Hackney home owners are not ‘living in Downton Abbey,’ Diane Abbott, the Labour MP for Hackney said last week.
In an interview on LBC she pointed out that many of the households that will be expected to pay Labour’s planned ‘mansion tax’ bought a house in an ‘unfashionable’ part of London many years ago and may not have the funds to pay the tax.
EastLondonLines boroughs have seen property prices soar by up to 122% in the last decade, meaning households who are rich in assets but poor in cash might be expected to pay Labour’s mansion tax.
In an infographic published by Property Division, it was revealed that Hackney, Lewisham, Tower Hamlets and Croydon all have homes valued over £2m, the mansion tax threshold, despite being areas that were not associated with wealth in the past.
Property Division’s report states that a house worth £258,987 in 2004 is now priced at around £575,476, an increase of 122%. Homes in Lewisham are now on average 73% more expensive, while Croydon and Tower Hamlets have seen house prices increase by 33% and 64% respectively.
Navarino Road, London Fields, is home to properties that can fetch upwards of £2,750,00, with the average asking price for a 5 bed house in the E8 postcode at around £1.4m, according to property website Zoopla.
A resident of the area who asked not to be named said that properties on the road have increased in value since she moved there with her family only four years ago. She said: ‘When the estate agent showed us the house he said the area was getting more and more desirable and that we would probably be in a good position if we chose to sell in 10 years time.’
The resident said that she thinks the households that would qualify for the mansion tax would be ‘less than pleased’ because it was ‘more than they bargained for when they moved in.’
Homeowners whose property is valued above the £2m threshold and who earn more than £42,000 will be unable to defer from paying the £250 a month mansion tax.
Nick Leeming, chairman of estate agents Jackson-Stops and Staff told the Guardian that the mansion tax would hit those who may not be able to afford it, saying it will hit the Carsons and not the Lord Granthams in another reference to Downton Abbey.
He said: ‘Many owners are people who have worked hard throughout their lives and have been in their homes for many years,” adding that “the threat of a mansion tax would force these people to sell up.’
Labour proposed the mansion tax as part of their 2015 manifesto, and it is designed to tax homes worth between to £2m and £3m in order to raise a hopeful £1.2bn for more NHS jobs.
In 2013 David Cameron ruled out a mansion tax, telling the BBC that a ‘wealth tax is not sensible for a country that wants to attract wealth creation, wants to reward saving and people who work hard and do the right thing.’