Could mansion tax affect many 'ordinary homeowners'?

Could mansion tax affect many 'ordinary homeowners'?

Britain's electorate heads to the polling stations today (May 7th) to decide who will lead the country moving forward. However, with the election being called the closest in a generation, there is still uncertainty about how the outcome will affect certain sectors, with one of the most prominent being residential property. 

There were fears in the last few months that the number of buyers would fall as people elected to wait until after the new prime minister was in place to see how policies would affect their purchases. And while this has proved to have been far less significant than had been feared at first, even at this late stage there are still worries that homeowners will be affected negatively. 

One of the most controversial of all proposed policies has been Labour's mansion tax, in which it has promised to put an extra levy on all homes it says are high value - those that cost more than £2 million. And now, as Brits head to the poll, it has been claimed that the policy could affect many 'ordinary' homeowners across the country, the vast majority of whom live in London. 

Chestertons Group chief executive officer Robert Bartlett, speaking in the lead up to the election, said that there are two distinct groups that will be negatively affected by this change in regulation and the additional levy. 

One of these would be people who still have a mortgage, who have seen the price of their home rise across the course of the last few years. Mr Bartlett said that these people would essentially be hit with a 'tax on debt' simply because they purchased in the capital a few years ago. 
"Unless you are very rich, you are likely to have a mortgage on your home. Let's say your home is worth £2.5 million but you have a £1.5 million mortgage. That means your asset value is only £1 million, but you will be taxed as though you own the property outright. This would potentially make this tax the UK's first ever tax on debt," he said. 

The other group that would be hit hard would be pensioners, most of whom have invested in the market for their retirement and benefited significantly from the rise in home values across the last few years. 

In cases even where a person owns their house outright, if they have retired and have little in the way of significant income, they could be hit hard by an additional tax on the value of their home.