Mortgage Rate Rises
- Thread starter glenimp617
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This explains it far more succinctly than I did
How does that work though? Lets say we have two houses next to each other. One is on 0.5 acres and the other is 1 acre. Is the land value of the second one double the first? One house might be £1m and the other £1.1m. Genuine question because I don't know how you would do it fairly.
The house on 1 acre will pay roughly twice the tax than the one on 0.5.
…and rightly so, they have twice as much land they are occupying.
There is nothing stopping the person on 1 acre improving the buildings on the land so the combined property is worth £2m, the tax would remain the same.
The way this operates in practice is land in district X (say a towns catchment area) will have a tax rate of Y, individual plots of land wouldn’t be priced individually, the burden of that would be far too high.
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Thats not remotely fair. The idea that a house is "occupying land" vs just having a garden. What do you expect them to do when their house is surrounded by other houses and there is zero development potential for their house beyond its current form. Extending to create twice the house won't do it. Encouraging people to treat gardens as a tax liability is not a good idea at all.
Congratulations, you extended you £1m house and now its worth £1.2m. You spent £300k to do this, you now have a smaller garden and you still have to pay the same rates because you have a larger plot of land. Nothing about it makes sense.
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Well it is fair.
You have more land which has a value (an asset) and you are taxed annually on that value of that asset.
Those with more pay more, it’s objectively fair.
If you don’t want to pay more, don’t buy a house with a massive garden.
Soldato
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Wealth taxes..... I suppose having shot themselves in the feet multiple times the Government may as well go for the head. They've obviously decided that their current spending isn't guaranteed enough to bring about a financial crisis so they need to destroy the economy too. It's one way to address the welfare bill I suppose if you can't get your backbenchers on side.
Of course its not. Its a system that might be remotely fair if we were starting from a clean slate but were not. You would end up with a system that devalues properties with gardens. Properties with gardens would be worth less than those without. Developers would start building even smaller gardens.
If its a fair system then you are equating land to value and thats not how land works. A piece of land on a 45 degree slope isn't worth as much as a pancake flat bit of land. A house with a huge garden hemmed in on all sides by other properties has very little value to that land vs one that could be developed for 10 houses.
Land does not intrinsically have value simply due to its location ignoring everything else. The value of land is due to a massive number of factors and reducing it to "this plot is Xm2 in area Y therefore attracts tax Z" would be a disaster.
Soldato
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Over here, property tax is worked out based on size/type of land, number of buildings, type of buildings, area and number of rooms in each habitable building and if you have a swimming pool etc.
Flat, arable land has the highest value per hectare and steeply sloped scrubland being the lowest value. Woods are in the middle of the range as a couple of hectares properly managed could keep 1-2 wood burners fuelled all winter.
It also varies on department and commune.
I've said before... Who's going to end up paying for all these houses?
I guess it will be foreign investors?
I expect if we limited housing investing house prices will fall over time.
My parents house is huge, it's probably a million ish. It's in the middle of nowhere. It's a maintenence nightmare. You wouldn't want to rent it.
There are loads of these houses occupied by boomers. I can see demand waning over time which will mean house prices fall in real time.
Its that what's happening now? We are at a point where affordability is maxed out and people are rethinking if they even want the old "buy a house, pay off mortgage retire" as that traditional plan is going out the window for more and more people.
We have a good income to mortgage+house price ratio. But it's not going to be quick to pay ours off. And I don't ever want to increase it.
If we are looking at 15 years (I'll be 55) and we are on the right side of the ratio.. How many people will never pay it off?
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Yeah, the value of nice large houses even 15-20 minutes outside of civilisation is much lower around here. A house that would be £1.5m+ is under £1m simply because its not near good schools, train lines or civilisation.
There are loads of lovely houses around us we could afford and would be great...apart from the above.
As to your last point, I can't help but feel that to keep the bubble going they will simply make mortgages a form of rent. You can take a mortgage out that you will never pay off and if you die then the house is sold and the bank takes their share back. Would allow people to spend 10, 15x multiples of their salary on a house because it wouldn't matter if its over 50 years.
I guess this would be effectively a form of rent control.
Ie at least you'd know you can't be kicked out.
Your mortgage/rent would go down overtime (ignoring interest rates).
Its better than renting. But not as good as a mortgage.
And it would keep the bubble going. It would be especially useful if the criteria for lending didn't require such a big deposit. That was the hurdle for us at the time. Took ages to save up enough with the 4.5x salary multiplier.
There was talk of a inherited mortgage not long ago. But this seems cleaner.
We intend to unlock value in house via equity release eventually as we have no kids. It's not too dissimilar in the final outcome. You don't own your house at the end.
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All sounds pretty grim to me and just another way to avoid the problem that as a country we have a housing market with a crappy economy tacked onto it. More and more of peoples money isn't circulating in the economy because its just going on housing, tax and cost of living essentials.
It’s only worth £1m because someone is willing to pay £1m for it.
If there wasn’t a buyer at £1m, it wouldn’t be worth that much, it’s that simple really.
Just because lots of people are struggling, it doesn’t mean there are not huge cohorts that are doing just fine.
Just look at how many 5090 sales are going through on here. There are lots of people with plenty of money to burn.
You guys know my views but now. The UK (at least) is in terminal decline for the average person. We've thought of the moment for too long and it's catching up.
I don't even have any suggestions that are realistic. People will vote to kick the can down the road every time. So it's not even like some radical politics can be applied to fix anything.
We struggle to accept quality of life going backwards. But I don't see any other option that's realistic.
But not as much as there were. You could get that million pound house on what was an average life in boomer generation. That's not possible now.
So I can't see anything but valuation decline over time unless foreign money props it up.
Sure there are plenty of rich people. But I doubt there's enough anymore
Outside of London and elements of the south east, a house which cost £1m today would still be substantial back in the boomer days and there is no way an ‘average boomer’ would have afforded it.
Sure if they were a doctor, lawyer etc. but that’s not a typical worker.
Inside of London and parts of the south east, it’s mainly because people have benefitted from gentrification and the rich moving in and effectively taking over. Once they die and the house is sold, that generational wealth will be gone in 1-2 generations.
Sure if they were a doctor, lawyer etc. but that’s not a typical worker.
Inside of London and parts of the south east, it’s mainly because people have benefitted from gentrification and the rich moving in and effectively taking over. Once they die and the house is sold, that generational wealth will be gone in 1-2 generations.
No way an average earning boomer like me was in a million pound house (at todays values). Earning 4k in 1980, 60k in 2017 we peaked with a house of approx 400k in today's value in a nice part of Cheshire then downsizing to about 250k. We do have quite reasonable savings but even throwing all that at a mortgage would not have done it.
My parents did. My mum was a hair dresser and my step dad was a factory worker since forever.
My step dad does work hard. But capital gains have been insane for them too.
I expect the house is closer to 800k now. 1 million was peak estimation
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