Politicians are queuing up to bash the rich, focusing on the houses they buy.
The LibDems, led by deputy prime minister Nick Clegg and business secretary Vince Cable, are proposing a 'mansion tax', an annual charge of 1 per cent on properties valued at over £2 million. And George Osborne, the chancellor of the exchequer, wants to close the loophole by which properties owned by offshore companies avoid paying stamp duty.
The first proposal is unfair, the second unworkable. And both are cynical attempts to curry favour with the electorate.
The mansion tax is unfair because its arbitrary lower limit of £2m (already increased from the £1m that Vince Cable originally mooted last year) will impose very high stresses on markets where average values are high, mainly prime central London. In our area, £2m will get you a property that no-one would regard as a 'mansion'. It will get you a relatively modest apartment.
In Marylebone particularly, many people who bought their homes in the 1980s before two property booms will now be retiring on fixed incomes. The imposition of a mansion tax may force them out of the places they have lived in for decades.
The tax will also impact investor sentiment, tipping the scales against London property as rental propositions and deterring inward investment that has brought billions in much-needed foreign currency into the capital over the last few years.
This pernicious proposal needs to be quashed immediately.
The closure of the stamp duty loophole would probably be a good thing, as possibly billions of pounds in duty may be lost in this way. The problem is that many high value properties are being purchased not by people but by offshore companies, often set up specifically to own that property. When the owner wants to sell, they sell not the property but the shares in the company. As the property does not change hands, no stamp duty is payable.
Unfortunately, without control over tax havens it is difficult to see how this might be done.