The Chancellor is ‘seriously considering’ a mansion tax on homes worth over £2 million, it has been reported over the weekend, with two key prime estate agencies slamming the leaked proposal.

Property owners would be charged a 1% annual levy on any value in their home over the £2 million threshold – so a £2.5 million home would pay an annual mansion tax of £5,000, with a rumoured higher percentage rate for super-prime and second homes.

The proposal would play well among Labour’s grass roots, who have long believed that Britain’s high net worth community don’t pay enough tax; the recent changes to the non-dom tax rules are from this playbook too, a system that Labour’s manifesto said had too many ‘loopholes’.

And London Labour MP Bell Ribeiro-Addy, who this month had an unsuccessful shot at being elected as the party’s deputy leader, recently called for “wealth taxes on Britain’s super-rich corporations and individuals to unlock billions for public investment.”

“The moral and political case for wealth taxes is overwhelming but they are also simply a practical necessity.”

“The moral and political case for wealth taxes is overwhelming but they are also simply a practical necessity.”

The idea of a mansion tax has been floated by previous Chancellors the first of which was Vince Cable in 2009.

He similarly proposed an annual tax for those owning homes worth more than £2 million, although this was later converted into a 7% Stamp Duty levy by his successor, George Osborne.

The latest proposal from Rachel Reeves has not garnered much support from the estate agents and firms selling this kind of property.

Agents comment

Lucian Cook, the head of residential research at estate agency Savills, told the Daily Telegraph: “There’s a big difference between someone in a £2m house without a mortgage and someone with a sizeable mortgage. It doesn’t necessarily capture net wealth at all.”

Dominic Agace, CEO of Winkworth, says: The Government is driving away the wealth generators in our country.

“Speculation of this kind has already affected the market and it’s hard not to see how such a tax won’t cause wealth destruction.

“It is particularly unfair for those in London where it’s not all uber wealthy people who own these houses.

“Many families in such properties have significant mortgages and are already tackling mortgages that have more than doubled as interest rates have increased. They have already paid significant stamp duty too.”

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