One in 20 London households worth £1m

One in every 20 households in London is worth £1m (€1.5m) or more, according to research out today.

Fewer than than 1% of Britain's £1m (€1.5m)-plus households are in Northern Ireland, where CEBR estimates there are just 4,000 millionaires, while there are thought to be only 7,000 in the North East of England.

The UK Centre for Economics and Business Research said soaring house prices had led to a surge in the number of people with assets worth more than £1m (€1.5m) in the past decade.

Inland Revenue figures estimated there were about 230,000 millionaires in the UK in 2001.

But CEBR says today’s figure is likely to be nearly double that at 425,000 following a 64% jump in house prices since 2001.

The group defines household wealth as the total value of people’s property, investments and other assets, minus any borrowings they have such as a mortgage.

Unsurprisingly, given the impact of property prices on household wealth, the highest concentration of people with assets worth seven figures is in London.

The group estimates that 175,000 or 41% of the country’s millionaires live in the capital, where they account for 5.5% for all households.

It estimates a further 90,000 households in the South East have accumulated wealth of more than £1m (€1.5m), followed by 32,000 in the South West, and 29,000 in the East of England.

About 23,000 millionaires live in the West Midlands, with 20,000 in the North West and 15,000 in the East Midlands.

Scotland and Wales also have a small share of the country’s wealth with only 12,000 and 9,000 households respectively worth more than £1m (€1.5m).

But the group warned that the sharp rise in household wealth could lead to the British government looking to increase tax on homes.

It said one of the options was to increase the rate of stamp duty on properties bought for more than £500,000 (€744,000) from its current rate of 4%, but this was likely to be very unpopular, as was imposing a capital gains tax on the sale of the family home.

Think tank the Institute for Public Policy Research recently suggested raising the rate at which inheritance tax is paid to 50% from 40% on assets worth more than £763,000 (€1.1m).

But Douglas McWilliams, chief executive of CEBR, said this would be unfair as it was a tax that would primarily be levied on people in the south of the country.

He added that with the abolition of mortgage interest relief, people had already paid for their houses through post-tax income, and should not be taxed on them for a second time.