Dr Nikhil Datta on the Budget announcement of a new High Value Council Tax Surcharge ('Mansion Tax')

Commenting on today’s budget announcement from the Chancellor of the introduction of a new High Value Council Tax Surcharge, also referred to as the ‘Mansion Tax’, Dr Nikhil Datta, Assistant Professor in the Department of Economics, University of Warwick, said:

“The proposed council tax surcharge will likely lead to lower house prices for properties at the top end of the market.

“The available evidence suggests that changes to recurring property taxes tend to be capitalised into house values, with buyers reducing their willingness to pay by the present value of future tax liabilities. For a £2.5 million property facing a new surcharge of £2,500 per year, this would imply a price reduction of around 2–3%, based on the most recent, state-of-the-art estimates.”

ENDS

 

Notes to Editors:

• Dr Nikhil Datta is Assistant Professor in the Department of Economics, University of Warwick, specialising in labour, urban and real estate.
• His recent work includes a joint publication with Dr Amrita Kulka, University of Warwick, on Solving Britain’s Housing Crisis: Where and how to build 1.5 million homes.
• The press release for Solving Britain’s Housing Crisis is available online here.