MPs were asked to vote on a proposal by Labour to introduce a tax on all properties worth over £2million before the next general election in 2015. Ed Miliband had stated that the funds would be used to re-introduce a 10p rate of tax to help low income families.

However the proposal was defeated by 304 votes to 241 as Liberal Democrats MPs sided with their Conservative coalition partners against Labour.

Liberal Democrats had accused Labour of trying to drive a wedge between the coalition parties ahead of George Osborne’s Budget next Wednesday.

Mortgage Solutions reported last month that property tax changes could be forcing foreign buyers from the UK and Nigel Green, chief executive of the deVere group, said that mansion tax measures would have been counterproductive.

“I suspect that a mansion tax would be the final straw for many of Britain’s wealthy – who contributed almost 26 per cent of the UK’s total income tax in the last financial year – because they would rightly feel aggrieved that they would need to pay another tax on a property that was bought with money that has already been taxed, either through inheritance or income tax, plus they will have paid Stamp Duty on the transaction and will be paying council tax.

“Should a mansion tax come into effect it would, inevitably, result in capital flight – right at a time when the UK needs all the revenue it can get – because the wealthiest in society are the ones who have the resources simply to move to a lower tax jurisdiction to protect their wealth.”