Perhaps caving in to party pressures, the Lib Dem Treasury spokesman, Vince Cable, announced that the starting threshold for a new property tax would be raised to properties worth £2 million, instead of the original £1 million stated.

However, the rate will be doubled from 0.5% to 1% in order to make up for the reduced number of properties that will be involved, as the number of homes affected will fall from 250,000 to 70,000.

Under the proposal, the tax would be paid at 1% on the home’s value over £2 million; therefore the owner of a £2.1 million would have to pay an annual tax of £1,000.

It is thought that the plans were changed after the Lib Dems became concerned that they would fall out of favour amongst affluent London supporters.

Andrew Smith, Head of Research for Primelocation.com, commenting on the changes to the tax, said: “A large proportion of London homeowners will still be affected and will now face a greater financial burden, regardless of the size of their disposal income.

“The Primelocation.com Prime Index shows that the average price of the top 25% of homes in Kensington and Chelsea and the City of Westminster and of the top 10% of properties in Camden, Hammersmith and Fulham and Haringey are all above £2 million.”

He added: “The levy has not been properly thought through and could prove damaging to the recovery of the housing market if introduced in the current climate. Creating another artificial threshold will hinder some of the natural movement within the property market, possibly stunting the ripple effect of a revival, which our data indicates will be led by prime London properties.”