The Mansion Tax Postcode Lottery
A proposed mansion tax from Chancellor Rachel Reeves has been branded 'unfair' by next-door neighbours in Hampshire who live in virtually identical houses but face dramatically different financial futures under the new rules. The policy, expected to be unveiled in today's Budget, threatens to create what critics call a 'postcode lottery' for homeowners.
Web developer Jez McKean, 44, lives with his wife, two children and their golden retriever in a four-bedroom house in Chandler's Ford that falls into council tax Band F and could be affected by the changes. His neighbour, school administration assistant Alice Yates, 41, lives in a similar four-bedroom home just next door but will not be impacted because her property is in Band E.
The situation highlights what many are calling an inherent unfairness in the system. Despite their homes being similar in size with only £57,000 difference in value - Zoopla estimates Mr McKean's at £730,000 and Mrs Yates's at £673,000 - one family faces potential tax increases while the other does not.
How the Mansion Tax Would Work
The Chancellor's plan involves revaluing 2.4 million of the most valuable homes across the top council tax bands of F, G and H. Properties that have gained significant value compared to the rest of the market or inflation could move up a band, depending on how the final scheme operates.
This revaluation would then facilitate a separate 'mansion tax' surcharge on more than 100,000 properties worth at least £2 million. The tax could cost owners an average of £4,500 each and raise £450 million for the Treasury. Crucially, there will be no impact on homes in bands A to E.
In Chandler's Ford, the current council tax differences are substantial: Band E properties pay £2,656 to Eastleigh Borough Council, while Band F is £3,139, Band G is £3,621 and Band H is £4,346. The potential for bands to increase could significantly widen these gaps.
Neighbours React to Budget Uncertainty
Mr McKean explained that the system doesn't make 'sense' given how similar neighbouring properties can be. 'I have always thought it weird that the bands have cut-offs rather than sharing it equally across everybody,' he said. 'The house next door is different, but not that different, so the abrupt change does not seem fair.'
The web developer, who said he wouldn't consider his house a 'mansion', added: 'I would not call it a mansion when it is on a road with other houses. I would consider it to be a mansion if it has a name and not a number. It is not different enough from next door for it to be fair for it to be a bigger increase for us.'
Meanwhile, Mrs Yates expressed relief that she would not be affected, admitting she and her husband would not be able to 'cope' with paying more tax. 'I didn't realise it was going to affect our street,' she said. 'I thought it was going to affect wealthy areas, but that's not really us. I mean, we do have a street with low, middle, and high-end houses.'
She sympathised with her neighbours, noting: 'We are the same-sized family as next door, and there is not a drastic difference. They have two kids, two parents, and a dog. It doesn't really seem fair. They are good-sized four-bed homes, a good-sized family home.'
Mrs Yates added that the government 'need to think a lot more about it and do a full consultation about how they are going to change it and not just in the budget by making a quick decision.'
Broader Implications and Regional Impact
The changes are expected to disproportionately affect homes in the South East, London and the East of England. Official data shows the South East has around 645,000 homes in the top three council tax bands, compared to just 43,000 in the North East.
Interestingly, the threshold means Prime Minister Sir Keir Starmer and Home Secretary David Lammy - who own properties in north London worth between £1.5 million and £2 million - are likely to escape the tax. However, Energy Secretary Ed Miliband and Attorney General Lord Hermer could be affected, as they each own homes with an estimated value of close to £4 million.
To mitigate concerns about forcing people to sell their homes, homeowners are expected to be allowed to defer paying the 'mansion tax' until they move house or die. Nevertheless, experts have warned the policy could damage the property market at a time when the Government is looking to build 1.5 million more homes.
The situation in Chandler's Ford serves as a microcosm of the broader concerns about fairness and implementation that surround this significant shift in property taxation policy.
