Fear of Labour tax grab drives down mansion prices


White luxury houses facades in London, Kensington and Chelsea architecture in a sunny day with blue sky

Fear of a Labour government is driving down mansion prices as ultra-rich buyers cite a potential tax grab by Sir Keir Starmer when haggling with sellers.

Wealthy buyers in the market for properties worth at least £15m have started using Labour policies as a bargaining chip in negotiations, according to Beauchamp Estates.

Director Rosy Khalastchy said Labour has increasingly been mentioned in discussions as the opposition party’s lead over the Conservatives remains stubbornly high.

Ms Khalastchy said: “Usually they mention it when they want to buy something in an attempt to get a lower price. They believe that taxation will be heavy.”

Ultra-rich buyers argue they are taking a big risk by buying before the election as they could soon be taxed more and are weighing up whether to wait, according to Ms Khalastchy.

Labour has pledged to close a tax loophole for second homeowners and restrict and raise levies on foreign ownership.

The party has so far rejected speculation that it will introduce a wealth tax or go after high earners, despite senior members of the party backing increased taxation on capital gains.

However, 44pc of the public believe taxes will rise under a Labour government, according to YouGov polling from October.

Mansion buyers citing fears about taxation under Labour are typically already based in the UK, Ms Khalastchy said. However, overseas buyers are increasingly concerned about British crime levels, she added.

Ms Khalastchy said: “Lately I’ve heard some people say they are finding the protests and the crime in the UK is more than it used to be and it is putting them off. Muggings, burglaries and just general crime.

“They don’t necessarily feel secure. Security is a big thing for international buyers. If people hear their friends say they have been mugged or there has been a big burglary somewhere, it brings it more home to them.”

It comes amid growing public concern over police forces failing to properly investigate crimes such as burglaries and car theft. More than half of forces in England and Wales have been reprimanded by the police watchdog for being inadequate or requiring improvement.

Despite reservations around a possible Labour government and crime, the top end of the housing market has held up well in the face of 16-year-high interest rates and soaring inflation.

The number of billionaires buying luxury homes in London last year rose by 10pc amid an influx of Gulf sheikhs, US tycoons and the Chinese super-rich, according to Beauchamp Estates.

Labour’s lead in the polls has widened to 27 points and remains at its highest since Liz Truss’s short-lived premiership.

Prime Minister Rishi Sunak has said that his “working assumption” is that a general election will take place in the autumn.