It is a London homes tax. A tax on Britons who work hard and save hard, often with high mortgage payments that will rise when interest rates go up.
In inner London, 20 per cent of properties changing hands are already worth more than £1 million. That’s not just in Mayfair, but in boroughs such as Tower Hamlets and Hackney. The next step up for these home owners brings them into the sights of Labour’s promised tax.
The Labour manifesto proclaims “everyone should be able to live in a secure home”, but for many Londoners that aspiration is no longer secure.
We have due right to be worried. You only need to look back to the story of the hated stamp duty.
Originally a flat rate of one per cent, in 1997 the Labour chancellor Gordon Brown introduced stepped bands. At £250,000, a 1.5 per cent tax charge was put in place, which was then cranked up every year to reach three per cent in 2000.
Heralded by Labour as a tax on the very rich — does that ring any bells? — this remained untouched for 15 years and, over three consecutive Labour governments, stamp duty went from a tax on the wealthiest to a tax on everyone.
The Coalition redistributed the tax, shifting the burden away from the average home owner. If Labour held the balance of power after this election, propped up by a more Left-wing and self-interested Scottish Nationalist Party, there would be no such moderating influence.
Nor would there need be, as Labour has left the door wide open, refusing to be specific about the proposed tax bands. Mansion tax promotes divisiveness and is unfair. Labour mentions the word “fair” 23 times in its manifesto. How can a tax on Londoners’ homes, probably their one and only asset, be fair?
London already pays more than its “fair share” of tax into Britain's coffers. In inner London, the average stamp duty receipt is 10 times higher than that UK-wide.
The new homes tax will put an even greater burden on London, which will not even be the beneficiary.
Labour’s Jim Murphy, the party leader in Scotland, where incidentally only 900 properties are affected, has already earmarked the tax for the NHS and 1,000 extra nurses over the Border.
Apparently, the entire country north of Birmingham will only contribute around seven per cent. So how fair is a tax on Londoners? Does the UK need a government-in-waiting that calls for “a Britain where everyone plays by the same rules”, but seeks to put the biggest tax burden on London alone?
Beware, Londoners voting Labour on May 7 will be voting for a London homes tax. Do turkeys vote for Christmas?
- Naomi Heaton is chief executive of London Central Portfolio, residential funds and asset management, specialising in prime central London - @LCP_Ltd #londonhomestax