What affect would taxing second homes have on the economy

[Scam]

Tax property not pay Packets.. https://www.bbc.co.uk/news/business-58485824

In my old place we rented a flat over the road from a couple that sold their big house for £1.6m. They bought it for something like £700k only 14 years ago. Which means they walked away with an extra £900k in their pocket. Completely untaxed windfall. It's like a lottery win. Actually works out that the house was "earning" about £64k/yr if you do the maths. So yeah, not exactly sure why us workers are being expected to pay more for their social care when boomers are retiring with money like that.

Property definitely needs to be taxed more. Even something as simple as a percentage tax on the profit made on a sale would raise billions. But of course they wouldn't do that because everyone is obsessed with making money off property in this country..

 

[Tefal]

A perfect example of the attitude of the Brits and their tunnel vision for their own personal enrichment at any cost. The factory owner doesn't care a hoot about his employees, and would pay them nothing if he could get away with it. He probably campaigned against min wage in the first place. He view his employees like you'd view a pair of boots or a calculator. A tool, nothing more. He cares nothing for their welfare nor for his responsibilities toward them.

If he can outsource production he will. It will mean he can own a bigger house and more premium cars. That is all he cares for.

This is the prevailing mindset in this country. There is no other goal than to enrich ourselves. So sick of it all. So very sick of this selfish country and its selfish people.

.
It's not really how modern factories work though.

There isn't an "owner"

Hell through company share schemes over the last decade I own 30k worth of the factory i work in.

Where does that fit in?

The company also has a pretty incredible record of retaining employees.

We didn't have any compulsory redundancy despite our industry getting decimated by covid.

The "owner/employees" even voted to take pay cuts in order to keep jobs.

But then the management/owners/employees have managed to cooperate and in the end we've ended up keeping all the jobs and not taking any pay cut.

Heck they've cut our shift by 45 minutes, (we did ditch 10 mins unpaid and 10 min paid from our breaks too through negotiation) but not cut pay for nearly 2 years now.

He cares nothing for their welfare nor for his responsibilities toward them.

Not really

We have private mental and physical health care providers on site for emergencies.

If you go to the GP with depression and they know you work there here they will advise you youll get seen faster through work.


The company doesn't want to lose its investment in each employee.

 

[Tom_ed1987]

I think the only way out of the present situation is for much more houses to be built (Government can get involved in this bit without harming many people; new garden cities, relax planning, build incentives etc), combined with a steady increase in inflation/wages.

Combine the two & housing should gradually become more affordable without any crazy taxes, sending any normal people to bankruptcy or killing the market.

 

[fez]

Property definitely needs to be taxed more. Even something as simple as a percentage tax on the profit made on a sale would raise billions. But of course they wouldn't do that because everyone is obsessed with making money off property in this country..

None of these ideas hold up to even basic scrutiny. All you would do is lock people into the homes they are in and discourage social mobility. Moving house is expensive as it is.

If I want to buy a larger house I will be paying a lot of stamp duty. Moving costs, furnishing costs and all the other costs associated with a larger home. If my house has gone up in price by 20% then so has the house I will be buying so taxing me on my profits whilst asking me to pay full price on the next property up is not right. What about if I have put a load of work and money into my property to raise the value? Am I taxed on that.

I'm all for limiting peoples ability to accumulate property empires and 3rd-4th and 5th homes but the average person gets rinsed enough on home buying that you should leave them well alone.

I feel like a lot of people in this thread haven't bought a home yet or they wouldn't think it was such a simple, all positives decision.

Something needs to be done but the housing market is a house of cards. You cannot do something that will pull the bottom out of it. You would literally make it 10x worse than it is now. If house prices fell 20% I would wager a huge number of people would be in negative equity and have to sell their home and who would buy them at discount prices? The mega wealthy of course.

Anything we do would need to be done slowly and carefully with a focus on those owning multiple properties.

 

[ci_newman]

None of these ideas hold up to even basic scrutiny. All you would do is lock people into the homes they are in and discourage social mobility. Moving house is expensive as it is.

If I want to buy a larger house I will be paying a lot of stamp duty. Moving costs, furnishing costs and all the other costs associated with a larger home. If my house has gone up in price by 20% then so has the house I will be buying so taxing me on my profits whilst asking me to pay full price on the next property up is not right. What about if I have put a load of work and money into my property to raise the value? Am I taxed on that.

I'm all for limiting peoples ability to accumulate property empires and 3rd-4th and 5th homes but the average person gets rinsed enough on home buying that you should leave them well alone.

I feel like a lot of people in this thread haven't bought a home yet or they wouldn't think it was such a simple, all positives decision.

Something needs to be done but the housing market is a house of cards. You cannot do something that will pull the bottom out of it. You would literally make it 10x worse than it is now. If house prices fell 20% I would wager a huge number of people would be in negative equity and have to sell their home and who would buy them at discount prices? The mega wealthy of course.

Anything we do would need to be done slowly and carefully with a focus on those owning multiple properties.

What the market really needs is stagnating house prices, so their value is eroded due to inflation. This avoids negative equity and should allow house prices to become more affordable to the whole in the next 10-15 years.

I've no idea how you could implement such a solution though.

 

[Psycho Sonny]

Funny how people with money consistently say, "You can't change the way the game is played, it will destroy society as we know it."

This has happened every single time people at the bottom were given thrown a bone. "You can't introduce minimum wage, it will destroy businesses up and down the country." "You can't give workers rights, it will destroy businesses up and down the country." "You can't free the slaves," etc, etc, etc.

The money many BTL landlords have is given them by the renters. How can they "take their money with them" when they leave? The only money they have is what they've leeched from the renter classes. The renter classes won't follow their BTL masters when they leave (may the door hit them hard on the ass as they do).

There is a problem with corporate home ownership. It's happening in parts of the US right now, where entire areas are being bought up by massive investment funds, purely for the rental income. And they are putting rents up and up and up and forcing people out of their homes, because they can. It's become (in the US) a massive, massive problem in some parts. And no doubt it would happen here too, because we similarly lack laws to prevent business ownership of residential property.

However there is literally no point in even discussing this. We are facing Tory rule with no end in sight. Labour are a shambles and will not see office again for decades. The Tories are the future, short and long-term, and they will not penalise 2nd/3rd/4th/10th home ownership. It's pure fantasy expecting the Tories to curb profiteering off a very limited resources like land or property. All things exist to make profit, esp for them and their mates. They all have massive property portfolios, as do a lot of Labour MPs. All charlatans, all bent as a dog's back leg.

This country is not a socialist country neither to people in this country care about social cohesion or the welfare of the common man. We've been bred for the dog-eat-dog lifestyle; it's all we know.

Personally I look forwards to the return to Victorian conditions for the working poor. At some point I'm hopefully going to put my money where my mouth is and leave this shrine to dog-eat-dog selfishness that we call a country. I hate how skewed everything is to those with no principles. I hate how our politicians manage a veneer of respectability despite being as bent as any you could find in Afghanistan. I hate how none of the parties care about society, and most of that stems from how little the electorate care about each other. Every man for himself, that's the British way.

You think landlords money comes from rental income? Lmfao

 

[Lopéz]

A perfect example of the attitude of the Brits and their tunnel vision for their own personal enrichment at any cost. The factory owner doesn't care a hoot about his employees, and would pay them nothing if he could get away with it. He probably campaigned against min wage in the first place. He view his employees like you'd view a pair of boots or a calculator. A tool, nothing more. He cares nothing for their welfare nor for his responsibilities toward them.

If he can outsource production he will. It will mean he can own a bigger house and more premium cars. That is all he cares for.

This is the prevailing mindset in this country. There is no other goal than to enrich ourselves. So sick of it all. So very sick of this selfish country and its selfish people.

Enriching yourself is rewarding and fun, and means you can easily enable yourself to lead a great and rewarding life.

 

[Psycho Sonny]

Enriching yourself is rewarding and fun, and means you can easily enable yourself to lead a great and rewarding life.

Wasting your time. He refused to buy headphones when retailer increased prices.

Bare in mind even after the increase no doubt they were still the cheapest on the market.

 

[fez]

You think landlords money comes from rental income? Lmfao

I mean some of it does. My partner owns a second house and makes money from the rental even when you consider things like having to rewire the place, redecorate, replace carpets, replace kitchens, furniture etc. The main bulk comes from someone else paying off your mortgage and the increase in property prices but I would wager that most landlords are still making a bit of money every month on top of the longer term gains.

 

[dave28]

A perfect example of the attitude of the Brits and their tunnel vision for their own personal enrichment at any cost. The factory owner doesn't care a hoot about his employees, and would pay them nothing if he could get away with it. He probably campaigned against min wage in the first place. He view his employees like you'd view a pair of boots or a calculator. A tool, nothing more. He cares nothing for their welfare nor for his responsibilities toward them.

If he can outsource production he will. It will mean he can own a bigger house and more premium cars. That is all he cares for.

This is the prevailing mindset in this country. There is no other goal than to enrich ourselves. So sick of it all. So very sick of this selfish country and its selfish people.

Businesses all over the world in general are like that, Cadburys were bought by an American business and turned a factory full of people into a factory where you need to use a telephone to talk to the next nearest member of staff. They replaced everyone with machines.

 

[fez]

Enriching yourself is rewarding and fun, and means you can easily enable yourself to lead a great and rewarding life.

There are different ways of enriching yourself though. It doesn't have to be 100% financial gain which is what current society places at the top of the pyramid. Everyone generally accepts that the most important thing is to have lived a happy life and yet we place far more value in money than happiness. So many people think that if they have X they would be happy and their life would be better. Then when they have X they want Y because thats actually what will make them happy.

 

[mrbazmondo]

Forcing banks to give 100% LTV mortgages whilst simultaneously causing house prices to crash? I'm sure nothing could possibly go wrong there

A wonderful idea in principal... in the real world however, what a mortgage costs is open to so many variables. Is this based on a mortgage over 10 years? 20? 30? What LTV are we looking at? Any particular lender? What happens when the landlord changes mortgage, do they change the rent mid-term? "Oh Hi Mr & Mrs Tenant, I've decided to shorten my mortgage term by 15 years, your rent is now 3x what it was last month"

And the other way around, Landlord locks into an expensive mortgage, then the market changes forcing rental to drop, then they have to sell the house that you're renting, or the bank takes it off them and kicks you out.

 

[Psycho Sonny]

I mean some of it does. My partner owns a second house and makes money from the rental even when you consider things like having to rewire the place, redecorate, replace carpets, replace kitchens, furniture etc. The main bulk comes from someone else paying off your mortgage and the increase in property prices but I would wager that most landlords are still making a bit of money every month on top of the longer term gains.

Depends entirely on equity in the property. A lot of folk don't have anything and all that money vanishes back into the property.

Sure if you have a lot of equity and mortgage is nothing then you make some money after everything else.

But the bulk of income is from value appreciation, when they sell or subsequently rent increases thanks to value appreciation. But that wouldn't happen without the increase in the asset. So all the money comes from prices rising.

 

[Scam]

I think the only way out of the present situation is for much more houses to be built (Government can get involved in this bit without harming many people; new garden cities, relax planning, build incentives etc), combined with a steady increase in inflation/wages.

You've drunk the wrong Kool Aid my friend. There are thousands of new homes being built in most major cities, you can see all the stupid "luxury apartments" everywhere from Manchester, Birmingham to London. You only have to look at the Battersea or Royal Docks developments in London to see the scary amount of flats being built. The problem is, who buys them? Only developers, landlords and buy-to-leave investors. Because it's still the best way to make money in this country. There's half a million empty homes in the UK as of last year. Why do we need more exactly? The argument for building more homes is absolute nonsense, until we stop landlords and investors buying the homes then you can't solve the problem. You're actually just making them richer as it stands.

If I want to buy a larger house I will be paying a lot of stamp duty. Moving costs, furnishing costs and all the other costs associated with a larger home. If my house has gone up in price by 20% then so has the house I will be buying so taxing me on my profits whilst asking me to pay full price on the next property up is not right. What about if I have put a load of work and money into my property to raise the value? Am I taxed on that.

I'm all for limiting peoples ability to accumulate property empires and 3rd-4th and 5th homes but the average person gets rinsed enough on home buying that you should leave them well alone.

I feel like a lot of people in this thread haven't bought a home yet or they wouldn't think it was such a simple, all positives decision.

I get it if you're in a chain. 100% agree if you've done a lot of work on a house, that'd be hard to quantify and tax appropriately. I'd be happy for a tax on profit to replace stamp duty anyway. Why exactly does a buyer have to pay such a tax? It's nonsense. Especially a FTB. Contrary to your assumption, I did just buy my first home this summer. Absolutely no idea why I had to pay a huge amount of stamp duty for the privilege, whereas the pensioners who bought it for peanuts, rented it out for the last 15 years (free money), and now got their massive windfall from us... they have not been taxed at all. How is that fair exactly?

 

[delta0]

What the market really needs is stagnating house prices, so their value is eroded due to inflation. This avoids negative equity and should allow house prices to become more affordable to the whole in the next 10-15 years.

I've no idea how you could implement such a solution though.

You can blame weaker currencies for that. House prices track much closer to gold than GBP

 

[fez]

How is that fair exactly?

Its not fair but then life isn't remotely fair and there is no really fair way to do it. Its always a choice of who you want to punish. How much the government is making from system X and how much they would make from system Y. Then you have the issue of who would be punished because you are shooting yourself in the foot if you make an enemy of the powerful elite AKA the rich. Its like tax. We used to tax people into oblivion once they earned a certain amount and we actually collected less tax than when we moved to a less harsh system. People find ways around things when they hurt too much and the rich don't like to spend their money where they don't want to.

I would like to see limits on foreign investment and purchase of housing, I would like to see very hard taxation of people who want to own more than 2-3 properties and I would like to see rent caps. If your house is worth X then you cannot charge more than Y. If you choose to pay your mortgage off over 15 years instead of 30 thats your choice as a landlord, the tenant shouldn't be involved in that.

 

[Dis86]

@fez you don't need to sell your home if you're in negative equity.

 

[b0rn2sk8]

The issue with charging capital gains tax on primary residence property sales instead of stamp duty on the purchase is that you create a disincentive to downsize. I’m short, old people are not going to downsize from a large family home to a small bungalow if they have to pay silly amounts of tax to do so.

Capital gains tax already applies to gains made on other properties including holiday homes and rental properties.

 

[fez]

@fez you don't need to sell your home if you're in negative equity.

Of course you don't but its soul destroying for people who might watch 10 years of mortgage payments go down the drain or the house they just bought has 50k wiped off the value and they then spend the next 5 years just getting back to parity. There is a damn good reason the government are petrified of doing anything that would negatively effect the housing market. A huge number of people would be affected by a housing market crash and whoever presided over it would be almost guaranteed to lose the next election. Especially if they actively caused it.

 

[Scam]

The issue with charging capital gains tax on primary residence property sales instead of stamp duty on the purchase is that you create a disincentive to downsize. I’m short, old people are not going to downsize from a large family home to a small bungalow if they have to pay silly amounts of tax to do so.

But rather than a blanket tax you could easily come up with a tax that says something like 1% tax on a profit of 25% or more, 2% on 40% profit etc. People can't complain if you're taxing a tiny proportion of cold hard profit they've done absolutely nothing to earn.