Londoners who do not consider themselves wealthy could be liable for the mansion tax because of the capital's housing crisis, Labour's candidate in the Holborn and St Pancras by-election has said. Chancellor John Healey is expected to confirm the threshold for the additional council tax payment at his Budget later this month.
The original plans, unveiled by his predecessor Rachel Reeves last year, would impose extra annual charges of between £2,500 and £7,500 on homes worth over £2 million, starting in April 2028. Reports suggest Mr Healey is considering lowering the threshold to £1.5 million.
One in five homes affected
Analysis by estate agency Hamptons shows that all but one of the top 20 constituencies most affected by the tax are in London, including Holborn and St Pancras, where one in five homes is valued at £1.5 million or more.
Labour candidate Sagal Abdi-Wali told the Standard: "I understand that there are some homes here that are a certain level of price where people don't necessarily feel rich and there would be a pressure on them. And I definitely want to make sure those people are listened to and supported. But I also think we do live in, we are living through a housing crisis, and anything that can alleviate the pressure for the vast majority of people in this situation and improve the housing crisis is really important to look at."
By-election campaign issue
The mansion tax has become a key issue in the hotly contested by-election, where Green Party leader Zack Polanski is seeking to oust Labour in the seat vacated by Sir Keir Starmer. Mr Polanski has suggested he opposes the move and would prefer a "wealth tax" on the richest Britons over the mansion levy, which Labour says is being introduced to make council tax fairer and raise up to £430 million a year for the Treasury.
The Conservatives have vowed to scrap the tax if they win the next election. Shadow chancellor Andrew Griffith said: "Labour have already come for the family farm and the family business. Now they are coming for the family home. People who have worked hard to buy their home and have lived in it for years will face huge tax bills, and many will have no way to pay. Labour's own figures say it will knock value off people's homes, and will raise less than 1 per cent of what council tax brings in."
Impact on London constituencies
In Kensington and Bayswater, the most impacted constituency in the country, an extra 3,000 households would be dragged into paying the new tax if the threshold were lowered to £1.5 million. Hampstead and Highgate had the second highest number of homes that would be hit, followed by Chelsea and Fulham.
London MPs are "quietly confident" the Chancellor will roll back plans to expand the levy to all homes worth more than £1.5 million after their appeals to the Treasury. "We are quietly confident it will not be brought down to £1.5 million," a London Labour source told the Standard. "That would hit almost all family homes in Zones One to Three. It makes no sense in London."
