LVT - a really bad idea?

[usernamealreadytaken]

The New Poll Tax - from the Labour Manifesto

"We will initiate a review into reforming council tax and business rates and consider new options such as a land value tax, to ensure local government has sustainable funding for the long term."

The suggestion is that the LVT would be around 3%pa. That gives a very real possibility of some in the South East being liable for bills of in excess of £9000-£15000 per year or more, for living in fairly modest homes. That's pretty much a NMW worker's entire salary in LVT. I also read that pensioners would be exempt. Given that a great number of those with large houses and gardens are likely to be pensioners, isn't this really just a tax on ordinary people who can least afford it?

Yes, because taxing people more/raising costs is a brilliant way to get them to build on their land - erm, they won't be investing in building projects if they're struggling to pay the increased tax.

What about the people who have enormous mortgages and are looking at income tax hikes, rising costs of childcare due to the min wage policy, likely rises in mortgage rates as Britain gets downgraded and possible lay offs when my firm decides doing business here is not profitable? I work for a big US firm with a tiny EU part that can quite easily be moved elsewhere.

Gardengeek

You are suggesting that more homes might get built, and they might be less expensive?

Opinions differ on whether that would be a disaster, or a benefit to the country.

The key words in this item of the Manifesto here are CONSIDER and CONSULT. Business rates are unfair because they are negatively impacting on small and socially useful businesses, and helping the emptying of our high streets. Council tax is unfair because it doesn't take into account ability to repay. We have landbanking instead of development where it is needed, and hundreds of million pound flats left empty as 'investments' while there are not enough affordable homes. So they want to look at an alternative property tax structure that takes into account the value of the land, and is hard to evade. But they haven't considered and consulted so there are no firm proposals as yet. Seems reasonable to me.

GardenGeek "This will have a massive affect on affordability for those who haven't bought"

yes, the effect would be that many more of them would now be able to afford to buy.

Tell me why you think that's a bad thing.

prices go up and down

To the person who needs a house and has a house, it doesn't make any difference when the price fluctuates. If you were to sell it and buy another, the other one would have gone up or down much the same amount.

If you are a speculator who owns multiple houses but only needs one to live in, the fluctuating value of your investment will keep you awake at night.

However it does no good if you have one home and lie awake worrying about its price, or if you timed the market right.

Piglet what you fail to take in to account in your equation is that a family who has just bought a house in, let's use London as an example, has just paid £300k with a £280k mortgage. Current council tax would be iro £1200pa for a modest 2 bed terrace (don't forget that council tax banding are still based on 1991 values). If LVT was brought in at the lower estimate of .85%, their tax would increase to £1400 right off the bat. Their property value would then start to decrease. A 10% drop in a few years would not be an unreasonable assumption, so our family are left with a house in negative equity, and no chance of moving.

Despite a supply of cheaper houses available (both new builds and resales), fewer people risk buying because of market volatility and the threat of negative equity - the only winners here are the property investors who can come and snap up the cheaper houses because they can make money by renting them out; pretty much what happened the last time we had significant property devaluation. And the biggest losers will again be in London; not the oligarchs and property developers and investors, but the families who struggle already. Other areas of the UK won't be hit as hard as in general the property bubble isn't as bad as in London and the southeast.

Not sure how that helps anyone, tbh.

It also assumes that banks will rush to lend in a falling market...

Could you show your working please user? On your figures, I make it LVT of £1275 per year (based on land value - of 50% of the property)

If that extra 75 would be a struggle, I would be very worried because there is no guaranteeing that Council tax bands will not be revisited and increased by the same or substantially more - all parties have talked about reviewing whether additional bands should be created and CT going up.

I can see garden's point - there are plenty of us who've just got ourselves on the property ladder and don't have a lot of deposit which means that negative house price moves will mean we end up in negative equity fast. Increases in tax are going to increase the risk we can't afford our mortgages, especially if combined with one person getting an hours cut/job loss or if mortgage interest rates start to go up.

I say again - Corbyn is trying to make too many changes, too quickly.

Artisan the proposal stated 55% of the property value being attributable to the land, so that's the figure I based on. Also bear in mind that the .85% will be the introductory rate and will slide towards 3% over 10-20 years, so possibly also an increasing tax on a devaluing property. Even after a five year devaluation of only 10% and an LVT increase to 1.35% would give an annual tax payable of just over £2k. Quite a jump from the council tax in a short number of years. Just look at how well the council tax rises this year were met.

We know that the proposed tax would not affect leaseholders in flats, but what about social tenants? Would housing association and council tenants also be exempt? That would potentially be a huge income loss for local authorities if they had to make up the shortfall from only owner occupiers or landlords.

I'd like to see the actual figures published by the Labour Party. All you are speculating on is some guff printed in the telegraph and a document produced by a separate organisation. It is not Labour Party policy and all they have said is that they will review council tax and business rates.

Username

Just to check, you are aware that the "article" you quote from is a production of the Tory Party Marketing department? And was specifically produced about a week before an election, in order to frighten voters?

Tell me, what will the Dementia Tax cost you, if you are foolish enough not to die young?

Will it be capped at a million? Or just half a million? You can't go by the Tory Manifesto, because it says there will be no limit.

Fake News

I find it difficult to accept the inability of certain posters to understand that, despite the fact that has been repeatedly explained mrspnut. It looks almost like people want to fall for the scaremongering of the Tory press, doesn't it?

There are many ways of "doing" LVT, and right now all these calculations regarding percentages are ridiculously hypothetical. I note that everyone is piling in to grab onto the Telegraph figures and not, for instance, the statement by Ed Balls where he said that it was only properties over £2m that would pay £3k, or any of the other suggestions that would actually make life cheaper for the poorest.

Ahh, but heloise, the poor are unimportant. We're just whining lefties who don't work hard enough or are benefit scroungers. Well, except for those genuinely disabled people.

Exactly we should be more like the billionaire owners of the Telegraph who live offshore and channel the profits of their massive empire offshore so they don't pay tax on it. I wonder why they don't want the status quo to change?

Piglet, the only two items I have quoted from are the Labour Manifesto and a document published on Labour Land.org which is a recognised think tank and has high profile Labour members among its membership.

Labour land is not the Labour Party, which you have been told over and over again. They are a separate organisation and they do not set Labour Party policy.

Hyprocursy is amazing on here. TM doesn't provide figures on cap yet because it is going to be consulted reviewed ...JC is looking to reform Council tax with possibly something like LVT hence no details on figures provided as its be consulted/ reviewed.

So whats the difference between the two? Nothing both are going to be consulted on. So noone can claim either side is going to do x y z then. Just like people ar saying you shouldn't use the 3% figures on LVT then people shouldn't be claiming the the cap will be £x amount.

No, but they are a lobbying group with the shadow chancellor as a member.