Properties with an asking price of £2m or above are not selling because of the threat of Mansion Tax, London agent Douglas & Gordon has said.

It also said the market generally is slowing.

The firm said: “Properties below £2m are selling well but sales above this price have stalled.

“Despite a busy sales market, persuading a buyer to spend rather than just look is proving more difficult than it has for at least five years.”

Douglas & Gordon also reports an active but imbalanced lettings market – with a 60% year on year rise in applicants but a 30% drop in supply over the same period.

The firm points out that if Mansion Tax is replaced by new higher council tax bands – as the Lib Dems are now proposing – then this would hit tenants.

While Mansion Tax would be paid by owners, it is occupants – whether owners or tenants – who pay council tax.