General Election 2015: How MPs stepping down at this election could make millions on their second homes
Exclusive: On 30 March when parliament is dissolved, as the majority of MPs will gear up to embark on the toughest part of their election campaigns, some will bid farewell to the Commons for the last time as they step down from public life.
But among the 77 MPs leaving office, many will be left with a valuable memento of their time in office – a second home part-subsidised by taxpayers.
Now research by City A.M. and online estate agent Emoov estimates that between them, MPs stepping down at the end of this parliament could stand to make more than £9m of gains on properties previously funded by taxpayers.
Interactive: scroll down to find out whether your MP could benefit
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, allocated on the basis that MPs need a base in both their constituencies and Westminster.
This could be claimed on mortgage interest payments for their second home; council tax, utilities, telephone and telecommunications, repairs, insurance and security, services and maintenance, cleaning and food.
But once the expenses scandal broke in 2010, the ACA was scrapped in favour of new rules allowing MPs to expense rent or overnight stays in hotels, rather than mortgage interest repayments. While many MPs sold up and moved into rented accommodation, some found it more convenient to keep hold of their second homes.
We estimate 32 MPs could be left with homes once funded by taxpayers, and have increased in value by hundreds of thousands of pounds, thanks to how house prices have rocketed in recent years.
For instance, during the last parliament – between 2005 and 2010 – Sir George Young, one of the longest-serving MPs to step down this parliament – claimed a total of £132,282 on his designated second home in Victoria. Since 2005, the average value of a property in that area has increased from £357,230 to £861,723, according to Emoov, meaning if Young decided to sell his second home, he stands to make £504,493 – although he told us there were no plans to.
MPs who do sell property designated as their second homes are subject to Capital Gains Tax of 28 per cent on any profits above £11,100. But some could still stand to benefit, to the tune of hundreds of thousands of pounds.
Among the highest claimants is South Suffolk MP Tim Yeo, who made claims totalling £133,386 between 2005-2010. Properties in the same area as the Thames-side second home he claimed on were valued at £357,230 in 2005, which which has since risen to £861,723.
There is no requirement to the MPs to pay back the money. Jonathan Isaby, chief executive of the Taxpayers’ Alliance, said: “Yet again, it’s clear that the changes made in light of the expenses scandal are simply inadequate. It’s crucial that taxpayers are able to trust the system and there remain far too many loopholes. The Independent Parliamentary Standards Authority (IPSA), the glorified quango in charge of the expenses system, have to be held to account for their failure to address this issue.”
Emoov founder Russell Quirk added: “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.”
But a spokesperson from Ipsa told City A.M. that when it was started in 2010, it took the view that “it was wrong for the taxpayer to subsidise MPs’ private property investments”.
“Mortgage interest support was ended, and as a transitional measure from May 2010 to August 2012, MPs who were re-elected in 2010 were allowed to continue claiming the cost of mortgage interest payments.
“This was to give them time to make alternative arrangements. Where the value of the property rose during this period, the MP paid back the capital gain to cover the taxpayer’s share of that increase. We cannot comment about arrangements before Ipsa came into being.”
Live in a constituency where the MP is due to step down? Use the chart below to see how much properties in the area where your MP’s second home was designated have increased in value – or if you’re not sure, use the tabs to show the MPs by constituency. Interactive by Chris Parmenter
(Click on the names below to find out more information)
