Mansion tax a key election issue for voters in Hampstead and Kilburn

The Victorian-terraced streets that straddle the top end of Finchley Road in Hampstead and Kilburn hardly look home to millionaires.

But in a few years' time, the owners of these three and four-bedroomed houses could be hit by the so-called mansion tax if Labour wins the general election, with owners of properties worth more than £2m paying at least £3,000-a year extra in taxes to help fund the National Health Service.

In tight London marginals, the policy has electrified local campaigns as middle-class voters in affluent neighbourhoods balk at being rebranded the super-rich thanks to galloping house prices.

Sophie Petit, a mother of three who lives just off Finchley Road, is incredulous that her £1.5m four-bedroomed property could become liable for the tax in a few years if prices keep rising.

"This is not a mansion, my Belgium family call it the 'little house' because it's tiny," says Ms Petit, who bought it fifteen years ago for £500,000.

"It is an attack on the middle class," says Ms Petit, a Conservative voter. "This is a tax designed to hit the rich but it is the middle classes here who bought family homes, who didn't know those homes would go up by this amount."

Although polls show the policy is popular with the wider public, it has gone down less well in the capital, where 80 per cent of the tax will be levied, according to estimates by Savills, the estate agents.

A number of London Labour MPs have spoken out against the policy - including Glenda Jackson, the outgoing MP for Hampstead and Kilburn, mindful that it could cost votes.

Ms Jackson's seat is particularly sensitive: it has a high concentration of multimillion-pound homes and is the tightest marginal in England and Wales. Labour won this seat by just 42 votes in 2010.

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Divided among the wealthy wards of Hampstead Town, Belsize Park, Frognal and Fitzjohns to the north and grittier Kilburn to the west, the constituency has for decades been home to the left-leaning intelligentsia.

Simon Marcus, the Conservative candidate, says the mansion tax breathed new life into a rather lacklustre campaign.

Labour rival Tulip Siddiq was 17 points ahead of her rival last August, according to an Ashcroft poll, but Mr Marcus believes as many as 2,000 voters could switch to the Tories over the proposals.

"I used to think we needed to be 6-7 points ahead in the national polls to win here," Mr Marcus says. "But the mansion tax has turned that on its head. What we are seeing in door-to-door canvassing is that huge chunks of the Labour vote are coming to us in large parts of the area. We are not talking here about 20-30 votes."

Mr Marcus says about one-eighth of the constituency's 40,000 homes will be hit immediately, while a further 5,000 to 6,000 in the £1.5m to £2m price band could be dragged over the threshold over the lifetime of the coming parliament.

But he has been criticised by his opponents over tactics. Last year, he sent out letters to constituents mocked up like a council tax demand, prompting Mr Miliband to criticise him for "spreading mistruths" about the policy.

Ms Siddiq has sought to reassure owners of homes worth less than £2m that they are not in danger of being drawn into the levy. "Ed Balls has categorically said if your house wasn't worth £2m from last summer when he announced the policy, you will never have to pay," she said. But without more details on how the levy will work - or how the higher bands are calculated - voters are nervous.

She insists the tax is not the only local issue and points to the council estates of Kilburn where voters are primarily concerned about benefit cuts, the "bedroom tax" and food banks.

The 32-year-old is steeped in politics. Part of the Bangladeshi political aristocracy, the former Brunswick executive is related to the country's prime minister. She is a prominent local figure, having served Camden council for many years.

On paper, the three-way marginal is hers for the taking, given the likely collapse in the Liberal Democrat vote, but she acknowledges the property tax plans have upset some voters.

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"It's not an ideal solution," she admits. "I don't think it should be called a mansion tax, the term is divisive.

"Some of the people who live in a £2m house don't think of it as a mansion, they think of it as their family home. But my point to the Tories is this: how are you going to fund the NHS?," she says.

She and other Labour candidates have lobbied for concessions for pensioners and people on low incomes to make the tax a little more palatable.

And the traditional left are still with her. Less than two miles from Ms Petit's £1.5m property, the Polya family in Heathhurst Road are contemplating the taxes they will have to pay on their £4m four-storey town house that overlooks Keats' former residence.

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"If they take £4,000 to £5,000 off me, well, we've got to close the gap between the rich and the poor," says the Moroccan-born Andre Polya, who bought the house more than three decades ago. "We've become millionaires and our children can't house themselves."

Life-long Labour supporters and activists, the retired couple are resigned to paying up. Their road is peppered with well-heeled liberals just like them: author Margaret Drabble and former Labour deputy London mayor Nicky Gavron are neighbours.

They are convinced Ms Siddiq will hold the seat even if the local party doesn't like the policy. A pollster familiar with the patch agrees and believes Ms Siddiq "will win comfortably".

But the neighbourhood is gradually changing as the "Hampstead liberals" move on and the hedge fund managers and City executives move in.

Mr Marcus thinks the seat can only become more winnable for the Tories in the longer term. "The old left here is shifting," he says. "This has always been hard Labour - Michael Foot even lived here - but now a professional class is moving in who sit firmly in the centre ground."

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