New stamp duty rules Post Reply

[Seriously?]

I don't think anyone is in any doubt that we live in an affluent area. I think there has been more debate around what constitutes being "rich". The affluence in Wandsworth is a result of a lot aspirational people living here. When I bought my first place there was still some stigma around the SW18 postcode. Can you imagine!? (Yes, that is me making a joke at my own expense).

I think the main point of contention is that some people feel that the level of affluence in Wandsworth is on a par with with the moneyed upper echelons. Maybe the chattering lefties will think that we all deserve to have our hard earned houses taxed to the hilt, but I am happy to admit that I don't think I'm at the level that left wing ideology is aimed at.

[juliantenniscoach]

Hi Livegreen, My house hasn't earned me anything. It's value has increased but I cannot realise any of those funds without selling. So it's most definitely a tax on monies I don't have. I'm unfortunately old enough to remember the negative equity situation of the late '80's and don't remember a tax refund being offered. Politics is a tricky subject on a blog site, so with the upmost respect, I don't see any logic to the tax whatsoever. I just see it as 'grandstanding' by Labour to it's traditional supporters outside of London.

[kiwimummy]

No we're not Petal. All joking aside, you are asset rich, and cash poor. You have assets that far exceed the assets of the average family in the UK.

I found your posts amusing in that you don't seem to understand that you are objectively well off, because you define "rich" only on the basis of disposable income and not in terms of the assets you have or the choices you have made that reduce your access to your disposable income (like paying interest on a large mortgage).

If you need to at some point, you can always realise a capital gain by selling your home and moving somewhere in London where house prices are cheaper. That may not be something you want to do, but you do have access to that value if and when you choose to access it.

You may not feel rich, but you have a lot more than many other Londoners.

[pie81]

livegreen I agree those who have built up massive equity through price rises have had an unearned windfall

I also agree with Julian that they don't benefit from that windfall till they sell

personally I think the fairest solution would be to introduce CGT on house sales, ie get rid of the PPR, at least above a certain level of gain. But that wil never happen as it's clearly a vote loser...

[supergirl]

I am adding my 2 pennies worth !!!

Actually i agree with a lot of things on there, but i wouldnt have phrased it this way.

I think whoever owns a flat/house in this area (with or without a mortgage still left to pay) IS rich. Ie. asset rich yes not necessarily cash rich i agree.

But the very fact that we (i am one of them) are asset rich is a priviledge position that not many are in.

Having assets is a priviledge whether you have worked hard for them or inherited them or both. Because you have been able to plan your financial future based on those assets when you discussed your house purchase with your husband/wife/bank.

So many people can't plan, can't even contemplate buying a place anywhere let alone in London.

So yes we are rich if only on paper because we are able to build a life here, because we have CHOICES. And having choice is a priviledge.

I suspect that for a lot of assets rich people it must be hard because some are mortgaged to the neck having added the costs if their refurb/loft conversion/side return etc on the back of their mortgages (and living off credit cards?).

Anyway it is ONLY my opinion. I m asset rich. And my house as almost double in value in the last 5 years. We believe we are tge top of bubble though as it really cant get much higher....

[supergirl]

And just to add London Maman you should remember that a lot if people would have made a gamble buying in CJ or around.
When i arrived in London 10years ago, we bought our first flat off Lavender Hill in a pretty grim road at the time.
Our born in london friends couldnt believe we were buying in CJ, kept telling us "location, location".
Well 10 years down the line i m glad we did as we would priced out now. We own a typical victorian terrace as Petal described in a lovely part of Battersea now. So some got asset rich based on decisions made years ago. I remember how CJ was 10 years ago: no waitrose, no starbuck, no jamie oliver...

And finally some are rich yes but have lots of debts so they dont feel rich and again thats based on decisions they have made years ago.

[Mummytoone]

The mansion tax is fairer if it's going to be means tested. So those who are both asset rich and cash rich pay. Lots of other people at the lower end of the income/asset scale are subject to means testing (benefits, legal aid). Why not everyone else...

[Bubs]

This smacks of the 50% tax band debate a few years ago.

Both with that, and now with this higher stamp duty I certainly felt a little "ouch" and winced at taking the hit, winced at the portrayal of a 'mansion' when we're quite squeezed for space/have no garden, winced at not being able to now buy a house of our choosing higher up the ladder, of course.

But ultimately, I must remember (as must others) that it's being in a situation of some privilege that has seen you/us fall into this section of society.

Ultimately, whilst it may not feel like it - and it certainly doesn't right now, it's a relatively lucky problem to have. We must try to remember that, otherwise I despair a little for what society is becoming.

[Ferrywind]

I think you can be both grateful for bring asset rich and allowed not to be happy about the prospect of being forced to sell that asset to realise its value. London maman et al may not like the nappy valley mummies who are asset rich/ cash poor- but is it any better if only asset rich AND cash rich people can afford to live in SW London?
Many people bought a long time ago to be near family and where they grew up. Granted they could sell up, realise property value and move somewhere else- but is forcing people to move away from their family and community a decent government policy? Places like Cornwall suffer from the problem that Londoners have so forced up house prices that younger generation who were born and work there, can barely afford to buy there. We should not be encouraging any sort of scenario where new generation can not afford to live near their 'home'. London maman is right to be annoyed that it's so hard to get on the property ladder, but not sure how she sees this policy helping her. I have no objection if means tested as well btw. I just don't think you should be punished for living where you live!

[foxyfriend]

I am definitely in the asset rich/cash poor category - but only just. I never ASKED to have a house that the government can take 40% when I die - I would much rather have a cheaper house that I could leave intact to my children - just as most people who live outside London are able to do.

[london_maman]

I think it would be very interesting to know what every single person who thinks is cash poor, means by "being cash poor". I find it very hard to believe that one would live in a £1M house and not be able to go on holiday once a year, go to the restaurant once a month or have their weekly shopping delivered by Ocado.
But maybe I am completely wrong and some of you are reading me, sat on the sofa of their £1M house, not able to buy presents for their kids for Christmas, in that case I am sorry for offending you!

[london_maman]

I agree with you Petal and Seriously.

This "rich" schick is really getting my back up.

So, after 2 decades of work, in jobs that most people won't or cannot do (because of 15 hour days and specialised nature of it), we get well paid for it, pay our taxes and can afford a home (no trust fund or inheritance and coming to the UK with nothing) that costs over £1m.

Yes, I do understand Maman that we are privileged, but it didn't come for free, and without loads of blood, sweat and tears. Maman, if you envy my house, I suggest that you and your partner get out there and work your butt off for it like my husband and I did and do.

I don't recall writing that people who have a £1M house don't deserve it??? Did I? Your comment is not only incredibly rude but also completely deluded. If only people working hard could afford your beautiful house mungomuffit then nurses would have the most gorgeous mansions in London.
Anyway enough for me on that topic! I didn't write on that topic to receive that kind of nasty comment, only to put things in perspective.
Cash "poor" people, I suggest you go out of Nappy Valley sometimes and feel grateful and humble for what you have.

[juliantenniscoach]

Perhaps it's time this post drew to a close?

[twice_as_nice]

oh julien, ever the voice of reason but I'm starting to think that you're no fun!!!!!

I have to say I do wonder if those complaining about not being 'cash rich' are also those complaining about the way that private schools demand their deposits before other private schools / state schools….or asking if it's ok to do 'state til 8' - I do suspect so.……if you can afford private school, then you most definitely are 'rich'. you may not be 'cash rich' but at £15k per year per child you certainly could be if you wanted to be.

[actuallyadad]

One problem with mansion tax is that you have to pay it from income you do not have.

The house may be worth a lot, but it does not itself provide you with any income to pay the tax from.

It is not like income tax, inheritance tax or capital gains tax where you pay a portion of money that you have coming in. Or even the new stamp duty which you can factor into your purchase price. With manstion tax, you will simply have to find an extra £3000 a year on top of your existing outgoings. This is what, in my opinion, makes it unfair.

Though I admit my family is far better off than a lot of the population (let's not get into the what-is-rich debate), the fact is I would struggle to pay an extra £250 a month. I am not saying I will starve, or that it is the biggest problem in the world, but it seems arbitary and mis-guided to tax people's homes with no regard to their wealth, because the huge increase in the house's value does not provide cash to pay bills.

Of course once it's on the books, the rates will rise in the future. (Think what happened with say, university tuition fees, getting them in is hard, but raising rates is easy).

There is likely to be an interest rate rise in 2015. This will make mortgages more expensive. Adding that plus £250 a month to my outgoings will be painful to me and I'm sure to a lot of people.

Actually there are lots of problems with mansion tax:

- it will lower ALL house prices as houses just above 2m will reduce in value. This will have a knock on effect on houses just below 2m (ie most of BTC). Ok good for some buyers in the short term, but it will cap their price growth, so good for nobody medium/long term.
- it will be hard to assess
- it will stop people doing home improvments (why make your house more valuable if it then becomes more taxable?) so no more lofts, basements and side returns so the area will stop getting nicer
- the area will change and actually get less diverse as you will have to be cash rich to live here. At the moment many people here who do not have huge incomes moved in before the house prices went crazy, but they could now be forced out.
- it's not just a tax on billionaire oligarchs in Knightsbridge as people think, it's a tax on hard working families living in terraced houses (hard for people outside London zone 1 and 2 to appreciate)

It's a bad idea overall. Populist and badly thought through. I certainly hope that Labour does not get into power and that we will not have mansion tax.