What affect would taxing second homes have on the economy

Psycho Sonny said:
"And while many empty dwellings are unsafe or simply unfeasible to renovate into accommodation"

I didn't think they would use homes which are literally falling apart in these statistics but there you go. Yeah I've seen those places where all the windows are smashed and there is boards over the holes, etc. But I'm going to say you can't really say they are that way because someone has bought it up as an investment to sit on. They are in areas nobody wants to live in because of the type of people who have caused them to get into that state living in that area.
Click to expand...

Not all but many of those houses could be brought back into use.

Stoke-on-Trent £1 houses: Hundreds express buying interest

Couple on how £1 house in Stoke-on-Trent changed their lives
 
Surveyor said:
Not all but many of those houses could be brought back into use.

Stoke-on-Trent £1 houses: Hundreds express buying interest

Couple on how £1 house in Stoke-on-Trent changed their lives
Click to expand...

What they are doing nearby is demolishing them all and building new council houses or for elderly folk to live in.

The place looked like Kabul before. Now at least it looks great I wish they would do the other half now but likley ran out of money.

It's an amazing transformation and I would prefer they did that than people get them for a pound and try and fix them up on the cheap. Then sell on, etc.

But I would say there isn't a lot of areas like that in places where people want to live.

18 Broomton Rd
https://maps.app.goo.gl/rXxt2uKmd2fmFu2s9

Take a look at that for instance. And see the other side. They have knocked them all flat.

290 B812
https://maps.app.goo.gl/D9VASw9SKiYxSH6Y9

Now look these are the new houses from the other side where Google has taken new pics.
 
Quartz said:
Have you done the maths on that and calculated the annual return? Don't forget to account for maintenance, insurance, and improvements. And if they had a mortgage remember that they were paying that mortgage out of post-tax income. Without accounting for maintenance etc it's a 6% annual return. That's good but not outrageous.

And remember that house prices can go down. The property market hereabouts, for instance, is not good.
Click to expand...

But if they had a mortgage they wouldn't have paid £700k up front for it...

Property is often a leveraged investment - suppose they put down a £200k deposit on that £700k house, 14 years later they sell for 1.6 million. They've made 900k on their 200k initial investment (minus the interest portion of their (500k) mortgage (circa 2% or less per year) & maintenance/insurance.)

Making on average 64k a year on a 200k investment when your mortgage interest is circa 10k a year (and decreasing if you're making repayments too) is double-digit annual returns even if you have a few maintenance bills etc.. assume a few grand for maintenance/insurance etc.. and it's like making 50k a year net. (obvs it likely didn't go up by the same fixed amount each year)
 
Last edited:
Street said:
Liverpool Council ran a licensing scheme for a couple years about 5 years ago. From memory, it cost me over £400 for two years and I saw absolutely no benefit. There were no checks or anything, it was just a money grab from the council. I'm sure the less reputable landlords didn't bother getting registered and it just stung the ones doing it right.
Click to expand...

Didnt know Liverpool ran one .

It’s in play in Newham London and is checked and enforced apparently. It’s a £1050 for a single dwelling unless covered by a 10 year new build guarantee , not sure how long that license is for .

https://www.newham.gov.uk/housing-homes-homelessness/rented-property-licensing
 
dowie said:
But if they had a mortgage they wouldn't have paid £700k up front for it...

Property is often a leveraged investment - suppose they put down a £200k deposit on that £700k house, 14 years later they sell for 1.6 million. They've made 900k on their 200k initial investment (minus the interest portion of their (500k) mortgage (circa 2% or less per year) & maintenance/insurance.)

Making on average 64k a year on a 200k investment when your mortgage interest is circa 10k a year (and decreasing if you're making repayments too) is double-digit annual returns even if you have a few maintenance bills etc.. assume a few grand for maintenance/insurance etc.. and it's like making 50k a year net. (obvs it likely didn't go up by the same fixed amount each year)
Click to expand...

.
Capital gains Tax goes on a second home as well .
 
dowie said:
They've made 900k on their 200k initial investment (minus the interest portion of their (500k) mortgage (circa 2% or less per year) & maintenance/insurance.)
Click to expand...

Call the interest rate 3% or £15k per year. That's about £200K in interest alone. And they might have ended up with a property worth less than they paid for it. They took the risk and they gained the reward. Yes, they've leveraged other people's money to do it. But they did take the risk.
 
Psycho Sonny said:
"And while many empty dwellings are unsafe or simply unfeasible to renovate into accommodation"

I didn't think they would use homes which are literally falling apart in these statistics but there you go. Yeah I've seen those places where all the windows are smashed and there is boards over the holes, etc. But I'm going to say you can't really say they are that way because someone has bought it up as an investment to sit on. They are in areas nobody wants to live in because of the type of people who have caused them to get into that state living in that area.
Click to expand...


There's also the fact there's no or limited work in some areas
 
Quartz said:
Call the interest rate 3% or £15k per year. That's about £200K in interest alone. And they might have ended up with a property worth less than they paid for it. They took the risk and they gained the reward. Yes, they've leveraged other people's money to do it. But they did take the risk.
Click to expand...
You're really clutching at straws to normalise bricks and mortar "earning" almost 3 times the national average salary. Heck, it's even more than the average salary around here too.
 
I'd treat second home, holiday homes, and BTL homes differently I think.

I wouldn't penalise BTL homes because they provide a useful service, and have people living in them. Sure the housing market is a bit dysfunctional but taxing landlords massively won't fix that. Increasing supply and streamlining the process of buying and selling might though.

Second homes and holiday homes should pay supercharged council tax (at a rate to be decided by the local authority, up to a maximum of say 5x normal rate?) which will go towards keeping local services and community groups going where otherwise they would go under due to lack of full time residents. Maybe also put it towards buying up houses for the council housing stock? Second homes in rural communities in particular can be incredibly corrosive to the area, so this could be used partly as 'deterrence' as well as to cover some of the negative impacts. Maybe the rate could be reduced according to how much of the time the house is occupied. Eg if you're in the second home 10 weeks a year then you only pay 4/5ths of the supercharged council tax maybe? I can see downsides to this arrangement and an sie there would be many loopholes to close, but think something needs to be done.
 
Bald-Eagle22 said:
.
Capital gains Tax goes on a second home as well .
Click to expand...

I don't think @Scam was talking about a second home though, just giving an example of some neighbour earning way more than the average salary per year simply through gains via ownership of their property.

Quartz said:
Call the interest rate 3% or £15k per year. That's about £200K in interest alone. And they might have ended up with a property worth less than they paid for it. They took the risk and they gained the reward. Yes, they've leveraged other people's money to do it. But they did take the risk.
Click to expand...

Nah, with that LTV you'd not need to pay 3%, either way they're still making double-digit returns per year.
 
NotAGolf said:
The government would also force lenders to offer mortgages of up to 100% LTV
Click to expand...
How would they do this? In a market where house prices are plummeting, lenders are not going to want to lend at 100% to any Tom, Dick or Harry because there will be massive negative equity. If someone forced to offer 100% LTV products, all they will do is charge high interest rates for that to put people off and cover their losses, so instead of a 2% mortgage you have a 10% mortgage. So you end up lining the pockets of the faceless bankers.
 
dowie said:
Nah, with that LTV you'd not need to pay 3%, either way they're still making double-digit returns per year.
Click to expand...

They still took the risk and are reaping the reward. I've lost perhaps £70K on my home. Perhaps the government should compensate me?
 
Something needs to be done. Problem is higher prices go the harder it's going to be to temper them without crashing.

I agree. Rent controls need to be in place. A cap on rent of x percent over a 25 year mortgage or something similar

A sliding scale where each house you own becomes slightly less profitable.

Because at this rate fewer and fewer are going to own.
It's quite apparent how the rich poor divide is widening. Wouldn't be so bad if state pension and support was sufficient for the poorest. But it isn't. So if you end up with no equity at 70, you're going to have a sorry end of life

The NI going up by so much is a clear indication that the country is getting poorer but the ruling party is favouring the rich.
 
hurfdurf said:


I’d love to be told how the two above are wrong, but if they aren’t, I think it’s fairly horrific how we as a nation have allowed it to occur, and are now allowing people who simply have capital to be taxed less than those who actually have to work.

I say this as someone who has capital myself. I find it utterly horrific.
Click to expand...

One day the student will be the retired?

If he's expecting his care to be paid for by the current retired guy then he's going to have a problem.


This whole disparity thing kinda solves itself in time given the first graph
 
hurfdurf said:


I’d love to be told how the two above are wrong, but if they aren’t, I think it’s fairly horrific how we as a nation have allowed it to occur, and are now allowing people who simply have capital to be taxed less than those who actually have to work.

I say this as someone who has capital myself. I find it utterly horrific.
Click to expand...

They aren't paying a student loan because they have paid it off.

They aren't paying NI because they have already paid it their whole life and once you hit retirement age no longer is it a requirement.

Are you saying that pensioners should pay NI? And that once you have paid off your student loan you should just keep paying more on top?

Or did you not understand the tweet? It's simply a ridiculous statement to make completely biased as they are likely a student who is renting from a retired landlord.
 
You must log in or register to reply here.
Back
Top Bottom