The housing market in the United Kingdom has shown signs of quantitative easing, and has also managed to fall short of investors’ expectations. The last few years saw a surge of demand in buying properties in London, for example, but concerns over the tax question has led many to drop “purchasing homes” like a hot potato. Market prices in the affluent neighbourhoods have been hit the hardest, followed by a sharp decline in purchasing interest for most income earners, as a stormy political weather continues to rage on. The prospect of a hike in interest rates, strict lending criteria, difficult mortgage rules, a neverending recession has all led to buyers being put off from purchasing homes.
The mansion tax is not worth much, figuratively speaking, because it cannot raise a lot of income for GDP. Properties that are valued highly, are all taxed more than affordable homes, but the moolah raked in cannot compete with government spending, which has jumped to a 45.8percent from a 38.8percent in 2007/2008. The mansion tax that Ed Miliband suggests aims to impact house prices and businesses are already losing confidence in Labour, so this is not the right moment to clamp down on stamp duty receipts. Elderly homeowners, and properties in the capital, as well as the South-East are going to be largely affected. The housing market cannot afford to cool off, to slow down. Furthermore, the stamp duty losses are too much to deal with in this present economic climate, and the losses incurred cannot be balanced out by any hopefully and prospective leads in gaining cash to support public infrastructures.
Terraced homes, pensioners, are already feeling the impact of a ballooning housing cost issue, where the cost has surpassed the inflation, and left it in the dust. Many people live in huge homes but do not have an equally large paycheck, or live off pensions, their wages cannot support this. Stamp duty receipts would fall if homeowners decide against moving or be tempted to take up an offer of reasonably priced accommodation. The affluent recently grew very interested in living in the United Kingdom, going so far as moving here, but with this picture of housing, it will not take much to put them off from purchasing properties. Just think of the income tax revenues, and how much of their earnings would be pumped into it!
This policy needs to take into consideration the practical angle of things, it needs to float, not sink because you cannot expect to rake in money, when most people with a good-priced home, do not have the wages to support it. The concept of mansion tax is good, so it should be implemented if Labour was to win in this year’s general elections, but the fineries still need working. Wealthy addresses don’t always mean fat paychecks, so homes that could have belonged to homeowners for more than a decade could now be sold just to leverage enough money to write off the losses incurred. Also, it is important to note that this “scrapped paper” noting down of policy of imposing a mansion tax on properties worth more than £3mn is unlikely to float because the tax raked in would just be too high, for most British pursestrings.