New stamp duty rules Post Reply

[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.

[Astolat]

If you live in a house eligible for a stamp duty increase or the mansion tax you are wealthy. Either you earn significantly more than the average income or you bought years ago and you house value has earned more than you every year for the last 10 or so years. Or likely a bit of both. The idea that it will be a pinch to pay a bit more tax doesn't get my sympathy when I look at the devastation going on in our public services.

On mansion tax vs stamp duty I am quite surprised that so many would prefer a one off hit of £50k+ when you move house to a £3k annual cost. To me everyone paying every year lightens the load overall. You would only gain by paying stamp vs annual if you move less frequently than every 14 or so years. I think that's most of us.

I think calming london prices is a good thing though but just pity anyone who needs to move.

[juliantenniscoach]

I'm sorry but it's an unfair tax. It bears no relation on the ability to pay. In my street there are 3 houses within a stones throw of me are owned by people who have been here for years, way, way before it was 'Nappy Valley'. I think it's inexplicable that they should pay a punitive tax through a geographical quirk of fate.

They are of a generation who have taken a massive hit on their pension plans through another disasterous Labour tax, 'With-holding Tax'. Because the UK economy is so dependent on the owner occupied market, that's why so many taxes are linked in e.g. Stamp duty, Inheritance etc.

I don't see the 'devastation in public services' either. I do see a huge increase in demand for primary services such as housing, health and education from the significant increase in population. I don't want to open that argument up on this post because that is a huge can of worms! :O

However I would say that the house prices in London have been pushed as much by the buying power of Sovereign funds and other non-resident investments. This is clearly visible here by the migration of families who would traditionally have lived in Kensington, Knightsbridge etc but have been outpriced by non-UK money. Needless to say I very much doubt those aforementioned funds pay much in the way of any type of tax.

[livegreen]

Julien,

How potentially devastating for you and your neighbours - you deserve a lot of sympathy from others in equally unfortunate positions.
Could you remind all how much you, and your neighbours paid for your houses, and how much they are worth now? Could you also explain if you ever intend to pay tax on the increase and when ? Remind me how much of the wealth is owned by the top 1% of the country? How would you rebalance?
Quirk of geography - what about the rest of our country?

[juliantenniscoach]

I'm happy to have a debate but I can do without the sarcasm to be honest. So I'll leave the thread now.

[pie81]

I'm with you julian on the mansion tax - how is someone who's owned their house for 40+ years, lives on a pension, can't get a mortgage, supposed to pay it? Yes they may have a valuable house but practically they can't access that value.

Which is why I think the fairest way to tax housing wealth is to charge CGT on house price increase when people come to sell (and if they live there till they die, their heirs pay it).

CGT on housing profits is quite common in other countries. It's frankly bizarre to me that in this country you can be taxed quite heavily on hard earned wages but not at all on totally unearned income from selling a house that's risen in value.