To think an annual property tax is incredibly unfair?

I found this video really helpful for explaining the issue with stamp duty which the land value tax may replace:

https://youtube.com/shorts/dHXKqrFgWXA?si=MeZ5KZyHVvl3a9ej

Essentially, stamp duty incentivises people to stay put. This is particularly a problem where people would like to downsize because, due to lack of new builds, this reduces the pool of larger homes for people to move up into, pushing prices up.

With an annual land tax instead, you're incentivised to downsize because moving will reduce your bill, instead of creating a lump sum of thousands, possibly tens of thousands, to pay.

The current council tax bandings are unfair, but it's fiendishly brilliant to move to a purely percentage-based system. It removes the element of corporate society (i.e. 'everybody together in a low/average band property seeing their bills go up by X%') and makes it potentially unlimited on an individual basis.

If it's a new property tax of X% of your property value, BUT it's dynamic and not set at a particular point in time like with CT, that will be the absolute killer - as anybody complaining will be told that it's perfectly fair for everybody, as it's strictly based on how much your house is worth, and so you have no moral right to complain - especially if it also replaces the stamp duty barrier to moving, so they can say "You can always move somewhere cheaper to pay less".

Not only will that percentage of value represent ever more and more hard cash as house prices rise, the percentage can easily be hiked at any time. A percentage-based charge should work itself out and keep track of real value regardless of inflation, but that certainly doesn't prevent dishonest governments and other bodies from hoodwinking people and double-dipping by claiming that they need to rise 'because prices are all going up'. Enough people won't understand this basic principle for them to be able to get away with it.

They're in for a shock I think. Not everyone who owns a decent sized house has a decent sized income. It'll also affect disabled people who have inherited their house via a trust, but whose income is low. They don't want people owning their own homes. The future is rental only with private property only for the very rich.

People are comparing this system to other countries systems, but don't realise that things are going to change. All the people who love the labour party are going to be crying into their low alcohol, ethically sourced, vegan beer.

It should be income based, then it adjusts according to affordability, and also needs to take into account income from benefits. I have friends (usually well off ones) who think you should pay based on the number of people using the services (ie how many people there are in your house) which is a nice idea but in principle I can't see how that can be justified. For me affordability should be key to so many things rather than assuming everyone is at the same level. Example, I live in a 4 bed house. It's worth a bit (think £550k, not millions!) and we have some equity in it. But the mortgage is large following financial restructuring, a situation forced by the fact I have a husband who isn't well enough to work, but isn't ill enough for any benefits. 3 kids under 15, one is autistic. I struggle to pay the £300 a month council tax on my take home pay plus child benefit and DLA over, say, my neighbours, both parents working, 2 NT kids, will have a combined income in excess of £100k. We have lived here over 20 years and circumstances have changed, but it's not like we can move and release equity, unless we moved up north (we are near south coast) and I tool a massive hit on pay. That's just our circumstances, but I really feel policy makers actually don't think through how to make things truly equitable. Too difficult, perhaps?

Paranoia much?

I'm not saying it's fair. What I actually said is that fair is a totally nebulous concept. There are many 'unfairnesses' (from my perspective) in our existing tax system - other people may have a different view of what is unfair to me. Since there is no definition of fairness in this context, 'fairness' is not a good criticism.

Yes exactly my sentiment

I agree that if they’re going to do this, there should be a general wealth tax too.

It’s not fair to penalise those who have had to take out massive mortgages just to live in the area where they work/ are from.

And surely it should be the equity you have, not the overall value?

Current council tax is unfair but this doesn’t help. It would carry on the penalising of single adult households. There should be some kind of tax payable per person (not household) to replace it.

He seems to be quite focused on getting more money into the treasury.

Yes, this is the elephant in the room. People are arguing as to whether this change would make things fairer or not; but ultimately the single reason why he is considering/planning to overhaul all of this is to rake in far, far more tax overall. An individual may pay less (initially, at least), but if so, that will be purely incidental to the main drive in doing it.

I agree about disposable income. An obvious example is teachers. They get paid the same in Kent/Essex as in Lancashire, but living costs in the south are significantly higher.

A lot is said about the south east being rich because property is expensive, but local businesses like restaurants are struggling to survive and closing because people don't have the money for luxuries like eating out. I'm often in the north west for work and restaurants there are busy even on a Monday or Tuesday evening.

I bought a house 5 years ago and paid nearly £60,000 in stamp duty. We then spent over £500k sympathetically renovating and restoring the house. It’s lovely now. What should I be paying Burnham’s property tax on? The value I bought it at? I already paid stamp duty on that. The value it’s worth now? Well I paid a lot of money to get it there (probably more than it’s worth), so it’s not like there’s a “gain” to be taxed. Should I pay more because I live in a nice (expensive) house regardless of circumstance? Maybe, but that’s just a tax on owning (not buying) expensive things which doesn’t seem very fair.

Burnham and crew are trying to figure out a way to tax people who have benefitted from massive property inflation - ie the 50-80 year olds sitting on property. They’re also trying to encourage those people to downsize so need to remove stamp duty.

But they won’t find the right way to do that, so they’ll just tax all of us because it’s easier…

Not anymore unfair than the current system. I live in a newer build so am paying more in council tax than houses much larger and higher value than mine. Any system will have its downsides

People are keen enough going by these threads.

It's a massive improvement on the unfair council tax+stamp duty+bedroom tax system but it needs some tweaks. 0.48% is exactly what people pay in the Netherlands, it is a system that works well, is generally accepted. There it's 0.13% as local/council tax, 0.35% to HMRC. Any value over €1.35 million get taxed at 2.35%. I would like them to add a similar 'villa tax' threshold for expensive houses.

I would pay around £2.8k a year, a 0.13% council tax element would be £754 - significantly less than the £1860 I pay now.

https://nl.wikipedia.org/wiki/Wet_waardering_onroerende_zaken (press the auto translate button). Renters only pay the council tax element, and it's also used to calculate fair social/affordable housing rent prices.
The campaign Burnham is backing: https://fairershare.org.uk/faq/#ptax

To get a big mortgage you have to have a high income. People make different choices about how to spend their money

Yes - and high incomes are taxed with high rates of income tax. This is local/property tax we're talking about.

Two people each earn £1m a year and are charged a hefty chunk of income tax based on it. One of them spends most of it on flash cars, multiple world cruises, masterpiece paintings, diamonds etc. and they are taxed ONCE at the point when they buy them.

The other lives an otherwise very modest lifestyle and devotes the majority of their (already-taxed) income on a very high mortgage for what may not even be a massive posh house, but just happens to be somewhere expensive. That person is then taxed every single year - both on the equity and the amount still payable as a mortgage loan - with the justification being 'because they have a high income'? How is that remotely fair?

Yeah I posted about it a few pages ago and honestly still outraged we are being taxed on properties we struggled to buy to begin with.

I thought I’d look this up : according to this article which was the first AI suggested, London house prices have gone up 10% in the last decade and flat prices by 0.5%, the Bank of England’s inflation calculator indicates £100 in 2016 would be £141 now, so she may have a point. moneyweek.com/investments/property/london-house-prices

As a comparison with a near neighbour, Ireland has a Residential (Local) Property Tax, plus Stamp Duty, plus bin charges, but no water rates or council tax.

The way the property tax is calculated there is on bands and is totally self assessed. It doesn't apply to renters. Audits happen and the owner must prove that they based their valuation on the best available information at the time of the self assessment which is done every five years. Collected by the Revenue (HMRC).

Just thought I'd throw it out for info if anyone is interested.

https://www.revenue.ie/en/property/local-property-tax/index.aspx

? If you are asking if house prices have increased in real terms over the last 20 years then the answer is yes. Ask your friends in the south to explain it to you.

A property tax? Interesting. I suspect this is how they'll wrestle people's private property from them. The amount will increase until the homeowner can't afford it any longer, then private firms attached to corporations will come in, buy the property then rent it back to you. When you die, it'll belong to them and they will rent it out to someone else.

I was wondering when this would start.

I think its a great idea. Taxation in proportion to wealth is not a new idea and anything that helps cool house prices in the south will make it far more livable for everyone who's not rich enough to support a 500,000 mortgage.

But it will replace council tax, which is hugely and fundamentally unfair at the moment. I’m saying this as somebody who is paying the same amount of council tax as houses a couple of streets away worth 4x what mine are.

For many, it actually works out cheaper with the 0.48% than the CT alone, myself included. My CT is currently nearly £500pcm, this would work out about £320 and that’s before the savings for new buyers on the SDLT (I’ll just cry about the 20k we had to pay).

On a £200k house for example it would be £80pcm. Again, cheaper than CT which even band a in my area (north) is £120.

It’s the £1m+ properties that will feel it. Which actually does seem fairer to me than hammering the middle and working classes as usual.

Good idea.

That is also an interesting point. Surely you’d have to offer some sort of taper or relief. It doesn’t bother me personally as have been in our house for ages but you’d be mighty pissed off if you had to pay stamp duty just before it was abolished and then pay the new tax that incorporates it.