Leading online estate agent Emoov.co.uk, in collaboration with City A.M, London’s most popular business newspaper, have released research which shows a number of MPs who potentially stand to make hundreds of thousands of pounds in profit through the sale of their second homes.
Originally purchased with the aid of the British tax payer, each of the 30 MPs in question could cash in, if they haven’t already done so, due to the consistent increase in UK property prices experienced in recent years.
The findings have highlighted an estimated £9 million could be made in profit using expenses records dating back over the last decade and second homes information that has been reported publicly since 2010.
Each MP could stand to make an average profit of £350,000 on the sale of their second home. If you multiply this by some 500 MPs in parliament, for whom this information has not been made public, total property profits could hit £175 million.
Until the expenses scandal broke in 2010, MPs were able to claim an “additional cost allowance” (ACA) to help with the upkeep of their second home. This could be claimed on mortgage interest payments for their designated second home; council tax, utilities, telephone and telecommunications, repairs, insurance and security, services and maintenance, cleaning and food. That was scrapped in 2010 – and while many MPs sold up and moved on, some kept hold of their second homes.
Although MPs who sell property designated as their second homes are subject to Capital Gains Tax of 28% on any profits above £11,100, house prices in the capital have increased by 67% since 2005 and so they could stand to make a substantial profit.
The second home allowances claimed by the 30 MPs in question range from £47,484 by Labour MP Jack Straw, escalating to as much as £133,386 claimed by Conservative MP Tim Yeo. When Mr Yeo bought his Thames-side property in Westminster it was worth £357,230 however if he was to sell the same property today he could do so for £861,723. That’s a profit of over £500,000, although Mr Yeo refrained to comment on what he would do should he profit from such a sale.
David Willetts (Conservative) and John Denham (Labour) both stand to make in the region of £1.5m in profit, should they sell their second homes in Havant and Southampton.
The former independent MP Martin Bell called the issue of profiting from homes subsidised with tax payer’s money “an open and shut case”, calling for the MP’s in question to pay back any profit they make in its entirety. Emoov.co.uk have surveyed 2,000 people across the country and 87% of the public believe profits from second homes should be given back to the treasury.
Russell Quirk, Founder and CEO of Emoov.co.uk said: “It’s fair to say that the amount of profit each MP is due to make on their property has been inadvertently intensified by the increasing price of property over the last few years, particularly those living in London. Those outside the capital will be due to make a lot less. This said, the fact of the matter is that they are benefiting at the expense of the tax payer, this isn’t right and they must pay it back.
As someone who takes an active interest in local and national politics, I am appalled that elected representatives are able to make personal gain from public money. The reform of the expenses system that began in 2010 is not complete until this capital gains anomaly is fixed, as MPs are simply playing the property market at the taxpayer’s expense. The very same people who are struggling to get on the property ladder are forced unwittingly to give MPs a helping hand from their taxes, and I think that is wrong.”
Emma Haslett, online editor at City A.M., said: “It is astounding that MPs who are standing down can potentially make such a huge profit on homes contributed to by the taxpayer. There needs to be a full-scale debate about whether this is a legitimate way for MPs to benefit from their time in Parliament.”
Each MP has been given the right to reply but at time of publishing only two, George Young and James Clappison, confirmed that this was their second home. The remaining MPs in question refrained to comment and none of those involved wished to comment on what they would do with the profit.
The full article from City A.M can be found at: http://www.cityam.com/212352/how-mps-stepping-down-election-could-make-millions-their-second-homes