To think new stamp duty is unfair on London AGAIN

[stupendoushorrendous]

Aibu to think that the new stamp duty rates will unfairly hit Londoners compared to an equivilent person (in wealth terms) elsewhere.

Example, Family bought their house for say £300k many years ago, value has gone up considerably. If they want to move to a different house of equivilent value they could be subject to over £100K in stamp duty. Their mortage could be doubled simply because they want to move.

Surely, this increase in tax could mean it is impoosible for some Londoners to move locally should they need to.

I think this new approach to stamp duty is quite sensible. The gradated approach is fairer. The Tories have also quite cleverly taken the wind out of calls for the 'mansion tax' too.

stupendous Yes I know - I'm one of them. Born in north London, left (temporarily I thought) in my 20s, realised I'd never be able to afford to live there again in my 30s.

But this change to stamp duty doesn't worsten the situation for people looking to buy modest homes - even in London. Complain in the changes to housing benefit and I'd agree with you.

Whether you believe it or not many people in London living in a million pound house do not have a spare 100K to spend to move. Their house wasn't 1 million when they bought it.

The ridiculous level of basement conversions and attic extensions in London over the last 15 years is because people cannot afford the extra moving costs associated with owning a property that has sky rocketed in value, when their income has not.

Yes, people can only live where they can afford but to be priced out of moving because of taxes are cannot be good for the housing market.

The new system is fairer than the old one and the majority of ordinary people will be better off. Those who may lose out have already benefitted massively from house price inflation in the capital. They cannot reasonably expect to buy a £1m+ housed on the same terms they bought a £150k one twenty or thirty years ago.

Your example doesn't need to move locally to an equivalent house - they want to. They have to live with the realities of the market, just like everyone else.

The pensioner in London who wants to move elsewhere in London is still more able to do so than a pensioner elsewhere who wants to move to that same place in London to be near her grandkids. At least the one already in London has an enormous amount of equity in her house, worst case is having to go for a smaller house. So I don't feel that sorry for her. The London based pensioners also have the option of moving to grandkids all over the rest of the country, buying a house with money to spare.

The comparisons are always based on the strange assumption that resident Londoners should have higher expectations. The more realistic comparisons are:

Elderly people who want to live in nice area of London from different parts of the country - the only ones that stand a chance of moving there are already London based.

Your neighbour could sell, put the money in the bank, rent a lovely place and still have masses more left over as an inheritance than an equivalent pensioner anywhere else.

In your example of a family wanting to move across London, here another way of looking at it:

The Jones's income of £75k pa enabled them to buy a house costing £300k. They want to move to (specific area of London) where a house costs £1.5m. For almost anyone else this would be an impossibility.

Luckily the Jones's have had 1.2m of price rises and so all they to find is the stamp duty.

I really struggle to see why we'd should feel sorry for them in this case. Anyone outside London would need so much more earned money to buy the same place.

Look I have a house worth over a million and I still disagree with you. A pensioner with a house worth a million pounds could move out of London and live a very comfortable life. It's entirely their choice to live in one of the most expensive cities in the world.

I know you are then going to say she has a right to live near to her friends. No, she doesn't actually.

People living in London in massively expensive houses need to be thankful for the fact that they own an expense asset and they need to deal with that asset appropriately which may well mean selling it and moving somewhere they can afford to live.

Londoners have benefitted hugely and surprisingly with recent price rises

How have they benefitted? If you live in the house, what does it matter what it's worth? It's value only matters when you go to sell it. At which time, you either move somewhere close by, where the value will also have increased, or you have to move a long way from where you live.

Buy-to-let-ers have benefitted, certainly, but you don't have to live in London to invest in property there.

Stupendous

I really don't understand the point you are trying to make
Stamp Duty LT on a GBP1,000,000 property is
Old regime
GBP 40,000

New regime
GBP 43,750

An increase of GBP3,750 is not really going to dramatically alter the buying decision of someone spending a million quid.

I personally think that there are many people in the bracket most affected (mainly in London) who will not move now. I think it's a misconceived idea that middle aged parents with a family would even consider the idea of increasing their mortages or downsizing just to move to an equivilent house.

The only people who will not be bothered by this are the people who recently bought at these crazy prices and have a very high disposable income. The vast majority of people who bought a family home a decade or more ago at lower price will stay put.

This cannot be good for the market in general. Would this not have a knock on effect all though the market. Less houses for sale, prices increase, No?

atticusclaw

"Look I have a house worth over a million and I still disagree with you. A pensioner with a house worth a million pounds could move out of London and live a very comfortable life. It's entirely their choice to live in one of the most expensive cities in the world."

You're right and she has decided not to move. Another house not up for sale.

stupendous
Do you really think that a 3-4K change in stamp duty will affect buying decisions of people who are spending 1 million? The SDLT was already substantial on these properties and it hasn't changed that much.

I'm sick of being told that Londoners are treated unfairly. In London there never was a recession, jobs are always available and services and public transport are in abundance. House prices are high because it reflects the riches that are there, not only in monetary terms but in opportunities and potential.

I live in a place where jobs are non existent, sickness benefits levels are extremely high, hospital services are closing, public transport is wholly inadequate so you must have a car and house prices are on the floor yet we pay higher council tax rates than most London boroughs.

I can't feel sorry for the people this affects. They are in the VAST minority and frankly London can bugger off, there is a WHOLE country outside of that little housing bubble that's affected and forgotten about 9 times out of 10.

But as I and a couple of other people have pointed out, it's a relatively small change. It's not like previously she wouldn't have had to pay and now suddenly she has to find £100k. You understand that, right?
I wonder if you are interpreting the rules correctly, it's not 10% on a house worth £1m, it now works like income tax. So the portion up to £125k is untaxed, then 2% on the next bit up to £250k, then 5% on the next bit up to £925k, then 10% on the bit up to £1.5m
So a £1m house would now pay 0+2,500+33,750+7,500 = £43,750.

Who is paying £100k in stamp duty OP? how much would a house need to be worth to get to that amount?

I live in London (just) and im in the process of moving. Im going to save several thousands in stamp duty. As someone pointed out above you have to have a house worth more than a million to see an increase in stamp duty and even then the example used above was less than £4k difference. I also find it hard to feel sorry for someone who owns a £1m+ house, buying another £1m+ house and having to fork out an extra £4k if it saves the likes of me and the majority of the population a few grand.

I don't understand. You pay stamp duty when you buy a house, not sell it. So if you are in an expensive house, your buyer has to pay the higher tax. If you downsize, you will pay a smaller amount than you would have done previously. Even in London, it is perfectly possible to get a decent house in a decent area for under a million especially if you only need something small. And if you can afford to buy a house over a million the bit of extra stamp duty isn't going to put you off buying as someone said above:

"An increase of GBP3,750 is not really going to dramatically alter the buying decision of someone spending a million quid."

The changes to stamp duty are sensible. It was really stupid that as soon as you crossed the threshold you had to pay the higher rate on the whole amount, rather than just on the bit over the threshold. I don't agree with Mr Osborne on many things, but this is a sensible change.

YABU

and a bit dim

Chaz

Yes, the SDLT was already substantial which is why many people with expanding families choose to dig down rather than move.

Increasing it will further fuel people to stay put.

Try living in negative equity and see how that affects your mobility choices.

I think it's time some people living in London stopped moaning tbh. I say this as someone who is currently keeping a ds at uni there.
London gets all the investment be it in transport links, infrastructure and facilities of all kinds. If you have ever tried to commute between Northern cities or bought a house with a high mortgage in terms of wages in the north of England, then gone into negative equity or just found your house has gone up in value by nothing over a decade, then you would realise people in London don't have it tougher than anyone else.
There is some real resentment in the rest of the uk in how much disproportionate investment the south east gets compared to the rest of the country. We have been told over and over that the economy is improving. The only time I have seen this be the case is in London! The rest of us have actually seen very little improvement on our local high street or in our pockets.
Living in London is a choice!

The realmarymillington

Please don't make personal insults

My house completes tomorrow and our stamp duty has been slashed from £9k to £5k so I am very very happy.

But then I don't live in London. Did it for 10 years and will never return

"It's value only matters when you go to sell it."

You also only pay stamp duty when you go to sell it.

If you already live in London then over the past couple of years your house has increased in value by way more than the additional stamp duty you might pay if you're selling and buying a million pound house.

So... the house you paid £750k for is now worth $1M and you're going to pay an extra £3,750 to move. Still not a bad return on your original £750k in my opinion.