Labour's mansion tax proposal almost exclusively penalises homeowners in the south east of the country, new research from Zoopla has found.
Reacting to Ed Miliband's party conference speech - in which he said Labour in power would tax wealthy homeowners an average levy of £15,000 each to fund the NHS - the property portal said that 96pc the tax burden would be shouldered by London and the south east.
Property group Savills, calculated this to be 1pc higher at 97pc, almost the entire country's bill.
The mansion tax plans proposed by labour could create more than £1.6bn in extra revenue per year for the public purse and with that money the Labour leader hopes to hire 36,000 new doctors, nurses, midwives and care workers
Despite the record high revenues that are paid by this area of the country in stamp duty - due to soaring property prices in the popular south east - Labour intend to put this additional tax on homes worth more than £2m, regardless of the owners' income.
Zoopla found that more than 108,000 households nationwide would be affected by the proposed tax.
Lawrence Hall, Zoopla analyst, said: "The introduction of a mansion tax would disproportionately penalise homeowners in London and the south east who are already responsible for the vast majority of property tax take in the UK.
"With more than 100,000 homes to be affected by this new levy, it is somewhat misleading to call it a ‘mansion tax’ when many three bed family homes in London and the south east would find themselves caught by it.”
A mansion tax could wipe almost £1bn off government revenues, deterring wealthy investors from buying in London, according to new research from Savills.
These plans mooted by both Labour and the Liberal Democrat would cause "a significant leakage" in government income from stamp duty, inheritance tax and capital gains tax, the property group has warned.
"The imposition of mansion tax is likely to result in a reduction in the amount people are willing to pay for the assets on which it is charged," said Lucian Cook, head of residential research for Savills. "This would have a negative impact on both stamp duty and inheritance tax revenues."
As the value of the property is not always linked to the income of the owners, especially when a home that has accrued in value is handed down through generations, the burden of tax is likely to be funded by borrowing, Mr Cook explained. "This means that rolled up debt (together with interest accruing) is likely to be offset against the value of the assets charged."
What the industry says...
There has been a backlash today against the Labour leader from property related businesses.
Stuart Law, CEO at Assetz, said: “Bashing the recovering property market with the threat of a ‘mansion tax’ isn’t the best tool in the box for Labour’s pre-election policy. The UK’s regional cities are beginning to flourish from the London prosperity ripple effect which is great news for local economies. While the spread of property millionaires is more concentrated in the south east, Ed Miliband must not stymy regional growth potential with this ill-thought-through plan."
“Introducing a mansion tax is just fudging the issue of a more important and urgent policy to build more homes and the resultant jobs that will create across the property industry. This seems a better way forward and one that will have a stabilising effect on house prices for homeowners of properties in all price bands and could just be more popular with voters.”
Rick Eling, Head of Investment Solutions at Sanlam said:
"How do you remain electable while promising brand new taxes? Simple: you give the tax a name that suggests extreme wealth and decadence. "Property Tax" sounds like something that could one day affect the ordinary man; "Mansion Tax", however, sounds like a tax on the bad guys.
"It's an announcement that will gather more electoral capital for Labour than financial capital for the exchequer should Ed Miliband win next May. And while "Mansion Tax" sounds as likely to hit ordinary families as "Ferrari Tax", there may yet be reasons for those without mansions to worry.
"The threshold is proposed at £2m- about 70,000 UK homes. But there has been talk of setting it as low as £1m. If that threshold is adopted- and left static- then this new tax has the potential to see tens of thousands of new homes each year caught by fiscal drag as house prices rise.
"Many more of us may find that we also - officially - live in a "mansion" by 2025."