75% CGT on second homes

[Dr House]

So I am putting on my communist hat here. I am a homeowner so this is not coming from "help me I can’t afford a house"


The UK and especially London house prices are out of control which pushes up rent prices which has put a squeeze on the quality of life of almost every family in the UK.

It has caused is a shift of wealth from the middle classes to a small minority of peoples, huge rent bills for social housing and a general decline in the quality of life for most of the population in the UK.

People have less free income to spend which does not help the retail economy and retail works. Everything is more expensive because retailers and restaurants need to make back the huge rents they pay.

Now we cannot bring down house prices by increasing interest rates because it would kill business and cause hardship to the masses. Over the last 10 years, people have not been allowed to take huge multiplier mortgages so I should think peoples LTV’s are quite low in general. A dip in house prices should not send most of the population into negative equity.

So my idea, 75% (or whatever number) CGT on 2nd homes, all homes owned by limited companies and maybe even 100% CGT on homes owned be non-UK residents.

This would cause a huge fall in house prices without proportional impact on normal working people. It would force people who have empty homes sitting around not giving any sort of return to rent them out because they are no longer getting huge capital gains.

Housing should not be considered a commodity, it should be thought of a basic needs. Would we allow the water company to charge us 10p/L just because they have a monopoly?

 

[Randomface74]

You'd put everyone into negative equity.

 

[Glaucus]

Yep:-[, I wouldn't go as high as 75% but yes higher stamp duty and applied from £0.
Insane council tax for empty properties.
But more importantly much greater renters rights and conditions. Stop have a go for profit and put in no effort landlords which seem to be 95% of the market.

You'd put everyone into negative equity.

Not if changes are applied gradually over many years.

 

[Randomface74]

Not if changes are applied gradually over many years.

Yeah it would. If you know it's coming you're not going to make a long term investment in property. So the impact is front-loaded.

 

[mattyg]

Greater renters rights?? As long as that also comes with the ability for landlords to recover 100% defaults and costs from non payers...

I know a guy that had to move overseas for this work for 2 years. SO he rented his house out. The family paid 6 months up front. Great he thought...Nope. That was the last payment he recieved. Took him 6 months to get his house back. Turns out the renters did that all the time. Paid 6 months up front and then nothing until evicted essentially paying half rent

 

[Glaucus]

Yeah it would. If you know it's coming you're not going to make a long term investment in property. So the impact is front-loaded.

And who knows when and how it's coming. Governments don't tend to tell you what they are doing exactly for the next year, let alone many years.

Greater renters rights?? As long as that also comes with the ability for landlords to recover 100% defaults and costs from non payers...

would have no issue with that, although they could already take them to court and win, the issue is always getting the money out of them and a change in landlord rights isn't going to change that.

 

[Rroff]

Despite that it goes against some things I stand for I'd be all for it - the situation is rapidly getting out of control and I'm seeing more and more people that are acquaintances or colleagues in a desperate situation that is almost entirely down to rent/house prices - though I think this area has maybe been hit a bit harder (or sooner) than the country as a whole.

 

[Hades]

What's to stop people wrapping the second home in a company to avoid CGT (like they do now)? I'm not sure the tax on houses wrapped in that way but once it becomes crippling to own a second home then many more will just follow that model instead.

Perhaps another approach could be to limit demand by:

1. Restricting ownership by foreign buyers (including foreign majority owned investment companies).

2. Introducing rent controls which will reduce BTL demand.

3. Remove help to buy schemes (which are great for the individual but fuel property price rises).

 

[CREATIVE!11]

Housing should not be considered a commodity, it should be thought of a basic needs. Would we allow the water company to charge us 10p/L just because they have a monopoly?

Of course, the reality is it's meant to be lived in and is a necessity for a functioning society.... but now it's just become something to try squeeze money out of people with extortionate rent.

And people don't exactly have a choice either that's the problem. You can switch internet companies if they start overcharging, if you have a secure job / family / friends it's not so easy to just up and move.

 

[Kenai]

Yeah it would. If you know it's coming you're not going to make a long term investment in property. So the impact is front-loaded.

As Glaucus points out, this would only be the case if they announced it as the intention. If they simply bumped it 10% this budget, 5% the next, then another 7% etc. then a few more savvy investors would start to cotton on to the long term game but not so many all at once that it would kill the market.

 

[Glaucus]

As Glaucus points out, this would only be the case if they announced it as the intention. If they simply bumped it 10% this budget, 5% the next, then another 7% etc. then a few more savvy investors would start to cotton on to the long term game but not so many all at once that it would kill the market.

exactly and this is what needs to do, you need to scare a few of every year (as well as building more, removal of shared ownership and other government schemes and slowly lower maximum wage multiplier for mortgage and other laws) what we need is 0% rises for years.
having a roof over your house should be a right and you shouldn't need to get into huge debt to do that. Needs to be cheaper small options as well.

this wouldn't help me, but I believe it should be a fundamental human right.

 

[TallPaul1878]

It's a difficult situation. Having holiday homes in Cornwall or The Lakes stay empty for 11 months of the year is not a good thing. It takes a house off the market that could be bought by a local person.

A similar problem occurs in London with it being touched upon by Corbyn this morning on Andrew Marr. So how do we deal with the problem without knocking the market out?

I don't have much faith that anything is going to get done. The government will continue to sit on it's hands until eventually these houses just get burned down by frustrated locals

 

[chaparral]

Houses over here need to drop by at lest 100k...........
Houses prices start from over 300k

It 1k per month to rent a one bedroom flat..

 

[Dr House]

I have not had to rent for the last 10 years but I start a job in West London next week so I have been looking for a nice little 2 bed flat, then I saw rent prices so decided to look at a 1 bed flat. Even then a not so nice place is £1600 per month plus bills. If you think as a middle-grade doctor I take home £2500 per month it's just ridiculous

 

[peterwalkley]

..... The government will continue to sit on it's hands until eventually these houses just get burned down by frustrated locals

Like these guys: https://en.wikipedia.org/wiki/Meibion_Glyndŵr I remember from the 1980's. Its nothing new

We need to build more homes which means throwing away our planning system as it is far too heavily influenced by local nimby types who already own property and don't want to see any more built as it "spoils their neighbourhood". I see this more and more from my generation (50 and over) and until young people get off their arses and vote so politicians listen to them things won't change. Much as I think Corbyn is a dangerous idiot, he has got the young up and listening to politics in a way I've never come across before in my lifetime.

I've said this over and over again in these threads - we could free up the next 20 years' worth of needs by removing 1 mile of greenbelt around the M25. This not NOT pretty countryside, its scrubland and golf courses. Truly beautiful countryside can be protected as it is now.

Alternatively a culture change where people want to live in flats (which needs decent sound proofed ones built !) rather than us all wanting a suburban 2 storey property with 4 car drive and front and back lawns.

 

[SpeedFreak]

My mother in law owns about 5 or 6 house and despite that I would be all for a big bump in CGT. It is unearned income in addition to the rent and would help stabilise the market. Having three children I cannot see how they will be in a position to buy with their own resources. They are fortunate in that they will inherit, but many others will not and life should not be so much of a lottery that you need to have wealthy parents/grandparents just to have a chance of owning your own home.

 

[Jumper118]

tbh people just need to realise london is a dump full of buses, people stabbing each other, the queen and overpriced shops and houses.

 

[No1newts]

You'd put everyone into negative equity.

Agree with this.

The whole situation is a sticky one as either you blitz in a terms the OP presents to reduce prices but then you are helping the have nots against every one else. Not just the rich but the people like myself with a mortgage who just want to get by. On the flip side leaving as is you screw future generations.

I don't think it will change as the government are more likely to get hassle from those with than those without. Sad but I can't see a way out without destroying the middle class if you reduce prices.

 

[sigma]

Isn't ythe main problem in London foreign people buying houses as investments thus pushing prices up? Mega rich buying and selling without paying much tax.

 

[RDM]

Wouldn’t this just hike up rents? If every single rental property suddenly gets more expensive then every single rent then gets more expensive.

If you introduce it alongside rent controls then you effectively kill the rental market as no one will be able to own property to rent out.