Will the mansion tax lead to

Will the mansion tax lead to a housing market bubble?

Proposals to introduce a "mansion tax" have sparked concerns that it could lead to a housing market bubble. The tax, which would be levied on properties worth more than £2 million, is designed to help alleviate the housing shortage in London and the South East. However, some experts argue that it could have the opposite effect, pushing up prices and making it even harder for people to buy their own homes.

David Miles, a former member of the Bank of England's Monetary Policy Committee, told the BBC that the mansion tax could lead to a "housing market bubble". He said:

"If you introduce a tax that's going to be very heavily concentrated on a small number of properties, you're likely to see a significant increase in prices of those properties. And that's because the tax is being borne by the people who own those properties, not by the people who are buying them."

Other experts have also warned that the mansion tax could lead to a housing market bubble. The Centre for Policy Studies, a right-leaning think tank, has argued that the tax would be "unworkable" and could lead to a "boom in property prices".

However, others argue that the mansion tax is a necessary measure to address the housing shortage in London and the South East. The Mayor of London, Sadiq Khan, has said that the tax would help to "reduce the number of multi-million pound homes" and "make it easier for people to buy their own homes".

Expert opinions

Author's note: While the mansion tax may have some benefits in terms of addressing the housing shortage, its potential to lead to a housing market bubble is a valid concern. The tax could have unintended consequences, such as pushing up prices and making it harder for people to buy their own homes. A more nuanced approach to addressing the housing shortage may be needed.

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This is Money This is Money — 2025-11-27

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