To worry about the predicted 30% fall in London house prices

[feellikeahugefailure]

This would have huge knock on affects if they let this happen to everyone in the country.

It wouldn't help people that cant afford a home, it would probably make them worse off as banks won't lend. The poor will be hit the hardest by any downturn.

Mr Carney does need to do something imo, was surprised that the rate wasn't dropped. But it will have to be in August.

There have always been house price crashes. It will come again.

Then those worried about the drop still wont buy then the price takes off again and then those that worried will still not buy because they cant afford to.

I really hope so. As a Londoner I currently will not be able to inherit my mum's tiny little 3 bed terrace because we would need to sell it to pay the inheritance tax. A drop in the market would pull it down to either below the threshold or within a realistic amount we can afford to pay. Its current value is a joke.

Ah inheritance tax is not something that I have encountered yet

How much % will you have to pay?

Yes, that's another issue, its all very well prices rocketing sky high, causing so many issues and effects for people

The only winners are the ones selling up/cashing in & getting well out of London!

If house prices come down, some of those currently renting will buy. If the number renting falls, rents will fall

But they will probably have bought but to let places, so supply also reduces.

dizzyfucker

Aren't family homes now exempt? Anyway I'm sure those who have bought in the last few years will be pleased that you're happy for them to go into negative equity so you can inherit a huge amount of money without paying any tax. Jesus wept, some people can't see further than the end of their own noses!

Lots of people with buy to let need tenants to pay the mortgage. If you don't have tenants, many of these people will sell.

Binkybix if we wanted the money we could just sell the house, whatever its value. I would like to keep my childhood home, if family homes are exempt that's news to me. Inheritance tax is unfair because instead of being based on house size, it's based on value. Yet when it was bought it wasn't that much more than a little terrace anywhere else in the county. Now all other little terraces would be under or not far over the threshold. My childhood home however, is worth over 700,000, for a little terraced house! What will start to happen as the 60+ age group start to die is those London homes that once belonged to teachers, nurses and similar will be sold to only those that can afford them . No one I grew up with can afford the inheritance on their parents homes. London is growing into a city of either very rich or very poor, that only benefits one group and it will cause increasing problems for London. Crime and hostility usually increases when there is a massive social imbalance.

No family homes are not exempt.

No im still worried, i think many people are not aware of the huge knock on affect london will have. It will ripple out to the whole country imo.

Inheritence tax is not unfair; simply a product of our progressive tax system. Who do you think should pay extra tax so that you can benefit from an enormous inheritence tax free? There is already a generous tax free allowance.

Whichever way you look at it, £700k is riches beyond most people's wildest dreams and if you choose to tie it up in an average sized house in one of the world's most expensive cities, that's your look out. There is no room for sentiment in the tax system.

If you want to live in the property, you could always get a mortgage to pay the inheritence tax which would be about £150k - a mortgage of this size would be well within the reach of a couple of teachers/nurses etc in London, or even a single person earning an average London salary of £40/50k.

Does no one remember the 2008-9 crisis and what happened to mortgage availability for first time buyers as property prices fell? Banks wanted insane deposits.

no they didn't. What they were asking for before 2008 was insane (next to 0% down). That spiked to a "whopping" 10-15%.

People talk about house price decreases as being a good thing because people will be able to afford to buy. That's true, but with such a big dip in prices people won't be able to afford to sell.

no doubt some people will try to hold on and wait out any crash, but you can't hold on forever, unless some other force makes it viable (rents stay high).

It's not the central banks job to keep prices ever rising. Their mandate is clear, price stability, and they have woefully missed the target on that.

I'll be keeping my eye on this page in the coming months. It contains sold house price data from the Royal Chartered Institute of Surveyors. Apparently they release a report every month and one is due at the end of July....

www.rics.org/uk/knowledge/glossary/uk-house-prices/

£700k is riches beyond most people's wildest dreams

Yes because it's an insanely stupid price for a damp little terraced house. Which is why I said a price drop in London is a good thing.

The average London teachers sallery is not £40/50! Get real, inner London max is probably just shy of £40k.

Also £150 mortgage? The tax threshold is £325k. £150k would be reasonable tax but it would be £375k at today's rate.

Fine, I'll swallow it up and be thankful my mum owns the freehold so I don't also have to pay thousands to the Cadogan family or some other Lord/Earl like others do to ensure that they don't have any problems ever paying their inheritance taxes. Britain is so fair, silly me

Er, you only pay 40% above £325k, which is £150k if the value is £700k.

I didn't say teachers were earning £40/50k. Two earners earning £30k, such as a teacher or a nurse could get a mortgage of £150k. OR one person earning £40/50K

Prices in London are never going to fall to levels where family houses are affordable to people earning average salaries who do not have massive deposits from inheritence or previous equity anyway.

Sorry didn't mean exempt, but you will get additional allowances on the family home going forward. Government going to have the find that tax from somewhere else, or spend less.

I've sympathy with the idea that prices coming down gradually will benefit people wanting to get on property ladder, but not for done be wanting to avoid paying a progressive tax or be given a house without having to pay anything towards it at all.

I'm not objecting to paying any tax. I'm objecting to be in a competely different situation to someone in the same position in Manchester or Birmingham. The house prices in London will eventually fall or at least stabilize. Some people will loose out. But anyone who is planning on that never happening is probably not being very realistic.

dizzyfucker you are subject to the exactly the same tax laws as those outside London.

Loosing your parents is not easy though, and of course having to sell your childhood home is a very emotional time. Sorry for your loss.

Prices in London are never going to fall to levels where family houses are affordable to people earning average salaries who do not have massive deposits from inheritence or previous equity anyway.

that's because every drop in price is resisted by a very powerful home owning class.

My dh has just paid a huge inheritance tax bill on his dads property just outside of London. If the house prices now fall and the house sells for significantly less than originally anticipated, I hope HMRC will be giving us some of that tax back.

People have misconstrued what dizzyfucker is saying. She's not saying that she shouldn't have to pay tax on her inheritance, what she's saying is that because the house she will inherit is so grossly over-priced it will be subject to inheritance tax thus meaning that instead of potentially being able to live in it she will have to sell it.

If she inherited the same house in Manchester she could move into it with her family and potentially no longer have to rent. Whereas in London she will have to sell the house in order to pay the IT and still won't be able to afford to buy due to house prices being so obscene.

I live just outside London, and when I moved here we sold a four bed, three reception room house and had to downsize to buy a three bed semi for twice the price.

When me and eXH split I could afford a decent deposit on this house because he bought me out of the FMH. But if house prices dropped, while I don't think I would be in negative equity, a large part of my equity would be wiped off the price. As things currently stand I will have to sell this house when DS leaves school and will then move to live with my DP who lives three hours away from here. I will then have some equity to invest elsewhere - most of which will be what I gained from my divorce settlement. If the house drops in value I will be in a position where I will sell it at a significant loss and will likely never be in a position again to be able to own property.

if the house is sold for 700k of which 150 is IHT then she has 550 k to play with. wont get you much but will get something small. or something bigger outside london....or, she gets a mortgage on the 150k and retains the house.

if prices drop to 550 k then her iht is much less. and she may be able to more easily keep the inherited house.

I didn't say teachers were earning £40/50k. Two earners earning £30k, such as a teacher or a nurse could get a mortgage of £150k. OR one person earning £40/50K

Umm.... Most nurses earn nowhere near that!

Many full time nurses in London will earn £30k or more. Lowest grade in nursing is afc band 5 which is 22 to 28k plus London weighting plus shift allowances plus some are on higher bands.

But to get £28+ shift allowance (so just over £30k) would take 8 years. Possibly 6 with London weighting. The majority of nurses are stuck on band 5. Those working in the community do not get shift allowance.

There are forecasts of well above 30%. To be honest, I can't help seeing this as anything other than a good thing. Anyway, you can't legislate house prices!

I hope it does happen