Labour plans to introduce an annual ‘mansion tax’ on owners of homes worth more than £2 million have drawn criticism from property industry experts.

Party leader Ed Miliband told delegates at the Labour Conference in Manchester this week that the proposal would raise £1.7 billion a year and help fund the NHS.

The levy would feature protections for the asset-rich but cash-poor – people who don’t have a high income but live in expensive properties.

Labour said the tax would also be staggered, so properties would be taxed at different levels, based on their value.

‘Inherently unfair’

The plans have been widely criticised, with estate agents saying a tax would be difficult to implement and disproportionately affect properties in the capital. London Mayor Boris Johnson said the move would be a “tax on London”.

Land Registry data shows that of 72,900 homes sold in May 2014 in England and Wales, 238 were sold for more than £2 million, with the majority – 199 – of them in London.

The latest figures from the Office for National Statistics show the typical house price in London was £514,000 in July.

Stephanie McMahon, Head of Research at Strutt & Parker, said: “There are many red flags being raised about a mansion tax, regarding geography, valuation, and whether the tax will actually raise the target funds once administration costs have been accounted for.

"Ultimately, from a market perspective, taxation works best when it is levied at transaction time as this is the point at which the buyer or seller have negotiated the tax implications into the price. An annual levy, aside from all the challenges raised above, seems an overly blunt tool.”

Jeremy Blackburn, head of policy at the Royal Institution of Chartered Surveyors, described the idea as "inherently unfair", arguing it would be complicated to run, lead to lost tax revenue and make the UK less attractive to investors.

The British Property Federation also criticised the plans, saying it was not the way to “plug funding gaps” in the NHS.

“This mansion tax is also effectively a tax on London. In an era of supposed greater devolution, further centralising property taxes can only be considered a retrograde step,” said the BPF’s director of policy Ian Fletcher.