elected. To read more about the impact of the election both before and after the ballot, click here.

Deputy Prime Minister Nick Clegg Addresses The Liberal Democrat Party Conference At the Liberal Democrat party conference this weekend, leader Nick Clegg announced they would be abandoning their previous proposal of a mansion tax for properties over £2million and would instead focus on introducing more council tax bands. The new policy would look to expand the bands beyond Band H, currently the highest council tax band, in order to ensure that those living in larger and more expensive properties would be taxed more than those that are living in properties in the same band but are considerably smaller and lower value.

Notting_Hill_AlexAs Alex Thomson, Director of Winkworth Notting Hill, comments, “The most notable thing to come from the Lib Dem conference was their realisation that a mansion tax is simply unworkable and in many instances unfair.Mr Clegg has been quoted as saying: 'I went off, big time, the idea that you have a fixed levy as a percentage over a certain value. The more I looked at it, the more I thought, 'That's very crude.' It leads to eye-watering amounts of tax being paid."

The Lib Dems remain intent on raising tax revenue from the higher end of the property curve, but are now focused more on adding higher council tax bands. Few can argue it’s fair that owners of multi-million pound homes in London pay the same level of council tax as those of small flats a fraction of their value. However it remains unclear what they feel the levels should be, we await Danny Alexander’s further elaboration on this.”

The change in policy now proposed by the Liberal Democrats comes at a time when Labour have recently announced their plans to introduce a mansion tax in order to raise £1.2billion for the NHS. Many have concerns about the policy and how it can be fairly implemented especially for those that are asset rich but cash poor. As such the proposal by the Lib Dems may be more widely accepted. However, a recent poll by Rightmove says that 52% think that mansion tax is fair perhaps suggesting that many feel that something needs to be done about those in more expensive properties.

“This proposal by the Lib Dems is an important shift as it is not unrealistic to imagine us reaching a situation next year where the Lib Dems use it as a condition of their leaping back in to bed with the Tories.” Alex Thomson continues.The impact of this shift away from a mansion tax by the Lib Dems can only be viewed as a positive one as far as the property market is concerned, although it may fall short of reigniting a market stagnating under a cloud of uncertainty whilst Labour cling to this unworkable policy. Council tax is an existing tax, a cost of ownership which is accepted and its adjustment may be a less bitter pill to swallow for most than the alternative, so long as the bandings implemented are sensible tax raising measures rather than of levels which might be considered more punitive in their scale.”

As the election draws nearer and the UK moves into a temporary period of governmental uncertainty with different policies being promoted by different parties, a slowdown in transaction volumes is anticipated as we move closer to polling day. In the run up to previous general elections, buyers have delayed purchasing until after the ballot papers have been counted and the new government has taken office. Therefore it will be interesting to see how the market with be impacted in this election both in the lead up to the vote and once a government has been elected.

To read more about the impact of the election both before and after the ballot, click here.

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