New stamp duty rules Post Reply

[BFW]

A colleague of mine just showed me this letter he received this morning and I remembered this thread (I am not British so I was not sent this as I can't vote at the next general election).

I just thought it might be of interest (and I do realise it is political propaganda - but i thought it still raised some interesting points).

[InterestedDad]

I've got a few questions on this document.

1. Would house valuation for mansion tax purposes trigger an increase in Council tax? Surely this is a separate unrelated policy question.

2. Many people think that high property prices are bad for the economy in the long term. Pricey houses mean that people can't move to where the good jobs are. The Economist leads on it this week:

http://www.economist.com/news/leaders/2 ... e-and-city

3. A lot of price appreciation has come from a rising market (so not through productive hard work, wealth creation etc). Indeed this has a lot to do with restriction on building new housing supply which comes at a cost to society as a whole. This seems to make property taxation much fairer than say, increasing income tax, corporation tax or VAT.

I'd love to hear peoples' views.

[Mummytoone]

1. If house price increase has no impact on Council service costs, then I agree Council tax is a separate policy issue.

2. There are many negatives associated with increasing house prices, particularly when they result from suppressed housing stock and overseas investment: (I) increases in purchase prices not in line with local wages, which disrupts community ties and (2) a potential unfairness if those who benefit from the value increase are not also contributing to the cost of security services and police forces, for example, that keep the investment safe; the investment protection is funded by the tax of habitual residents.

3. I agree with point 3. But the tax should be means tested, so those not able to afford to pay it don't have to. Means testing is adopted in other areas like legal aid, and in principle I don't see why the mechanism shouldn't be applied at the high earner end too.

[InterestedDad]

Come to think of it there are other issues created by high house prices. People can't afford to buy, so home ownership declines and private renting increases. See the graph on p13 of this link for what this has meant in London.

https://www.gov.uk/government/uploads/s ... 013-14.pdf

"In London, the proportion of households in the private rented sector
increased from 14% to 30% between 2003-04 and 2013-14".

This trend may cost the Conservatives votes, in a tight election this could make all the difference (whether this is a problem or a bonus depends on your view).

Very close to home for many NV residents, increased numbers of renters may be the factor that has shrunk catchment areas for primary schools. You can talk about sibling rules etc, but the catchment area issue probably cannot be addressed whilst private renting remains at high levels.

I await peoples' views.

[Mummytoone]

You said: "Very close to home for many NV residents, increased numbers of renters may be the factor that has shrunk catchment areas for primary schools... the catchment area issue probably cannot be addressed whilst private renting remains at high levels." Why so?

[pie81]

InterestedDad, to address your points 1 and 2, I think the best solution would be abolish the PPR exemption, so that people pay CGT on any gain when they sell their house.

this would be a tax on a real gain, at the time that gain is realised, rather than a tax based on a paper valuation, so would avoid the unfairnesses of the mansion tax.

this would also address actuallyadad's point : he wants to keep his money that he earned and paid tax on. Well nobody has earned or paid tax on a house price gain - it's a windfall - which as you say is largely caused by a rising market, housing shortage, etc.

Naturally there would be practical issues to overcome, eg any gain which is due to money spent on the property should be exempt. however other countries manage this sort of system.

If we all paid tax on house price gains I would hope that we would be able to reduce taxes in other areas, eg taxes on income that has been earned and worked for, or sales taxes such as stamp duty which do come out of already taxed income.

[InterestedDad]

Mummytoone - Take the 800m sibling proposal. A renter will find it pretty easy to work within the rules for a sibling, certainly much easier than getting within catchment for a first child. It's taken a lot of effort to work out this proposal, but I just don't think it will be effective. Indeed the situation is likely to get worse as the number of renters continues to increase (noting strong upward trend in the earlier link).

[rooting4tooting]

how often will the houses be valued?
Remember the recession of the early '90s. all those repossessions?
our parliamentary masters had better use this extra money wisely...

There is only one way to get more money for the country and that is to earn it. The country needs to grow financially, economically. We need to sell more plates overseas.