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

[HACO]

You'd be wrong tho. I haven't bought anything from scalpers. I haven't persuaded anyone to buy from scalpers. I *am* waiting.

I'm sitting on an i5 2500K so I'm hardly short of patience This will be the first proper upgrade since 2012.

I need a functioning PC for my work and the aging motherboard has already developed a fault. I'm one of the most frugal people you could possibly meet.

Only if you hadn't bought that 2500K all those years ago, and instead stuck with your Core 2 E6600, you'd be a homeowner now.

 

[HACO]

Unless you don't max out your mortgage. Borrow less. Pay it off much quicker than a 30 year term. Then you have much more equity and potentially additional savings to add on top and money to have significantly improved the current property.

People generally borrow as much as they can to afford anything, and then overpaying a loan that's 1.5-2% interest is usually a bad idea, they get better return in a mutual fund in their S&S ISA, or can contribute to their pension to get tax relief (somewhere between 32-62% depending on income assuming they can salary sacrifice).

 

[HACO]

Not taking financial/ house buying advice from you, thanks!

Take it from Sonny then, you'll be a BTL landlord in no time (if you're not one already)

 

[HACO]

I wish, that'd pay for some real good chicken tendies. I do plan to take the equity out of this place to make a deposit for my next place though. I bought in an area out performing the market.

Ya know, cause I don't live in North Korea and that's how the free market rewards people who take risks instead of sitting still

Good for you buddy. Good for you. Enjoy your free market rewards. Sadly I live in Pyongyang and here it's all communism here, we get free cookies though

 

[HACO]

Your comment basically said don't bother unless it's urgent or actually needs fixing because it's a hazard

Either way, I encourage anyone to make a snagging list and follow it up, you e just purchased a brand new house, it should be pristine inside, regardless of the price.

Yeah, gotta keep those builders accountable. They build a house and usually make a 30% profit margin. It has to be problem-free.

 

[HACO]

Are we expecting them to extend it anyway? Most commentators saying it was brought in too early and should be extended. Gotta prop up the market y'all.

There was a piece news a week or so ago that Sunak was considering plans to get rid of SDLT and council tax completely in the March budget and replace them with an annual property tax.

https://www.thetimes.co.uk/article/rishi-sunak-eyes-tax-rises-in-march-budget-gmd3qpmkb

A 0.48% annual property tax would raise the same money as SDLT and council tax do now, and this was planned to be a tax rise, so probably more than that. Hopefully at least 1 or 1.5% per year, although my preference would be above 2%.

Obviously we wouldn't know until announced. if a 0.48% property tax is implemented, the average person outside London will save money, the average person in London will have to pay a little more.

 

[HACO]

That would mean for example my council take going up by something like 5x per month lol.

You'd also need a way of constantly revaluing houses.. it's a total non starter.

Also massively regressive, you'd have people being forced out of areas through gentrification because they couldn't afford the property tax despite the fact they'd perhaps lived there for generations.

If it was basically replacing council tax then I guess fine and it can start to diverge but it's no panacea.

If implemented, I'm sure it will have provisions to make sure that people won't be forced to sell, e.g. postponing tax at no interest until sale/probate. Most wealth/property taxes implemented globally have such provisions. Even still, borrowing against a £400k property to pay £2000 a year will be effectively interest free anyway.

I can understand that council tax needs more accurate. But yeah it's going to suck for some people that have lived there for years in an area that has become more expensive. But it has to be done at point. Council tax is based on 1991 prices. I mean it's been 30 years.

Yeah, it totally needs reassessing.

That's interesting. Stamp duty payable by a buyer is ridiculous. The best idea I've seen for a fair property tax is to take a percentage of the difference of the sale price compared to the last sale price. In other words, the owners capital profit. Like I've mentioned many a time it's crazy that we have bricks and mortar in this country earning more than the average salaries for that area. Just tax it. Those people who were lucky enough to buy a property in an area that becomes gentrified/expensive will still get a profit, just not a life-changing/lottery-winning profit that they've done nothing to deserve. Even a tiny percentage would work.

Yeah. That's capital gains tax which is already in the tax code. Currently your home is exempt. It shouldn't be, or at least the exemption should have a cap (e.g. only properties sold at below median price - £250k - are exempt). Or something like that.

Isn't the percentage of people renting in this country now approaching (or recently hit) 50% of the population? So this already happens to half the population anyway by way of their landlords increasing their rent, or kicking them out if they dont want to pay it. Two wrongs dont make a right, but.. just sayin'

I think we're at 60:40 own:rent ratio right now, down massively in the last 20 years.

Landlords are already charging the highest rent they can charge in any market. If there was scope to increase rent, they'd have already done it. They may try to use it as an excuse to ask tenants to pay more, but tenants must resist. Ideally this should be coupled with rent control but that won't happen.

A little more?
2% annual property tax is literally mental numbers. Would never be allowed to happen. Some people's council tax would rise 5-10 times over night in London. Yes London is not the whole country but I'm just saying it holds significant importance as ever with these things.
0.48% for me - just worked it out - is more than 20% rise as it is. I don't live in London but am in the South East.

Yeah, 2% is my hope and wishful thinking. 0.48% will raise as much as council tax + SDLT, so assuming this is a tax increase, then it will be somewhere between 0.75 and 1%.

 

[HACO]

That seems a bit pointless to me. It'll allow renters to save a lot more buy home ownership becomes so expensive that mortgage affordability is much lower and they'd need to save a much bigger deposit anyway. Or is the idea that renting becomes cheaper and people will choose to rent permanently rather than buy a home?

*Pointless in terms of your situation and others similar, in that it won't make home ownership any easier. I guess it would generate more tax overall than council tax, so that would be a benefit.

It won't help people buying in the immediate future like me, as you say it may even make it more difficult, but property taxes (similar to higher interest rates) will have a downwards pressure on the asset prices in the long term, e.g. a 300k house will be 400k in 15 years instead of 800k. Helping people who want to buy in future decades and generations.

 

[HACO]

Ok, I understand your point. Maybe a good compromise would be the 0.48% for 1 property and the 2% on each additional property. Then you might get a balance between suppressing price increases but also allowing people affordability on a mortgage to buy if they want to.

Would be pretty great if we get that.

 

[HACO]

The original article you linked is behind a paywall, is this a tax that would be paid by owners or occupiers?

Owners.

So a home owner pays £x towards the cost of local services and a tenant pays nothing?

Suppose I was a landlord with a £150k property let at £750/month. @HACO suggests I should pay up to £3,000/annum for this new tax, isn't this just going to be added to the rent? This would mean a tenant was contributing towards local services but possibly at a higher level than a home owner.

Well, 2% was my idea, the number thrown around seemed to be around 0.5%, so £750 per year for a £150k property, lower than the current council tax in most places.

As for whether you would have passed this to the renter, if the you could have charged your renter an extra £3k/year, you'd already be doing that. Maybe if the tenant no longer needs to pay council tax you can charge them an extra amount equal to the council tax, either way the tenant is no worse off. Realistically though, some of that will be passed to the renter, and the landlord will have to take some of it, depending on the local market.

Generally speaking though, someone currently paying £1500pcm in London for a 2-bed flat that's worth £750k would not be getting a £350pcm rent increase as a result of this. Most of that cost will be absorbed by the landlord.

A social landlord with 1,000 £150k properties. Are they going to have to pay up to £3m/annum?

Yeah, someone with a net worth of at least £150 million net worth shouldn't be having problems paying a £750k property tax (@0.5%) every year. Hell, they can easily afford to pay a 5% tax every year.

Build houses where?

There is no point building houses 300 miles away if haco needs a house in the centre of London.

Building houses won't affect house prices. Because those houses won't be wanted by anyone other than those in the local area.

It's not as if everyone in London is going to start buying houses in Wales. Therefore London prices remain the same.

The real solution is fixing the wage issue. To fix that you need to fix the economy. To fix the economy you need a long standing competent government.

Sure, building in Wales doesn't affect London pricing, it affects Wales pricing. Building in and around London affects London pricing. It's not that hard to grasp, my friend.

 

[HACO]

You can't realistically build any more in London.

Not unless you are knocking something down and building multiple homes upwards on it.

Otherwise you have to ask why they haven't built there already.

London is overbuilt and overpopulated as it stands.

You can if you build taller. Like Tokyo, Seoul, Shanghai, Bangkok, Hong Kong, New York, Singapore, etc...

London is comparable to those cities, yet we don't build anywhere near as tall. London barely makes the top 50 in the world in terms of average building height. I'd say we can go A LOT taller than it is now.

England is overpopulated, no arguments, but unless you suggest genocide or forced displacements we need a way to house our population where they want to live. Building taller works well, as we've seen in comparable cities around the world.

 

[HACO]

The problem with building taller is where do you park all the cars? It brings its own issues.

Bringing more population into a smaller area will increase pollution, fumes, smoke and reduce what little greenery there is.

It's also a solution I mentioned in my post if you go back and read it. So your post was pointless.

We need to get away from the "everyone needs to own a car" culture, car ownership in London isn't all that high (56% of households, versus 80% countrywide), those numbers are even lower for younger people, despite the stereotype among boomers that millennial are poor because they all drive BMWs, lol. And you don't see this as a problem in the cities I mentioned. Not everyone needs to own a personal car in big cities with good public transport.

 

[HACO]

That’s presuming that good public transport links exist between where you are and where you want to be. The other consideration is how long public transport takes to get somewhere if you have to change buses/tube lines. I can think of a dozen retail parks I used to visit that were 5-10 minutes in my car that would take an hour to reach by bus/tube and then I’d be limited to what I could carry on the return trip. Good luck transporting a family’s weekly shop on the bus or the tube.

The future of shopping is online, we can't fight that trend, we should embrace it.

As for public transport, it can be better (and cheaper) for sure.

Also holidays, if we want to re-introduce holidays in the UK rather than abroad then the need for cars will increase not decrease.

Yeah, but you don't need to own a car to drive a car for holidays. There will always be need for cars, just less and less need to own one if you live in a major urban area.

So are you going to just do shopping online then?

You may as well just convert all retail space into homes then because the majority of stuff requires a vehicle to bring it home unless you want to do daily trips and bring what you can carry at a time.

Especially if you have kids, etc.

Pretty much yeah. Future of shopping is online and retail is dead. That's a global trend and you're not going to reverse it. Every year a lot of retail space is turned into service centres, office space or residential.

Cities could be much more urbanised, London included. It’s surprising how many parking spaces can be fitted underground.

Precisely.

 

[HACO]

I like the idea, but you make a very valid point.

We've just bought a newish house in a popular/wealthy area. If we'd purchased in 2012 when they were built, they've increased in price by 44% in 8 years.

The area has only become sought after from about 10-15 years ago, when it was considered a bit of a rough area. A lot of the elderly people who live on our road have lived here for a good 30+ years and would likely have purchased their houses on what would be considered as low-paid jobs. Simply put, if they were 30 years younger and doing the same job they'd never be able to afford the property. The value of the properties will have outstripped their potential lifetime earnings, and a tax on the property would simply make the houses unaffordable for them.

A property tax is usually cited as an incentive to get pensioners and older people to downsize and move out of the heavily sought after areas such as London or other highly urbanised locations, making those houses available for younger people who want to raise families or work nearby.

That's a good thing and by design.

A property tax is fair. It's better than stamp duty as it allows people to move around easier.

It also might hinder the 'lucky' ones who can buy a whopping house just because of inheritance. If you don't have the job to afford the property tax you might have to be a bit more modest.

I would expect a assets tax to hit me equally as what I'm paying now.

Really, if it could be properly administered I think it's a great idea.


The big 'but' is changing values and modifications etc.


One thing is for sure. New tax has to come from somewhere soon. As total tax income is falling at a time when national debt has ballooned.

They don't have many options

Wealth is the only thing we don't tax in this country, and we should.

It's funny that in this country someone with £25k net worth and £70k income pays twice as much tax as someone with £1 million net worth and £40k income.

 

[HACO]

Someone with a 70k income pays more income tax than someone with a 40k income... that's just how taxation works. The amount of assets they have is irrelevant to income tax.

In this country, yes that's how it works. Not everywhere. E.g. Sweden, France, Italy, Norway, Switzerland, etc have different forms of wealth taxes. Add in property taxes and then US, Australia, Japan, Canada, Ireland, etc, they all have them. You know, these communist countries who don't know how taxation works!

In fact, UK is the only OECD country that doesn't have some form of an annual property tax for the property owner. THE ONLY ONE. Maybe we're the only one who understand how taxation works, and everyone else is mistaken.

Someone with £1million net worth has likely paid a lot of tax already to get to that position (save for gambling winnings)... perhaps in time, the person earning 70k might get there and later when they become a pensioner with a lower income they won't pay much income tax.

Not if it's property price appreciation, for which they haven't worked at all, and pay zero taxes (exemption from capital gains tax).

If they still have substantial assets when they die then their estate will be liable for IHT too.

IHT is not a replacement for wealth tax. All the countries that have wealth and property tax, also have IHT tax on top of that.

We're really unique that we don't tax wealth. Every other OECD country does it.

 

[HACO]

But surely that is only realised if the property is sold.

So if someone scrimps and saves to get on the ladder with a £150k flat on a 30 year mortgage, and 3 years later the flat has doubled in value, they need to suddenly pay more tax (that they might not be able to afford)?

Or will this have a tax-free threshold as well? Will the net-worth be calculated based on the balance of debts and assets?

They should pay more tax in that instance, because they are now significantly wealthier.

If you benefit from 100% asset appreciation, then you should also be liable for its taxes.

I'm referring to income tax and, you're wrong - see below.
Only on a primary residence, someone with net assets of 1 million might have a second home or a stock portfolio etc.. Then they've paid tax on the income used to purchase the primary property, the transfer of the property and it will be liable to IHT too.



All 4 of them? Most of them have scrapped it.



No we're not, the countries that are unique are those that haven't scrapped theirs:

https://www.businessinsider.com/4-e...-norway-switzerland-belgium-2019-11?r=US&IR=T


so you're proposing a tax that most countries who had it have gotten rid of because it was a bit of a farce - difficult to administer and hit people who couldn't easily pay it.

While it's true that some countries crapped their pure WEALTH tax, you ignored the PROPERTY tax part of it, which is the main subject here. All OECD countries have PROPERTY TAXES that the owner pays. EVERY SINGLE ONE OF THEM, except the UK.

Or did you seriously claim that these countries have scrapped their PROPERTY taxes as well? If so, you're just wrong.

Administration would be impossible.
You'd never be able to an accurate valuation. Probably biggest issue

Every other OECD country has property tax based on the value of the property that the owner pays. If they all can manage administering it, so can we.

I personally don't have confidence that this Tory government will deliver a property tax, but we shall see in the March budget.

 

[HACO]

But that benefit only happens IF they sell.

So the property goes up in value due to gentrification of the area, suddenly they have to pay tax on this 'gain'.

But then the property market crashes, and they have to sell their flat back at it's original price.

They have now paid extra tax for no logical reason, it is impossible to administer such a process fairly, which is why so many countries scrapped it.

Imagine having to sell your property because it went up in value and you can no longer afford the associated outgoings, that crazy. Some people have just managed to get on the property ladder based on the current system, then you slap an extra tax on them that they can't afford.

"What's that, you've cleared you mortgage? Well, not really, as you will continue pay tax (basically interest) on your house."

Nothing happens that fast. A 0.48% annual property tax (the proposal) is not going to crash the market or force anyone to sell. You can easily borrow against your property at almost no interest to pay that.

Everywhere in the OECD countries, people pay annual property taxes. Their world doesn't end, their countries don't collapse and they don't have to sell their houses.

So are you advocating that a pensioner should be taxed out of their home and forced to relocate potentially miles from their family and friends through no fault of their own?

Absolutely. 100%. If you have an asset that's worth, let's say £1 million, and need to pay an annual tax of £5000 as a result, I'm not going to sit here and pretend like you need a tax break.

Either borrow against that £1 million to pay your taxes, or if you don't want to, sell up and become super cash rich.

Poor pensioners, the richest demographics in the country whose wealth in 2020 increased by 20% alone while every other demographic got poorer (to protect those pensioners!). Imagine being so heartless to ask them to pay 0.5% tax on their properties.

 

[HACO]

Should we also have a higher tax on saved income then? By definition if it’s saved it’s not actually required, let others benefit?

and at what point would the wealth tax kick in?

Property tax? No lower limit, like other countries. Wealth tax? At let's say, £10 million net worth and more.

Remember that 50% of land in England is owned by 2500 people.
https://www.theguardian.com/money/2019/apr/17/who-owns-england-thousand-secret-landowners-author

HACO, now you have done house prices and council tax, can you move onto childcare? I am going to have to pay £1500/mo for 4 days a week

I would 100% support universal childcare like Scandinavian countries do. It's a disgrace that childcare is so expensive in this country. I would happily pay more tax to fund education and childcare. But instead our taxes go to the pockets of pensioners and landlords.

Nah, screw that, I was with you on controlling people hoovering up properties, and BTL magnates and foreign investors, but we already paid £30k in stamp duty when we bought our house 2 years ago, pay inflated council tax even though we get reduced council services, have to pay the estate management company £60 a month, and now with your proposal we need to stump up another £250 a month just because?

You definitely seem to be bitter and twisted over home-ownership.

The property tax would replace council tax, and I'm bitter & twisted because I want us to learn from other OECD countries who manage their housing situation better than we do? Call me bitter and twisted. I'd say the attitude in this country over home ownership (which is a fundamentalist religion at this point, we consider it sacred) is twisted. Any policy that might not benefit the homeowner class and might slow down the ever-increasing house prices is considered blasphemy, even though these are normal and exist in dozens and dozens of other developed countries, and very successfully so.

 

[HACO]

No, you specifically said wealth tax and I addressed that aspect - the UK has a property tax too - it is commonly called council tax!

No. This is what I said: In fact, UK is the only OECD country that doesn't have some form of an annual property tax for the property owner.

Go back and see it. I clearly said PROPERTY. You refuted something I never claimed.

Council tax is a residency tax, not a property tax. The same is true of business rates. They are paid by occupiers, not owners.

You're arguing with yourself there - you claimed they had a wealth tax, you're wrong. A general wealth tax and a property tax are different things.

No, YOU are arguing with yourself here. I said property tax, you pretended I said wealth and refuted your own fantasies.

This is also false - as per your wealth tax claim. In Germany the tenants can pay it, in Spain it varies, in cases where the landlord pays it then it's a bit moot as the rent reflects that.

Nope, in Germany owners are responsible.

It would probably be better to argue for the benefits of it tbh... rather than trying to make an argument on the basis of other countries do it therefore it must be good.

I already have, several times.

 

[HACO]

That has been pointed out to him a few days ago, yet here he is making the same claims all over again - the biggest landowners in the UK unsurprisingly are the likes of the forestry commission, the MOD, the crown, the national trust etc...

The capitalist swine!

The actual study reporting on it was discussed in the Parliament as well. But you're right, it's communism to notice and discuss these things.