In yesterday's Autumn Statement, Chancellor George Osborne announced a complete reform of the Stamp Duty system, meaning the average home in London will see a reduction of around £4,500 on stamp duty costs. Osborne predicted that these measures would mean a reduced amount of stamp duty paid by 98% of homebuyers.
The new stamp duty system means that each rate will only apply to the part of the property price that falls within that band. Under the new rules, no tax will be due on the first £125,000 paid, followed by 2% on the portion up to £250,000, 5% on the portion up to £925,000, 10% up to £1.5m and then 12% on anything above that price.
Under Labour's Mansion tax, owners of properties worth more than £2m would face an annual charge.
Ed Balls has previously said that most people who own homes worth between £2m and £3m would pay around £250 a month in mansion tax, while owners of homes worth "tens of millions" and second home owners would pay much higher rates of the "progressive" tax.
In an interview with ITV today, Balls said:
“I think people at the top with properties over £2m aren’t paying enough tax at the moment; 95 per cent of them are not moving in any year and they should be paying more.
“I want to get some money for the NHS and I think particularly for foreign investors but for also people with very high-value properties, the mansion tax is fair.”
Last month, Savills said Labour's proposed mansion tax could mean a price drop of up to 10% for properties valued at £10m or more, while those valued above £5m could see an 8% fall.
It predicted a property worth £7,500,000 now would rise to £8,424,043 in 2017 without mansion tax but just £7,601,040 if the tax was introduced.
According to the report, this could impact five year growth by an average of 5%.
Savills reaearcher Sophie Chick said that a clampdown on property owning non-doms had already compounded buyer caution, another move announced by Osborne in yesterday's statement.
