US hedge fund billionaire Ken Griffins’ two London properties, together worth around £195m, are liable for just £2,842 in Council Tax. But his penthouse apartment in New York – of similar value – will cost him £217,000 ($280,000) annually in local property tax.
Simon Jenkins, a columnist writing for the Guardian, revealed the figures in an article criticising the system under which UK local authorities are funded. He says that the tax on luxury London properties is a tiny fraction of a similar prime market like New York, and that this is a significant contributor to the current local government funding crisis.
He comments: “Crazier still, Council Tax bands were fixed so the highest was only three times the lowest, and were never adjusted to reflect rising house prices. Within the top band, West End palaces pay the same as modest terrace houses. As a result, councils have been unable to benefit during the house price boom, as New York did under its former mayor Michael Bloomberg. Stamp duty is Britain’s only price-related property tax, and that goes nowhere near a local council.”
Jenkins is not the first to point out the contentious nature of the current Council Tax system of course. However, few will probably have realised how massive the gulf is between London and a comparable prime market like New York – except perhaps foreign investors for whom it makes London all the more alluring.