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Labour’s mansion tax could force thousands of asset-rich, cash-poor pensioners to sell up, analysis suggests.
Chancellor Rachel Reeves is considering hitting homeowners in properties worth more than £2m with a 1pc annual levy in her November Budget.
However, property experts warned that retirees who had seen the value of their homes rise over several years could be forced to downsize to avoid the extra tax – which would be as much as £10,000 a year for those in £3m properties.
Homeowners in London and the South East, where 82pc of recent sales of properties over £2m were located, would be disproportionately affected, the analysis found.
Tom Bill, at estate agency Knight Frank, warned “cash poor” pensioners were particularly at risk of getting caught up in Labour’s wealth raid.
He said: “It doesn’t follow that if you happen to live in a large house, you have the cash to pay this levy – older people may have been in the house for decades and it has appreciated.
“If a mansion tax were introduced, you would see some older homeowners forced to downsize, whether they were ready or willing to move out of their neighbourhood or not.”
There are approximately 140,000 homes valued at £2m or more in the UK, according to Savills, with 23pc of those sold owned for over 20 years.
Nearly a fifth of homeowners in the highest net property wealth bracket – calculated at £500,000 or more – are over the age of 65, ONS figures show.
Lucian Cook, Savills’ director of residential research, said many of those hit by a mansion tax raid would be older, long-term homeowners who had not prepared for a tax bill amounting to thousands each year.
He added that those in London and the South East, where 82pc of recent sales of properties over £2m were located, would be disproportionately affected.
