Labour's plan to hit houses worth over £2 million with a so-called 'mansion tax' would be "very disruptive" and hurt house prices, one of Britain's top housing experts has warned.
Kate Barker, the former Bank of England Monetary Policy Committee member who wrote a report for the last Labour government on housing, told The Huffington Post UK that she would not support the proposal.
She also dismissed Ed Miliband's proposal to double the number of first-time buyers getting on to the housing ladder as "far-fetched".
"The thing with introducing a mansion tax, particularly if it's introduced at a reasonably high level, is that it is unexpected tax, and it'd be capitalised into house prices today and therefore have quite a disruptive effect on the housing market."
"It'd mean that houses over £2 million would decline in value according to the discounted view people have of the tax paid on them."
"If maybe a bit difficult to feel terribly sorry about the effects of house prices as they have risen so rapidly. However, you should be reasonably careful about introducing a tax that would be very disruptive. I wouldn't do the mansion tax myself."
Ed Balls has said the mansion tax would be done in a "fair, sensible and proportionate way; raising the limit each year in line with average rises in house prices".
Labour aims to raise around £1.2 billion a year with the tax, which Barker said was not a "wholly unrealistic" prediction.
Barker, part of the MPC from 2001-2010, spoke to HuffPost UK to mark the publication of her new book "Housing: where's the plan?".
In her book, she suggests levying capital gains tax on main homes as a way to curb property inflation, writing that it "would bring the taxation of housing more into line with other assets, and it would tend to discourage over-investment in housing."
“Changes in house prices often result from public policy: restrictions on neighbouring land, transport links, or the quality of a nearby school, for example. It is odd not to tax these gains, which the homeowner has done nothing to earn, but charge CGT on the profits from selling a business enterprise."
Miliband told members at his party's last annual conference before the general election that he would introduce a mansion tax to pay for extra NHS spending and aim to double the number of first time buyers in Britain.
"It is going to require a massive national effort, a massive national effort," he added. "We will build a new generation of towns, garden cities and suburbs creating over half a million new homes."
However, Barker, who is a non-executive director at house-building giant Taylor Wimpey, argued that Miliband's goal to get more people onto the housing ladder would be hard to achieve.
"The concept that you might be able to double the number of first-time buyers straightforwardly by producing measures that would reduce house prices is far-fetched," she told said. "Measures to increases supply don't have that much effect on price. It's an aim but it wouldn't be personally one I hold."
Barker also said that Britons should "move away" from the idea that "it's really good to get lots and lots of people into home ownership".See also:
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The average price for a three-bedroom house in central London has increased by £729 a day over the last year, equivalent to a quarter of a million pounds, estate agency Marsh & Parsons said. The estate agent firm said the scale of house price inflation meant that prices rose by 19% since April 2013 to an average of £1.6 million, equivalent to £5,120 a week, or eight times Londoners' £658-a-week median salary.
Less than one in ten properties in many parts of the UK are affordable to single house-buyers, according to the homeless charity Shelter. Meanwhile, three central London areas are completely unaffordable for couples with children or single people living on average wages: Kensington and Chelsea, Westminster and Camden
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Sir Jon Cunliffe, the Bank's deputy governor for financial stability, has warned that it would be "dangerous to ignore the momentum that has built up in the UK housing market." He also said that the housing market was the "brightest light" blinking on the dashboard of financial hazards that the Bank monitors.
While arguing that Britain is not showing signs of a housing bubble, Broadbent admitted that it may be easier to spot with hindsight. “Bubbles are things that are things that are far easier to identify after the event than at the time," Broadbent told Radio 4's Today programme.