A joint letter has been written by four London boroughs to express concerns about the repercussions of introducing ‘Mansion Tax’.

Sent to the Chancellor by Wandsworth, Richmond, Westminster, and Kensington and Chelsea Councils, the letter calls for the Government to reconsider its plans to implement a new High Value Council Tax Surcharge.

It cautions that residents who ‘already contribute heavily to the public finances’ could be unfairly targeted by the move.

In a statement from Wandsworth Council yesterday, it is argued that roughly £275m could be paid annually by households within the four boroughs following the commencement of the new tax, which is due to take effect in April 2028.

This would be over half of the revenue that is estimated to be made across the whole of the UK.

The statement outlines fears that landlords who are impacted by the tax will charge tenants more, causing increased pressure on local housing costs. Furthermore, residents whose house prices have surged over the years but have continued to earn a modest income could be disproportionately affected, it warns.

In their plea for action, the leaders of the four boroughs have called on the Chancellor to rethink the proposals, as well as urging that a fairer approach is devised with the help of local government to ensure a ‘disproportionate burden’ is not faced by London residents.

Comments

Cllr Robert Morritt, leader of Wandsworth Council, said: ‘We won't get to keep a single extra penny raised, with Wandsworth residents hammered to pay for those elsewhere.  

‘Why should an additional tax on our residents’ houses, be spent so far from their homes?’

Cllr Gareth Roberts, leader of Richmond Council, commented that the Government ‘is seeing Richmond residents as cash cows that they can milk to fix funding gaps elsewhere in the country, irrespective of whether they can afford to pay this new tax’.

Cllr Elizabeth Campbell, leader of Kensington and Chelsea Council, said: ‘This is not a tax carefully targeted at the very wealthy. It lacks nuance and will hit pensioners, families and long-standing residents whose homes have risen in value while their incomes have not.’

Cllr Paul Swaddle, leader of Westminster City Council, added that high property values ‘do not always translate into high household incomes, and it risks creating unfair outcomes for residents whose property value does not reflect their ability to pay’.

Government response

A Government spokesperson said: ‘This tax is expected to raise around £430m per year to help fund public services and is addressing a longstanding unfairness in our country, where a Band D home in Darlington or Blackpool pays more in council tax than a £10m mansion in Mayfair.’