Plans announced yesterday by the Liberal Democrat party to introduce a new property tax on residential real estate worth over £1 million has met with a cool reception from the industry.
The party’s treasury spokesman Vince Cable said that the new property tax would raise more than £1 billion that would be used to raise the income tax threshold in the country to £10,000.
However, many in the property industry believe that real estate taxes should be based on ability to pay. They point out that elderly people living in larger houses will be hard pressed and also the tax will be heavier on those living in London and the south east of the country where property prices are higher.
His response to such sentiments may not have won him much support. He explained that the tax, dubbed ‘the mansion tax’, could be rolled over from year to year and then taken from someone’s estate after death. Critics claim that this would turn the new property tax into an inheritance tax.
He also suggested that owners of large houses with low incomes should mortgage their homes to pay the tax. ‘There are equity release schemes and that is a way you can turn your wealth into income,’ he said.