Older borrowers and high-value regions seen as most exposed to planned levy
Although housing policy did not dominate last week’s Autumn Budget, the government’s planned “mansion tax” continues to draw criticism from parts of the property sector. A significant share of UK adults believe the tax on properties valued above £2 million is unfair, with older homeowners and those in high-priced regions appearing most at risk of being drawn into the charge.
Survey findings by specialist lender Together indicate that more than one in five respondents (21%) think the levy is unjust, while concern is especially pronounced among Baby Boomers and residents in London, the South West and selected cities where long-term price growth has lifted typical property values well above the national average.
The lender also notes that the term “mansion tax” is also contentious, as some older homeowners on modest pensions may fall within scope due to long-term house price growth rather than high income levels.
The study found that Baby Boomers – those aged 61 to 79 – are notably critical, with 21% in this cohort regarding the new levy as unfair. Regional disparities in pricing appear to be a factor, with almost a quarter (23%) of respondents in London and the South West reporting that households in those areas are likely to feel the impact most.
Drilling down to city level, the survey shows that residents in Bristol (27%), London (23%) and Plymouth (23%) were among the most vocal in opposing the mansion tax.
Ryan Etchells (pictured right), chief commercial officer at Together, said the policy risked placing particular strain on older owners whose properties have risen sharply in value over several decades.
“The Baby Boomer generation - somewhat unfairly - tends to have a bad reputation due to buying homes in the 1970s to 1990s when prices were low and disproportionately benefitting from house price inflation since then. However, with this new mansion tax in place; as our research proves, it’s crystal clear that they will be hit hardest.
“This means ‘empty nesters’ and people who bought their property decades ago simply as a family home, not as an investment, will now have to cough up thousands just to continue living in their own home. That’s utterly unfair and will penalise them - adding even more cost pressures. Asset-rich but cash-poor older homeowners could really struggle, as this mansion tax could be equivalent to an entire year’s state pension.
“The industry needs to prepare for the likelihood that the government won’t carry out any affordability checks. This means lenders will need to factor this additional cost into mortgage assessments for homes above the £2 million threshold, of which there are many, especially in London and across the South of England.”
For mortgage professionals, the proposal raises questions about how the annual charge should be treated within affordability models for higher-value properties, particularly where borrowers are older, on fixed incomes, or already facing elevated living costs. Lenders may also need to consider how the tax interacts with interest-only arrangements, later life lending, and capital raising secured on long-held family homes.
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