* Super-prime house prices flat in 2013 - report
* Political uncertainty deters wealthy buyers
By Tom Bill and Chris Vellacott
LONDON, Oct 5 (Reuters) - The love affair between the global super-rich and London property is souring as UK politicians tap into a mood of public resentment of the wealthy, with tax increases and rhetoric playing up their own humble origins.
Prices of homes costing more than 10 million pounds ($16 million) have risen 56 percent since 2007 as overseas investors park money in the relative safety of London bricks and mortar, with foreign buyers accounting for about a two thirds of deals, a report by property consultant Knight Frank shows.
Prices in top neighbourhoods, such as Mayfair and Kensington, will be flat next year after a slowdown that began in March with a coalition government budget that included a proposed "mansion tax", Knight Frank said on Friday.
Alex Michelin, founding partner of luxury developer Finchatton, said: "A 3.5 million pound house in Chelsea was put on sale in March, but interest cooled rapidly after the budget. It was like the buyers disappeared into quicksand."
Last month's sale of a property called Gordon House to developers the Candy Brothers was a key test of appetite because of the high asking price of 75 million pounds. It was bought for closer to 65 million, three sources told Reuters.
Personal wealth is a divisive issue in British politics, with Conservative Prime Minister David Cameron frequently under attack for his privileged upbringing, while many in the country suffer under austerity measures. Cameron is the latest in a long line of British prime ministers to have attended Eton, one of the UK's top fee-paying schools.
Ed Miliband, leader of the opposition Labour Party, featured in a political broadcast on Tuesday that emphasised his state-school background, despite subsequent reports that his Primrose Hill home is worth 1.6 million pounds.
Last year's opening of the luxury One Hyde Park development n ear Harrods department store, with accompanying tales of stamp duty avoidance and opulent second homes sitting empty, helped to spark the government scrutiny, two sources told Reuters.
The March budget introduced a 15 percent rate of stamp duty for purchases of more than 2 million pounds through a company - a method commonly used by wealthy buyers to avoid paying stamp duty and remain anonymous.
It also launched a consultation process on plans to levy an annual charge on properties worth more than 2 million pounds and extend capital gains tax to include overseas individuals who buy property through companies. The government hopes to impose the charge from April next year.
The consultation period ends on Tuesday, but uncertainty has put a brake on the market, particularly for homes costing between 2 million pounds and 5 million pounds. Buyers of properties in this range tend to be less able to pay the extra taxes, Knight Frank said.
Opponents of the tax increases say that the influx of the super-rich, many of whom come from Russia, Eastern Europe and the Middle East, benefits the economy because they spend money in local businesses.
"For Nick Clegg (Lib Dem leader and deputy prime minister) to stamp on successful people buying property in London is a short-sighted mistake," said Michelin, who will expand into New York and the south of France because of the uncertainty.
Many buyers are sitting on the fence until the picture clears, said Damian Bloom, a London-based partner at law firm Berwin Leighton Paisner, who specialises in the tax affairs of the super wealthy.
"George Osborne (the Chancellor of the Exchequer) would have to make an awful lot of speeches about how wonderful London is to counteract the fact that when clients pick up the phone to say 'I want to buy a house', the first thing they do is hit a whole load of problems," Bloom said.
A slowdown in the market, however, would be welcomed by those who argue that the chasm in living standards is morally repugnant and exacerbates a housing shortage in London.
The Smith Institute, a left-leaning think tank, found in July that "many areas of inner London have become prohibitively expensive for local residents and too many luxury flats remain empty and treated as lucrative investments".
Much of London's continuing appeal lies in the fact that wealthy foreigners are not taxed on their overseas wealth if they are not domiciled in the UK, though recent policies impose a levy of up to 50,000 pounds on longer-term residents.
Buyers are also still attracted to London because it is outside the euro zone and alternatives such as France have become even more unwelcoming to the rich after the election of left-wing Prime Minister Francois Hollande.
The London slowdown could be temporary as buyers wait for the outcome of the consultation and seek loopholes in the new laws, said Sophie Dworetzsky, a partner at law firm Withers.
"What might be happening is everyone's taking a bit of a break while they figure out what they can do in terms of (ownership) structures. It might just be a lull before it kicks off again." ($1 = 0.6222 British pounds)
(Editing by David Goodman)
Keywords: LONDON PROPERTY/SUPERPRIME