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Original poster

Housing isn't a source of unearned wealth

162 replies

Itchthescratch · 14/05/2026 14:59

If you bought in the last 20 years.

Houses are now worth the same as they were worth 20 years ago in real terms. We need to get over the idea that every homeowner is sat on a money making asset and therefore is in a preferential position to pay loads of tax on all this non existent unearned wealth. Too many people don't understand how inflation works. £1 in 2006 is worth £1.65 today. House prices need to go up 65% just to be worth the same in real terms.

OP posts:
Original poster
Itchthescratch · 14/05/2026 17:16

Anyahyacinth · 14/05/2026 17:15

I think the maths is wrong or the language; a pound several years ago is worth less in spending power today not more.

No, a pound is worth less in spending power today. That is how inflation works.

OP posts:
AmberTigerEyes · 14/05/2026 17:16

Itchthescratch · 14/05/2026 17:12

No the data doesn't suggest that. https://www.savills.co.uk/research_articles/229130/382247-0

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Savills has their maths wrong as the data shows house values have outpaced inflation and then recently dipped.

https://business.zoopla.co.uk/20-years-of-house-price-growth

https://www.jrf.org.uk/income-savings-and-debt/weak-income-growth-leaves-people-with-little-resilience-to-shocks

https://www.thechamberlaingroup.com/2026/05/08/house-prices-versus-inflation/

A chart is worth a thousand words.

Housing isn't a source of unearned wealth
Original poster
Itchthescratch · 14/05/2026 17:16

Lunde · 14/05/2026 17:14

House price rises have truly outstripped general inflation in many areas over time so some people have made huge gains - it depends where and when you bought.

Houses that may have cost less than £30,000 in London in the 1980s would have been around £100,000 if they had kept pace with inflation but are changing hands at £600,000-£750,000 - so greatly exceeded inflation

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Yes, it depends on region and timeframe. My poing is though that people could be sitting on houses that have nominally doubled in value but are actually worth less in real terms than they were when they bought them. People still seem to be confusing this with unearned wealth.

OP posts:
Paytovote · 14/05/2026 17:15

Our house is worth a third of what it would cost to rebuild.

You couldn’t actually do it now. You would never get your money back.

Anyahyacinth · 14/05/2026 17:15

I think the maths is wrong or the language; a pound several years ago is worth less in spending power today not more.

Original poster
Itchthescratch · 14/05/2026 17:14

CoverLikelyZebra · 14/05/2026 17:11

You have a minor point @Itchthescratch but someone who gains £100,000 over 5 years from possessing a property that they bought for £400,000 and sold for £500,000 didn't actually do anything to earn that £100,000 compared with someone who earned £20,000 per year over the same 5 years by actually doing work, did they?

But yes possibly inflation could play a role - but as income, capital gains is under-taxed at only 18% for basic rate taxpayers and 24% for higher rare payers. I would support a policy change to say that capital gains tax should only be charged on the difference between the increase in value since purchase and the inflation level over the same period if combined with the tax rate charged being uplifted 40% for all.

They haven't earned £100k though in real terms as they have simply owned a depreciating asset. They have lost money. They can buy less with the £500k now than they could but with the £400k 5 years ago.

The person earning £20k a year will have actually made money. This is what I mean about people not understanding how inflation works.

OP posts:
Lunde · 14/05/2026 17:14

Itchthescratch · 14/05/2026 14:59

If you bought in the last 20 years.

Houses are now worth the same as they were worth 20 years ago in real terms. We need to get over the idea that every homeowner is sat on a money making asset and therefore is in a preferential position to pay loads of tax on all this non existent unearned wealth. Too many people don't understand how inflation works. £1 in 2006 is worth £1.65 today. House prices need to go up 65% just to be worth the same in real terms.

House price rises have truly outstripped general inflation in many areas over time so some people have made huge gains - it depends where and when you bought.

Houses that may have cost less than £30,000 in London in the 1980s would have been around £100,000 if they had kept pace with inflation but are changing hands at £600,000-£750,000 - so greatly exceeded inflation

Marmalademorning · 14/05/2026 17:14

I agree with you OP. But I’m betting that a lot of the rabid Labour voting socialists on here won’t.

Backedoffhackedoff · 14/05/2026 17:14

Safarisagoody · 14/05/2026 17:12

Then you should know that it is subsidised no? And you should know that it is not entirely self funded as you make out. And that the majority of people in them are having their rent paid by benefits which maintains it,

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It’s not subsidised. Tell me, how you think this works?
Who gives out the money, to who? What is the process of this happening as you understand it?

Twiglets1 · 14/05/2026 17:14

Itchthescratch · 14/05/2026 15:46

CGT for landlords is an issue though. Why should they pay tax on selling something that hasn't actually appreciated in value?

I also think it has long term implications for IHT. Proponents always say that the majority of what is taxed is unearned wealth through profit but what if it isn't?

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You don't pay CGT on your primary residence - your home.

For landlords, if the building hasn't increased much in price, there won't be much capital gains tax to pay.

JoWawa · 14/05/2026 17:13

Itchthescratch · 14/05/2026 15:46

CGT for landlords is an issue though. Why should they pay tax on selling something that hasn't actually appreciated in value?

I also think it has long term implications for IHT. Proponents always say that the majority of what is taxed is unearned wealth through profit but what if it isn't?

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They won't

AllBranGirl · 14/05/2026 17:13

Itchthescratch · 14/05/2026 16:56

Seriously? 😣 Is this what MN is coming to?

It's clearly a subject worthy of debate and discussion. This is the point of the forum.

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Telling women we need to get over something doesn’t sound like you want ‘debate and discussion’ 🤣

Nice try anyway x

AmberTigerEyes · 14/05/2026 17:12

Itchthescratch · 14/05/2026 17:07

The income tax bands are supposed to move with inflation so that is factored into the system. The fact they haven't moved for the past few years is wrong IMO.

I think the idea that the government needs to even out consumer prices or incomes relative to inflation is clearly insane. I'm not suggesting that they do something like that for CGT either. The point is though that it's built on the premise that you tax gains. This only makes sense if the gains are real and not just nominal.

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No, that makes no sense because then governments would be unable to levy any taxes in a recession. The reason taxes exist is to fund public services regardless of whether the tax base has gained or lost wealth in real terms.

Even people on benefits pay taxes.

Safarisagoody · 14/05/2026 17:12

Backedoffhackedoff · 14/05/2026 17:10

My job involves modelling how social housing is paid for

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Then you should know that it is subsidised no? And you should know that it is not entirely self funded as you make out. And that the majority of people in them are having their rent paid by benefits which maintains it,

Original poster
Itchthescratch · 14/05/2026 17:12

AmberTigerEyes · 14/05/2026 17:00

Yes the national average shows that houses are worth 11% more than they were twenty years ago in real terms. There is greater wealth accumulation in some regions( South +20%) , and wealth loss in some regions (North -30%) in real terms.

I don’t think that using inflation (not sure which inflation index you are using) as a benchmark to calculate gain or loss is a good way to go about it.

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No the data doesn't suggest that. https://www.savills.co.uk/research_articles/229130/382247-0

Adjusting for inflation

Savills Research provides advice and analysis to clients across the UK and globally, with specialists in commercial, residential and rural property research.

https://www.savills.co.uk/research_articles/229130/382247-0

OP posts:
CoverLikelyZebra · 14/05/2026 17:11

You have a minor point @Itchthescratch but someone who gains £100,000 over 5 years from possessing a property that they bought for £400,000 and sold for £500,000 didn't actually do anything to earn that £100,000 compared with someone who earned £20,000 per year over the same 5 years by actually doing work, did they?

But yes possibly inflation could play a role - but as income, capital gains is under-taxed at only 18% for basic rate taxpayers and 24% for higher rare payers. I would support a policy change to say that capital gains tax should only be charged on the difference between the increase in value since purchase and the inflation level over the same period if combined with the tax rate charged being uplifted 40% for all.

Backedoffhackedoff · 14/05/2026 17:10

Itchthescratch · 14/05/2026 17:09

This is wrong. Social housing absolutely isn't entirely self funded. This is why you can't simply build more social housing which would be more possible if it truly was financially self sustaining. It relies on all kinds of discounted capital and other state funding/assistance to build it.

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My job involves modelling how social housing is paid for

Backedoffhackedoff · 14/05/2026 17:09

Safarisagoody · 14/05/2026 17:06

Yes but it’s not the full story, two thirds of people in social housing get housing benefit to pay for it. For those two thirds, nearly 3 million people, the government is paying fo4 it via taxes. That’s what funds it.

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That’s not what fund the build. That’s what funds the repairs, maintenance and overheads, as it does for the large number of people who pay their private rents with universal credit housing element (used to be housing benefit)

Original poster
Itchthescratch · 14/05/2026 17:09

Backedoffhackedoff · 14/05/2026 17:02

This is wrong.

social housing is self funding. The model has been in place for many years. It’s actually a pretty good return which is why private companies have entered this market.

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This is wrong. Social housing absolutely isn't entirely self funded. This is why you can't simply build more social housing which would be more possible if it truly was financially self sustaining. It relies on all kinds of discounted capital and other state funding/assistance to build it.

OP posts:
Original poster
Itchthescratch · 14/05/2026 17:07

AmberTigerEyes · 14/05/2026 16:56

It’s a nice idea, but then how do we not also apply that income? Should we say that someone on £100k should only be taxed as if it were £85k because wages haven’t kept up with inflation? Should we only charge VAT on 50% of the food bill or electric bill because the costs have far exceeded inflation?

It gets too complicated and too contentious.

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The income tax bands are supposed to move with inflation so that is factored into the system. The fact they haven't moved for the past few years is wrong IMO.

I think the idea that the government needs to even out consumer prices or incomes relative to inflation is clearly insane. I'm not suggesting that they do something like that for CGT either. The point is though that it's built on the premise that you tax gains. This only makes sense if the gains are real and not just nominal.

OP posts:
Safarisagoody · 14/05/2026 17:06

Backedoffhackedoff · 14/05/2026 17:02

This is wrong.

social housing is self funding. The model has been in place for many years. It’s actually a pretty good return which is why private companies have entered this market.

Show quote history

Yes but it’s not the full story, two thirds of people in social housing get housing benefit to pay for it. For those two thirds, nearly 3 million people, the government is paying fo4 it via taxes. That’s what funds it.

AmberTigerEyes · 14/05/2026 17:03

You've misunderstood the term double taxation. This specifically relates to paying the same tax on a financial transaction in more than one jurisdiction eg you pay IHT in both the USA and UK.

^This. From an expat who has just filed their French and UK taxes.

Backedoffhackedoff · 14/05/2026 17:02

measuretwicecutonce · 14/05/2026 15:35

I agree. I also think that many on here simply
do not understand how expensive construction is in the first place. Everyone talks about those in social housing paying rent but my understanding is that this does not cover cost of build and maintenance so long term costs tax payers.

In fairness primary residence can be sold cgt free although depending on amount is included in IHT. Homeowners should be able to offset mortgage and maintenance payments.

This is wrong.

social housing is self funding. The model has been in place for many years. It’s actually a pretty good return which is why private companies have entered this market.

OnePeachHiker · 14/05/2026 17:01

Itchthescratch · 14/05/2026 16:05

Again, this is regional. My parents bought a house in the North in 2000 and have technically lost money in real terms on it. This is before you factor in interest payments, cost ownership etc

My own house has undoubtedly lost value in the last two years whilst their house hasn't.

Yes, I agree that CGT is a wider argument but I think this highlights that profit is only really profit when it outstrips inflation. If my parents had been landlords then they would have actually lost money on their house in relation terms but be liable to a relatively big CGT bill for so called gains. It's a joke!

The IHT debate is a moral argument. Lots of people don't like it because they view it as double taxation, especially because you can't even give the money away before you die without potentially falling foul of the tax. If you've already paid a high level of tax to earn the money, why do you need to pay 40% tax to gift it to someone. A lot of people reconcile this by saying it's all unearned wealth anyway so a case of easy come, easy go. That argument doesn't stack up though if none of the gift is unearned.

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You've misunderstood the term double taxation. This specifically relates to paying the same tax on a financial transaction in more than one jurisdiction eg you pay IHT in both the USA and UK.

The reality is all transactions are taxed multiple times in a life cycle. You pay income tax. With your net pay, you buy goods subject to vat. The company that sells you those goods will pay CT on the profit etc. This is not double or triple taxation.

AmberTigerEyes · 14/05/2026 17:00

Itchthescratch · 14/05/2026 16:55

There is regional variance but the national stats are pretty clear.

Earnings aren't relevant to this debate. Home owners will have seen a decrease in their earnings power too. We all have!

If the value of an asset has only increased nominally and has dropped in real terms then this is the opposite of wealth accumulation, it is wealth loss. It isn't unearned wealth

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Yes the national average shows that houses are worth 11% more than they were twenty years ago in real terms. There is greater wealth accumulation in some regions( South +20%) , and wealth loss in some regions (North -30%) in real terms.

I don’t think that using inflation (not sure which inflation index you are using) as a benchmark to calculate gain or loss is a good way to go about it.