Homeowners hit by the proposed mansion tax will have to spend £110m revaluing their properties, according to Savills estate agents.
Labour’s plans will require over 120,000 homeowners to have their homes valued, which could cost up to £4,800 each.
Savills says that homeowners will have to pay the total cost of £110m or risk fines of thousands of pounds.
The estate agent also noted that taxpayers will suffer as HM Revenue & Customs (HMRC) will have to pay the £65m cost of disputing any valuations.
Savills have raised concerns that the cost of revaluing and disputing will probably be higher than the amount raised from the tax.
Research conducted by Savills indicates that more than a third of the 97,000 properties worth between £2m and £3m subject to the charge have been owned for over ten years. 18,700 have been lived in for over 20 years and 10,400 for over 30 years.1
Critics claim that many hit by the tax in the South East will be on low incomes that do not correspond to the huge price rises their properties have experienced recently.
The new chairman of Tesco, John Allan, said that the tax is “penal” and “difficult to justify.”1
Director of Residential Research at Savills, Lucian Cook, says: “The valuation requirements and associated potential for dispute mean that a mansion tax would be particularly costly and complicated to administer, reducing its efficiency as a revenue raiser for the Treasury.
“The potential costs borne by the tax payer will be a further concern to long-term owners who are often asset rich but cash poor and for whom the tax itself is a significant concern.”1
Labour claims that taxing properties worth over £2m could raise £1.3 billion for the NHS from about 100,000 homes.
It announced proposals to charge £3,000 a year on homes between £2m and £3m. It is also planning higher taxes on properties worth more, but has not disclosed how much. Estate agents estimate the average cost to be £12,000 per year.
Ed Balls has claimed that the charge to homeowners with properties worth over £10m could be tens of thousands of pounds, increasing to more than £1m for the most expensive homes.
Savills have compiled their research based on the following six bands: £2m-£3m, £3m-£5m, £5m-£10m, £10m-£15m, £15m-£20, and £20m and over.
Most of the valuations will be for homes worth between £2m-£5m at a cost of £1,800 each. For the more expensive properties, it could cost £4,800.
Savills believes that HMRC will want to contest some valuations by using a district valuer, which could cost the taxpayer £38m. Further disputes could coast £27m.