House prices rose 7.3% this year, average now almost £250k

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He's just floating it as an idea, it's not definitely happening is it? It's going to be very unpopular in certain parts of the country.

It does nothing to address multiple ownership either if the properties are BTL? Tenant pays the tax?
 
HungryHippos said:
Yes. Yes it is! :(

Not seen any news to suggest this was definitely going ahead though, has it been confirmed?
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The property tax proposal permanently removes SDLT and council tax.

neocon said:
He's just floating it as an idea, it's not definitely happening is it? It's going to be very unpopular in certain parts of the country.

It does nothing to address multiple ownership either if the properties are BTL? Tenant pays the tax?
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Not happening until they formally announce. The news only said that Sunak was seriously considering it for the March budget.

According to the proposal, the owner is always liable for the property tax, but depending on the market, they will of course try to pass that on to the renter if they can. Realistically in most cases some percentage of it will be passed down to the renter, some percentage will be absorbed by the landlord. But yeah, it's the owner who gets the bill.
 
neocon said:
Surely it would need recalculating every year. Where I live people have bought houses for 100k and 10-15 years later they are 500k. It wouldn't be fair otherwise, you could have people on the same street paying very different rates.
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property taxes are recalculated every year based on factors like inflation, house price market changes in the neighborhood, sll taking into account floor area, number of rooms/bedrooms,garden, garage etc. Basically everything gets put in a big formula and updated. This does mean property taxes do decrease wheb the market crashes.


The value is not directly set onvthe sale price but dale prices of similar houses nearby each year. Typically the listed value for tax purposes will be much less than your purchase price
 
Simon said:
So why would it have an effect on house prices then ?
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Well, the property taxes should be in the range of 1-2%. This puts an incentive on people not to buy houses bigger than they need, snd to rent out second homes.


But the goal is not reduce house prices but generate taxes in s progressive msnner by those who can afford it, with a tax scheme that promotes efficiency and not reducing demand unlike VAT.
 
Anyone know how property tax works on vast estates? Say a Duke has a 1,000 acre estate with his castle on it. On the open market the estate is worth many millions but the property hasn’t sold for centuries. How do the land registry work out the area’s per sq ft price and apply property tax? They’d have no data on pricing. Could be a nice loophole for the ultra, ultra wealthy nobility. I guess they don’t pay any proportionally different council tax so it’s not different to now but it would be a shame to introduce a wealth tax that would miss these wealthy types.
 
BigT said:
Anyone know how property tax works on vast estates? Say a Duke has a 1,000 acre estate with his castle on it. On the open market the estate is worth many millions but the property hasn’t sold for centuries. How do the land registry work out the area’s per sq ft price and apply property tax? They’d have no data on pricing. Could be a nice loophole for the ultra, ultra wealthy nobility. I guess they don’t pay any proportionally different council tax so it’s not different to now but it would be a shame to introduce a wealth tax that would miss these wealthy types.
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The biggest estates get handled specially, but a fsir estimate can be msde invthe same way insurance costs are calculated. For example if the state includes agricultural farmland thebvthe going price for nearby farms lver the last X years can be used.


But property taxes on vast estates is actually one of the primary benefits as it helps tackle tax evasion and appropriately taxes the richest even if their reported income is modest.

A 2% property tax on a £10million estate helps the government coffers, and forces an efficient use of land and property, as well as avoiding excessive wealth accumulation.
 
D.P. said:
Well, the property taxes should be in the range of 1-2%. This puts an incentive on people not to buy houses bigger than they need, snd to rent out second homes.


But the goal is not reduce house prices but generate taxes in s progressive msnner by those who can afford it, with a tax scheme that promotes efficiency and not reducing demand unlike VAT.
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2% tax would be totally unreasonable on an annual basis.

Using my example of a £340,000 house, 2% property tax would be £6,800 a year. This would make property tax £566 a month (that's more than my mortgage).

0.48% has probably been calculated to not be outright punishing, even on a £1M home 0.48% is £4800 a year.
 
HungryHippos said:
2% tax would be totally unreasonable on an annual basis.

Using my example of a £340,000 house, 2% property tax would be £6,800 a year. This would make property tax £566 a month (that's more than my mortgage).

0.48% has probably been calculated to not be outright punishing, even on a £1M home 0.48% is £4800 a year.
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why is it unreasonable? Property taxed around tje world are typically in the 1-2% range.

as i posted above, property tax where inlive in Switzerland is 1.5%< an average family house is about 1.5million CHF, which would equate to about £1550 a month.

When i lived in the US property tax was 1.15% but I lived in a lower tax county. The averages in the USA are 1-2%
https://images.app.goo.gl/iDKvs2givH1Phu337
 
D.P. said:
why is it unreasonable? Property taxed around tje world are typically in the 1-2% range.

as i posted above, property tax where inlive in Switzerland is 1.5%< an average family house is about 1.5million CHF, which would equate to about £1550 a month.

When i lived in the US property tax was 1.15% but I lived in a lower tax county. The averages in the USA are 1-2%
https://images.app.goo.gl/iDKvs2givH1Phu337
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1% would pretty much double what I currently pay for council tax, and I already got hit for 10s of thousands of SDLT 2 years ago, do I get a rebate for that if this new tax is to replace both council tax and SDLT?
 
0.48% would make me pay a bit more, but I could do it and just be a bit poorer.
1% would more than 2X my current tax payments.
2% would probably be about 4.5X my current tax payments.

1-2% might be the norm elsewhere in the world, but we've been effectively paying around 0.48% for probably decades.

From a personal perspective I'd go from being reasonably comfortable financially, to having very little disposable income. I'd need to earn a lot more to counteract the tax increases at something like 2%.
 
krooton said:
1% would pretty much double what I currently pay for council tax, and I already got hit for 10s of thousands of SDLT 2 years ago, do I get a rebate for that if this new tax is to replace both council tax and SDLT?
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This is the problem with drastic changes to the tax system, it'll always impact a minority.

I suppose you'd be screwed over just as much as people were whinging on the news when the SDLT holiday had come into effect and they had just exchanged contracts a few days prior to announcement. No chance of them getting that money back.
 
krooton said:
1% would pretty much double what I currently pay for council tax
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Yes, it'd probably need a bit of regional variation to get the numbers to work properly. 1% for me would only be a little bit higher than council tax.
I live in an area where average property prices are much less than London property prices but council tax is about 1.5 times London council tax, so that's why we get very different results when looking at a percentage of property price vs council tax.
 
2 percent and id have to sell up.
1 percent would a an unwelcome increase
0.5 percent is sensible. It would still hit a lot of people hard. That would be break even for me


My friends who bought a 500k house (historic inheritance) would be hit hard. As a teacher and a marketing person at a charity)

But I do feel it would be fair. Inheritance is still too big a differentiator. It can give someone with an av we job such an easy life. While someone with a better job and no inheritance struggles through life year on year
 
krooton said:
1% would pretty much double what I currently pay for council tax, and I already got hit for 10s of thousands of SDLT 2 years ago, do I get a rebate for that if this new tax is to replace both council tax and SDLT?
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No, in most countries the stamp duty remains. I thibk i paid 3.5% here.


A 1-2% property tax may well be double or triple your council tax, but so what? That largely means the council tax was probably insufficient. For a property tax to have a measured impact on house pricing it has to be hugh enough that the tax acts as an incentive to moderate house buying.

If the property tax is not affordable then you either have to downsize or rent. E.g. here, rental costs are abput 2-3% tops, while a 1.5% property tax and 2-3% or more mortgage means it is much cheaper to rent than buy. As long as there is proper rental controls in place and strict protection for renters then there is zero problem with renting. Buying is a strangly British obsession
 
Would this tax be paid on the percentage of the property you own? I mean why do you have to pay a wealth tax on something that you might not even own outright? It could well be a debt tax if you do
 
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D.P. said:
Well, the property taxes should be in the range of 1-2%. This puts an incentive on people not to buy houses bigger than they need, snd to rent out second homes.


But the goal is not reduce house prices but generate taxes in s progressive msnner by those who can afford it, with a tax scheme that promotes efficiency and not reducing demand unlike VAT.
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But its goingt o replace council tax, something tenants pay today. IF property tax replaces it then surely the tenants will be expected to pay that too? If they dont the rent will go up to cover it.
 
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