there's never been a worse time to be young and British, your screwed if your under 30

[lhldn]

OK the title is taken from a torygraph article, but I do find myself agreeing with it and being sad for the next generation.
www.telegraph.co.uk/men/thinking-man/11231796/If-youre-under-30-bad-luck.-Youre-screwed.html
We’re all becoming depressingly familiar with the results of these policies. The single worst (and most easily grasped) problem is housing. Our housing market has become an in-and-out club. If you’re over 50, in addition to your primary residence, you may well own a couple of buy-to-lets which will augment your already well-upholstered pension. If you’re under 30, you’re screwed.

If you’re under 30 in London, you’re super-screwed. You’ll be in your 40s before you’ve saved enough to buy a dump in Catford. And even then it’s likely that you’ll be outbid by a buy-to-let investor or, increasingly and tragically, refused a mortgage because you’re too old.

A long list of policies across three very different governments has got us here. The “one off” sale of council houses to make us all Tories in the 1980s - over two million homes that went cheap, often criminally cheap. The bottom three rungs cut off the ladder, the proceeds pocketed and the houses never replaced. Even so, property was still cheap back then – and if the housing market was anything like a free market, we might still be alright.

However, for all their devotion to the free market, our leaders have shown no interest in allowing the housing market to function this way. Rather, each year, we build a tiny fraction of what is needed ensuring prices march endlessly upwards. We have no coherent national housing plan. Our planning system is a mess. We have artificially low interest rates. We sell homes off-plan to foreign investors and don’t build enough to house the immigrants who are vital to our economy. The result is an cruelly dysfunctional market – and one which works brilliantly for your parents.

In tandem with this, over the last few years we’ve done a great job of increasing the wage gap between age groups. Guess who low wages hurt? Not people in their 50s and 60s. In fact, they actually help older people as they as more likely to be investors and employers. So, there’s no house for you, but the people who vote can afford a cleaner for their holiday home.

Housing is the most pressing problem

What are the dates of the boomers? I assumed people meant my parents' generation who were teenagers during WWII and then had those awful 1950s years of rationing and national service and the like. if we mean people who were born later surely they suffered the 3 day weeks in the 70s, 60% inflation which ruined their savings, income tax rates up to 99%, power cuts, strikes - an awful time.

Maybe you should google what a boomer is, the clue is in the name. I doubt any boomer will have any recollection of rationing. How exactly were all those things awful? My dad fondly looks back on 3 day weeks and insists productivity improved.

Ecomically everything is far far worse now than then.

People in London are often room sharing now.

I assumed the OP meant the generation before mine. e.g. people now in their late fifties and sixties.

Atticus the source of the money in my example is irrelevant IMO. Perhaps help from parents is more common than inheritances. The point was that a difference in timing of getting £10k leads to one family being over £100k better off.

Taxing unearned wealth seems intrinsically fairer than taxing earned wealth.

The measure would raise billions and a government doing it could easily afford to abolish stamp duty to compensate..

If they'd only got a 10k increase, the 2.8k if CGT would be more than offset by the stamp duty.

I think the U.S. system is fair. You pay capital gains on a residence owned less than 3 years unless you have had to sell due to a work relocation. After 3 years up to $250k for each person is exempt so a married couple would get a $500k exemption. After that gains are taxed as capita gains. It is a pain because we expect to live in our home forever so must keep capital improvement receipts as with inflation we expect this to affect us.

The problem is the UK taxes too much. Klass had a point about taking the water she was drinking. Hate to point it out but that water is taxed already at 5%. If we had reasonable taxes those at the top would stop trying to avoid them and just pay up. a high rate taxpayer paying taxes instead of avoiding them has a bigger impact than applying new taxes to the middle and lower income earners/classes.

Taxing CGT on main residences isn't taxing unearned wealth. Its taxing a necessity - a home to live in. Your proposal is totally unworkable as it would mean many people were taxed twice, firstly on their income and secondly on money they had spent their income on. It would remove the one incentive many people have in this country for working.

Taxing inheritance tax more heavily and substantial gifts of money would be far fairer as it would not target those who buy through their taxation twice on their own labour.

Basically in the UK I think you have a situation where you get less for your taxes as society as a whole because more is spent on comparatively generous benefits, and this is tolerated, along with the NHS. So instead you have a more US style system where private endeavour is rewarded via property ownership. Take that away, and you have very little foundation left for encouraging hard work.

Germany for comparison allows I believe three capital gains tax free sales of a main residence in a ten year period before taxing it.

The Netherlands still gives tax relief on mortgage interest payments for main residences!

Well then surely Handoff what you're actually saying is that there should be higher inheritance tax.

Given everyone's notion of "fairness" seems to play such a big part then that would be "fairer"

mshanj
How exactly were all those things awful? My dad fondly looks back on 3 day weeks and insists productivity improved.

Really you're asking how those things were awful? 3 day weeks, 60% inflation, income tax rates up to 99%, power cuts, strikes. It's actually very naive and quite offensive to those who went through those problems. Just because your DF relished a bit of time off work doesn't mean others didn't struggle.

Baby boomers are technically those born between 1947-1964. But I really don't see why you keep harking back to this. The OP didn't say "The youth of today have it worse than the baby boomers - Discuss." She said that the youth of today have it worse than at any other time, which is clearly a nonsense.

When my mother was under 30, she had a child, a business, a twin tub washing machine (dad would not help with any household chores) no central heating and had to light the stove before getting breakfast (which had to be hot ) for family and workers. Her life was endless hard work!

My parents used to sit each night under the stairs with all their towels and blankets wrapped around them because it was the warmest part of the house and they couldn't afford to heat it.

what is this?
a rendition of the four Yorshire men?

No, demonstrating the fact that the youth of today are not suffering the worst times ever.

But the fact that you know the four yorkshire men indicates you might (heaven forbid) be a 1947-1964 baby boomer!

It doesn't change that no matter how hard some people work (how many iphones/gadgets/holidays etc. they eschew), they will never, ever have enough money to put down as a deposit on a home. A basic need like shelter should never have been allowed to become the commodity it has.

DH & I will be emigrating to Australia in 4-5 years, but as I'm Australian, & my parents have a cottage on their farm for us to live in, it won't be too taxing/impossible financially (I am under no illusions as to the insanity of the housing market in Oz, either).

It is true that people have always moved for work - most of my dad's family moved to Oz from the West Country in the 1840s, my mum's side from London/Scotland/Yorkshire a decade or so after. They moved to where the work was/for a new life/opportunities.

It would be interesting to see figures on rent as a % of income over the past 100 years - any idea where we could find this?

Chandler: the one incentive people have to work is house price gains ?[hmmm]

There are loads of things that tax people twice. This would tax people once.

Back to my example "A" paid £100k and sold for £200k. That £100k has not been taxed ever.

The mortgage repayments made to service the mortgage came out of taxed income sure, but the gains did not. We are heavily taxed on earnings. If we taxed unearned wealth more, we could cut taxes elsewhere.

Attics I would increase IHT but I don't think it would act to cool the property market anything like as much as this would and I don't see it as an either or.

Is it likely - no, the rich would hate it the Daily Express would go mental. It would really help the problems of the deficit and "generation rent" though.

four Yorkshire men! If you took housing out of the equation then I think is very good for under 30's, so much opportunity and choice!

?
I'm a wee bit young to be a boomer, gen X I think is my category.
Has there ever been a time when people didn't complain about the complaint of 'the youth of today'?
Our neolithic ancestors probably had similar misgivings about the younger generation! ?

greengrow in late nineties after university I also had to apply for over 100 jobs till I got mine and that was a lucky speculative application sent in the same week as someone had given notice. I only got my deposit through incentivised overseas working.

People need to remember that we are in 2014 and things surely should be better than decades previously?

Though will we get to the point where we have 'peak jobs' quicker than we expected?

The previous myth was that we (west) would be ahead of the game selling our technical skills etc to the former colonies etc. Al lot of these technical industries have now been lost to them and what mass job creation do we have now in the west - Call centres?!

Handsoff There are loads of things that tax people twice. This would tax people once.

What bit of people paying mortgages from their salary, on which they already pay income tax, don't you get? Yes, obviously its a gain but we as a society tolerate that because its a gain out of necessity - you need somewhere to live. Its not the same as people going out and buying watches cheaply and selling them on ebay. That's why its not considered a capital gain by the tax system. The law distinguishes between contracts for necessities in many other areas, so this would turn the foundations of which our legal system on its head. Its a bizarre and totally fruitloop idea.

Imagine living in a society in the future where people not only are in debt til their thirties or forties paying off student loans and tuition fees, having scraped together enough to buy a two bedroom house which makes a small profit when they sell it to boost their retirement income and maybe move to a studio flat. And then they don't even get to keep that hard earned profit. My, that sounds just great. Why bother not just living off the State in the first place, instead of providing for yourself? You would probably end up better off!

If you must tax something, make Inheritance Tax higher. I can't understand why people think its fairer to tax people's income more, but not people who are dead, who won't know anything about it anyway. All it does is perpetuate an accident of birth - if you're "fortunate" enough to inherit, you are always going to be in a position to buy a better house than someone who works just as hard but has to rely on their own income.

I wonder whether the current generation notices the difference more though, because the immediately previous generation in many cases did have it easy?

My PIL for instance. Their ftb was a 4 bedroom family home in an expensive city (same house recently was up for sale for £420,000). Both of them dropped out of their uni courses, but still had no fees or loans to pay back and still walked into jobs in that same city which today you would need a good degree for. Both got final salary early retirement schemes in their fifties and spend their retirement travelling the world, despite not having private pensions (and moaning about how "poor" they are). Neither have ever heard of performance related pay increases or work reviews. Once you were in a job you were there for life.

When their good fortune is pointed out to them, they say in mitigation that they had a short period of paying sky high interest rates.

Expecting to own a house in your twenties is a very modern idea. DParents didn't buy their first home until they were well into their late forties, and even then it was very modest.

When I first started work in a big city back in the eighties, I lived in a hostel, single bedroom, shared bathroom and kitchen. This room cost me nearly half my pre tax salary.

CGT especially on 2nd and subsequent homes, isn't a double tax. People are only being taxed on any profit they make from a rise in house prices. I think CGT in this scenario is a good idea, equally CGT on inheritance - not talking 50%, but see no reason why there shouldn't be a 5-10% CGT on all inheritances, and higher rates when inheritances get into the multi millions.

The banks and big business need reigning in and made to play fair, but of course until every country agrees to fair taxes etc, big business can just move to wherever it's cheaper to operate.

The 70s were truly appalling but it sounds like some people just don't want to know how hard things were in the past. In the 90s we sold two buy to let flats at 50% less than we paid for them 90s property crash and there was Black Monday when interest rates rose to 12%).

Anyway generational comparisons are never worth doing. On the whole the food most of us have and ability to heat a home and the like tends to be better than in the past. I doubt anyone having babies today took 2 weeks off and was back full time as I was and had no maternity pay/rights or bought all their baby things second hand etc. What is the point in the comparison? All our children today can do is cope with how things are now.

in the early 1900s it made sense for 4 of my uncles to try to become solicitors - 3 utterly failed and nearly starved in the great depression. The next generation also know the professions provide better pay and studied hard. My generation did so too and my children have done. That has never varied. If you were bright enough across all those generations to pass the exams you need for careers where most people cannot pass those exams or aren't prepared to work hard enough then obviously you earn more. If instead now, in the 70s, 60s, 1920s, you choose not to work at school and don't work very hard you don't do well.

You can either sit back in life saying oh woe is me, times are hard, none of this is my fault. Or you can say - okay things are hard so this is what I need to do to get to where I want to be eg move countries, work 7 day weeks or whatever.

My mum is a little bit too old to be a boomer by a couple of years.

She has had a good retirement in a nice house.

However by God she had some tough times.

Rationing (went on a surprisingly long time after WWII).

Childhood with coal fires and hard graft - not like my washing machine, tumble dryer, dishwasher etc!

Renting a damp room with a friend (so sharing one room between the two of them) with a shared bath and toilet and stove down the hall in a grim part of london for close to 50% her wage when she started teaching. Ironically this area is now super cool and wher I live 40 years later!

living with my sister as a tiny baby and dad in a house with no inside toilet or bathroom.

Struggling against the highly sexist attitudes in the workplace in the 70s.

High interest rates stretching made several years very difficult.

Winter of discontent in the 60s.

Woman's salary not being taken into account for a mortgage (tricky as my mum was the main earner).

I think we are much better off now in many ways. We are used to having a very high level of disposable income comparatively. Really the main issues are the huge higher education costs and high house prices comparative to income. Except even that is fine outside of london!

Atticus I guess the bit I don't get is how paying £100k out of taxed income means you've paid tax on £200k.

The people in your example are still doing massively better than most under 30s will. They've managed to buy a house and made a profit from just living somewhere (which in my mind is not hard-earned - it's just luck). I don't see a tax on the free money as particularly harsh especially as its on a lower rate than the actually hard-earned income from employment.

Because prices are so high most young people will never be able to buy a place.

I totally agree with higher IHT, but it won't affect house prices so would have a limited benefit for under 30s.

Atticus I guess the bit I don't get is how paying £100k out of taxed income means you've paid tax on £200k.

I think you need to change the blinkered way you're blinded by one type of figure. We have no written constitution in this country, but most countries do and they give you a right to property. That means your property rights are protected from state interference and you are generally free to do as you wish with them, within reason. Arguably the UK in its unwritten constitution also respects property rights and rights to basic necessitites, and this is one of the reasons it doesn't subject main residences to CGT. Of course if you are in fact selling as a business or selling a second home, then CGT is levied.

You also look at the intention. While many people might buy a house to live in with a hope to making a profit, most people arguably don't, but do so in order to have somewhere to live. Its not purchased with the sole or primary aim of creating a capital gain, and there is equally a risk of loss, for many reasons - if it needs massive repairs, if you get into negative equity, if you can't keep up mortgage repayments.

Why would higher IHT not affect house prices? Of course it would, as it would mean less massive deposits floating around to fuel inflated prices. Many parents, from my experience as a solicitor, give their children large deposits for their first time buy, not lest to avoid IHT and the 7 year rule. We can quite easily track where these deposits come from, through money laundering rules of course.

I never understand people who think a house is a cash point and free money. I will live in mine until I die for another 40 years. My parents were in their house 50 y ears and both died in the house. It doesn't matter if my house is worth £10 or £20m. It is not the same as other assets like savings or shares or a car which you could sell. So not surprisingly we treat the home differently.

We need a much smaller state and much lower taxes all round. We could start with abolishing IHT and stamp duty.