The Autumn Statement further undermines the case for a mansion tax, both by increasing the rate of stamp duty on high value properties and substantially increasing the annual charges for those caught by the ATED* regime. Despite this, its introduction remains Labour party policy.
Such a tax would not be significant at the lower end of the price spectrum, with Labour suggesting a charge of just £3,000 for properties worth between £2m and £3m. However, it would be more onerous in higher price bands, if the stated target revenue of £1.2bn per annum were to be raised.
This would indicate a relatively muted market in the run up to the election. What happens thereafter depends on who gets into power and specifically whether a full blown mansion tax is introduced, abandoned or substantially toned down.
As things stand we are forecasting that prices will fall by around -1.0% in prime central London and plateau across the rest of the prime London market in 2015, assuming there are no further tax changes.
Overall, this means committed sellers will need to be realistic on prices but there could be a buying opportunity for those who are prepared to take a long term view on the prime housing market.
Over the five years to 2019, we are forecasting growth of 23% assuming no mansion tax is introduced.
*Annual Tax on Enveloped Dwellings
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