To think these baby boomers are missing the point?

[Hundredacrewoods]

I grew up in an area where house prices have quadrupled since 2000. I consider this an intergenerational equity issue. Whenever the topic of house prices and 'millennials' comes up with my parents' generation, all I hear is how hard they worked and how much they sacrificed to get on the property ladder. AIBU to think that they're missing the point? No one is denying that they worked hard and sacrificed. The point is that if they worked just as hard today, and made the same sacrifices, it wouldn't be anywhere near enough.

Blink66 In one of your posts up there you seem to be saying that house prices are more expensive because two people work.

I see it as the other way round - the only way people can afford houses is if two people work.

This takes away choices (to be a sahp) and forces parents to both work and use childcare.

You mention everything else being awful during that time and women not having the choice to go and work, and I remember my own mum idolising this idea of going out to work and envying friends with good jobs. So I can see how you would say that younger generations are living in better times in that respect, there have been more opportunities for women and more opportunities for university education for more people.

But wouldn't it be wonderful if this progress had been accompanied by reasonable, expected and fair house price rises in line with inflation? Instead of massively inflated prices that have not risen in line with wages?

Why should progress in some areas be accompanied by a huge backward step in another?

And is it really progress when instead of being stuck in the home hankering after jobs women are now stuck in the rat race hankering after time with their children at home?

The other thing that's not helping is BBs staying in family-sized houses once they have outgrown them. I include me & DH in that, but we'll downsize when we retire (we aim to retire far beyond commuting distance!).

Our street is full of people our age and older, rattling around in houses that young families should be living in. 7 out of 8 consecutive houses on our side of the street have just one or two people in them though they have 3-5 bedrooms.

MIL, recently widowed, is another, but she's so proud of owning her own home that wild horses won't drag her out of it to anything else (flat / sheltered housing / home for the elderly). Her neighbour is a man who is mid-60s. He moved back in some years ago to support his elderly father who died recently, and says he can't imagine living anywhere else. Another family home that's unavailable to families.

One day, half the street will be up for sale and prices will plummet - which might, at last, help today's 20- and 30- somethings.

@ImNotWhoYouThinkIAmOhNo totally agree! We are looking for a house at the moment - we must have viewed about 20 houses and have not seen one house (looking at 3/4 and a few 5 beds) that has had a family living in it for a very long time. All single old people living in lovely big family homes with big gardens. While families of 4 live in tiny flats with no where for little ones to play outside. I'm not saying I think the old people should be forced to leave or anything- but when my children are settled I hope I remember to pass my home on to another family to enjoy rather than just clinging onto it!

Dear god I just read this whole thread.

It makes no difference. You cannot change the past. We are BB GenX Milleniums for no reason other than accident of birth. Every single one of us would be stupid to not take full advantage of what's on offer AT THE TIME.

If BB are unsympathetic so what? If millennials are snowflakes so what? It still won't change anything.

Stop comparing what could have been if you had been born at a different time and just get on with doing the best you can with what's available for you now.

So it's tough. So what? Each generation thinks they have it tough even if it's for different reasons.

There is nothing to be gained by living your life with what ifs..

Flipperflap
No you made an assumption I didn’t understand because I didn't understand the maths. When in fact I didn’t understand your reference to not there not having been a drop in house prices during the past 20 years when there has been a drop in house prices. You didn’t explain your post using maths. You referred to a website. That’s not the same. Perhaps next time take what people are saying at face value instead of assuming what they’re saying. As I illustrated on my first post on this thread, I understand the maths perfectly seeing as I explained the maths. On the thread. Using real life examples of my own.

Its very easy not to compare unless you are related to said baby boomer who likes to rub your face in it.

In the 50s both my grandmithers worked: one ran her own post office so not sure where this no working thing came from.

I think CGT should be introduced on homes. It’s unearned, untaxed income that people have been lucky to have, not been entitled to. If you’ve made money, why shouldnt you pay tax on it, you’ve still made money at the end of it? Property is an asset just like anything else. Yes people need somewhere to live but they also need an income and that’s taxed, whether that’s a wage or a pension.

At the same time I think stamp duty should be lowered (I live in SE where property prices are really high so the cash required to fund stamp up front in a purchase can be a huge barrier). The concept paying tax before (and regardless of) making money but not when you’ve actually made it is ludicrous.

Add in some sensible allowances like £100,000 per person (so £200k if you’re joint owners) which would account for inflation over time and also ease the impact on areas where property prices are low, plus some restrictions on claiming the allowance such as length of ownership etc (so people are encouraged to stay longer) with exceptions around moves based on changes of health or jobs, and you have a system which allows a fairer distribution of property gains than is the case today.

It’s absolutely true that it was easier to buy a house 30-40 years ago. Average house prices were on a multiple of 3-4 times average earnings, today they’re over 9 times. We all have to recognise that things have changed and make contributions where we can throughout our whole life, not just our working life.

Fruitbox
That would be impossible to implement. The market would completely stagnate. No one would sell unless forced eg through divorce or to pay for care home fees.

How do you account for people, who’d spent nothing on their house during the time they lived there and others, who demolished the house they bought and built a new one in its place?

What about people, who bought cash and those, who got loans and therefore paid interest on the loan?

Would people be expected to create accounts from the day they bought their house?

Would they have to account for every penny spent from a boiler service to a new lampshade, every loan interest payment made?

How would you implement that retrospectively?

Who would pay for the preparation of these accounts? An accountant would perhaps charge 1k for the privilege.

Say the government arbitrarily did arbitrarily implement CGT without considering these measures, where would the incentive be to home improve?

Would a large proportion of people see their houses crumble and live in squalor? Even central heating and toilets pack up sooner or later.

Would that mean a lot of trades would be out of work? Hardly anyone was spending 8 years ago. It was pretty depressing for the building trade and associated trades.

I think CGT should be introduced on homes.

Yes there are things that can be discussed along these lines.

Mummy you’d implement it in exactly the same way it’s implemented for additional properties now. If what you said was true, there would be no CGT on rental properties for example which would never be accepted.

All these rules are in place and they’re very clear. Where money has been spent on a home improvement it can be deducted as a capital expense, so for example if you spend £100k on an extension and the value of your home goes up by £250k over time, you pay CGT on £150k. Sales are administered by solicitors, they already process stamp payments so adding a capital expenditure calculation would just be an additional part of the process. I don’t think it would be onerous for homeowners to keep records when major improvements are made. The kind of work you’re talking about doesn’t add to the value of your home, it’s maintenance.

Likewise, a property is likely to sell better when it’s well presented so you’d be more likely to get your money back on a well maintained home. Similarly, a decent allowance on eg the first £100k (per person) would cover a lot of the other issues.

As for introducing it, having an eg 2y lead time should be enough to get the market moving again which is sorely needed. It may also encourage downsizers as referenced earlier in the thread to move out of larger family homes and open up more homes to young families (thereby releasing smaller homes for people to downsize into) or possibilities for developers to build eg to smaller and more affordable units on the same plot.

If you’ve made money, I don’t understand why shouldn’t you pay tax on it? You’re still making money.

Also you’re implying that the only reason people (notably baby boomers) have made money on their homes is because they have looked after on them. That’s not true, changing lightbu

Sorry posted too soon!

Also you’re implying that the only reason people (notably baby boomers) have made money on their homes is because they have looked after them. That’s not true, changing lightbulbs and servicing boilers is not what has made house prices double, triple or quadruple in the last 30 years.

I have a BB friend, she is lovely but she does tend to look down her nose at anyone who ( god forbid) rents a place and doesnt have a mortgage.
Her daughter married someone on a six figure salary and they live in a beautiful home - she seems to think that everyone can do all this, millienals are all snowflakes and going to Uni is a ' waste of time', everyone should 'man up'. We agree to disagree or not discuss it as she knows it all winds me up - but thats how a lot of people think. Even my' non BB friends' think this way - most of which have had a huge inheritance or help from family years ago and are now ' the smugs' - mortgage paid off etc. A few other friends are like me and actually worried about the future of our children who have normal jobs and wages and might not ever have a mortgage and burdened with Uni debts and all the rest. It is what it is, but i cant help worrying about it all!

Last point to respond to:

What about people who bought cash and those, who got loans and therefore paid interest on the loan?

When buying a house there is a net cost to being both a cash buyer and a borrower so although savings rates are a bit lower than lending rates (which are however currently lower than most dividend yields) the outcome is similar.

The mortgage holder pays interest on a loan, but the cash buyer forfeits interest (or dividend) payments on his investment which he would receive if it were held in savings or funds. Both cash buyers and borrowers get the same capital growth (or loss) on their asset (the house).

No I’m not implying that at all. I understand the cgt rules perfectly. Things like new windows, kitchens and bathrooms are a grey area and depend on what is replaced. Like for like or upgrade. And that is not always clear and wouldn’t be so until the day the person sells. In that context, why take the risk of selling?

With rental properties, it’s different, all repairs, improvements and expenditure, including loan interest payments (although changes are being phased in this tax year) will have been accounted for either as an expense against the income or on selling. Right down to a new light bulb.

Even if cgt could be applied, it would have to be seriously modified and would be impossible to administer. It definitely I s too much to expect people to have kept invoices for work, even substantial work done on their homes perhaps 40 years ago.

And as for encouraging downsizers, I’m speechless. It’ll have the opposite effect. Why should “grandma blogs” sell her house, pay 100k in cgt when she can leave the house to her children, who will get that 100k split between them and pay zero iht as her house is under the threshold? And what happens if “grandma blogs” wants to downsize to a luxury purpose built retirement home but can no longer afford to do it because she has to pay cgt on top of stamp duty? She just won’t bother. And what if “grandma blogs” has Alzheimer’s and can’t recognise her own child, let alone how much she spent on her home that she’s lived in for 50 years?

I’d have had to had my head in the sand for the past 30+ years if I thought house price rises were due to home improvements. I was a teen in the mid/late 80’s and have made several comments on this thread. All of which were written with good knowledge of the changes in incomes, house prices and lending, which have happened over the past few decades.

I’m sorry you’re struggling. But I don’t think this is the answer. It’s so arbitrary and full of holes.

Okaaay. So say I borrow 150k over 25 years and repay say 300k, ie I pay 150k interest. This is probably the reality at this time in the era of low interest rates. When it was 15% not so much so. During the 25 years I don’t buy any financial products or have any savings as my income is all swallowed up on mortgage payments and living. Again this is feasible in a market, where incomes in real terms have dropped consistently. How exactly am I as well off as the person, who paid their house cash and forfeited the interest/dividends? Your assumption is based on me having 150k to play the markets, isn’t it?

Administration aside though as we both understand it would be more complex than people currently are used to and where there’s a will there’s a way, why shouldn’t you pay tax if you’ve made money?

Stamp should be reduced, and CGT on homes wouldn’t have to be the same rate as other CGT, but it’s a fiscal lever that could be implemented to better distribute the disproportionate gains that people have made on property, particularly if they’re under the IHT threshold (which otherwise would risk being brought down).

The alternative is bringing in a land tax which would be a huge blow to income at all levels especially “grandma blogs” who may be living in a huge house on a small pension, where ultimately further erosion of income would in time lead to a fall in house prices on account of affordability?

Similarly, look at the response in GE17 to the suggestion that the value of your home should be included in your financial assessment when examining eligibility for care funding. There was outrage, despite the fact people don’t realise it is already included where the homeowner doesn’t have any dependents living in the property eg if they are widowed. For me this encapsulated the entitlement that many people feel they have to these gains, that they should be preserved and protected at the expense of everyone else. What people didn’t realise was that a £100k cap in care costs was £77k less than it is at the moment (estate - £23k).

Ultimately, not managing this well will result in significant capital erosion as a result of stagnating or falling house prices, when there are enormous returns which could be capitalised on by homeowners and tax authorities at a time when they are desperately needed.

I have to go now but I have enjoyed our discussion, thank you.

I think CGT should be introduced on homes. It’s unearned, untaxed income that people have been lucky to have, not been entitled to. If you’ve made money, why shouldnt you pay tax on it, you’ve still made money at the end of it? Property is an asset just like anything else

So how would that work then?! A person buys a house (their home, to live in) for £100k and 10 years later they are made redundant and have to relocate to a new area for a different job. In the intervening 10 years, house prices have increased, so their home is now worth £150k.

They need to sell their home and buy another one in the new area. But, as house prices have gone up by 50%, the person cannot afford to move, because if they do so they will incur a tax charge on the £50k by which the value of their home has increased when they sell it - which will leave them unable to afford a similar home in the new area, where prices have increased by the same amount.

I was born in 1944 in a NE pit village. My parents never owned a house but were delighted with their Council house. Dad was an invalid (MS) from when I was 11 and mum had two jobs one in a factory canteen and one on a market stall with my grandad.
I was lucky enough to be able to do teacher training but I married aged 21. My mum and grandad saved half crowns from the stall to give us money for the deposit on our first house two years later. That marriage failed. I gave them back the deposit. I taught abroad, remarried, had a child and when I came back (1972) my lovely family had been adding to that money and once again I became a house owner.
Now I am 73, mortgage free and have been privileged to be able to give my dc a bit of help though never a full deposit. Now in their 40s all are home owners and have dc of their own.
I think the sad truth is that unless you live well North of the Watford Gap life these days is so so difficult.

It is the reason we have stamp duty. Pay upfront and forget it. Makes moving easier, you do not see it as a seller's tax, it is just like VAT for houses. People are more likely to move house, less likely to be badly affected in case of an enforced move.

I think the thread addresses the attitude of baby boomer homeowners towards non home owners.

In my experience it hasnt been good. There is a general refusal to acknowledge our struggles.

My dad himself admits he voted Brexit as he misses life in the 1950s .Apparently it was 'lovely'.

He could have nudged me onto the ladder when he inherited from his mum but he cheerfully maintained that 'noone can afford to buy nowadays.'
Of course this has changed now as he keeps saying there are more home owners than ever before.

What i suspect is that ge didnt want to help me as i am 'lazy' and a soecial snowflake as im struggling to find a permanent job. After all...he was in the same job for 25 years so why cant i keep one for that long??

My family are a special case though . Im very depressed about it all.

Special snowflake even!

Fruitbos
I know you’ve gone to work now. I don’t have the answer. From my personal POV, I would be happy to see house prices fall to allow others onto the ladder. But that would be at great expense to recent homebuyers. Having lived through two recessions, I would not want that for these people either.

Dh and I have profited in the past from rising prices although not substantially on our current house when the extension and other associated build costs are factored in. As such we would not be in a position to have to pay cgt as you proposed even without considering the interest payments we have paid out over the past 10 years.

As I said, I would expect these interest payments to be offset in any proposal either in part or full simply because homeowners have taken the risk to borrow this money, secured on the property. Had Dh and I for example failed to keep up with the payments, we would have had the house repossessed. Until the past perhaps 5 years even with the mammoth cost of the building work, we would have probably left with nothing. Meaning that not only would we have lost our original deposit on our house, but we would have lost the money used to pay for said building work plus all of the interest payments to the lender.

The way I would see the mortgage interest is adding to the cost of the house. So say I bought my house for 250k, borrowed 150k. At the end of the 25 years, my house will have cost me 400k plus stamp duty and solicitors fees. Whereas it will have only cost a cash buyer 250k. The loss of not investing the money elsewhere is immaterial. I could say the same thing regarding shares. Some shares have trebled in value over the past 2/3 years. Lucky shareholders.

Again all of this would be impossible to administer when we consider that people are only expected to keep accounts for the past 5 years. Even my extension is older than that.

As for land tax, I agree that is not very desirable either. As it is arbitrary unless it takes equity into consideration. Perhaps “granny blogs” should take in a lodger if she doesn’t want to downsize.

Or perhaps Granny Blogs' kids could go live with her and provide all her care needs. Like people used to.

That is the reason big houses tended to stay in families. You can't downsize if the daughter/son, partner, teenage kids are going to move in sometime down the line.

malificent
I think a lot of baby boomers have been nice. I haven’t counted but I’d say more than not. Someone upthread said you’d received an inheritance, which was enough to put a deposit down. Is this true? Were you unable to get a mortgage? I know you say it’s impossible to get a fixed contract. Sorry if you’ve already said. This thread is very long.

It also sounds as though you are single. With the best will in the world, it’s far easier to buy in a relationship or with a friend. Perhaps you could discuss going half with your dad even. Maybe he’s a black and white see it on paper facts and figures man. If you were to sit down and show him the figures would that work?

In any case, I think you need to act more like a grown up with him. Right now, you’re being bullied and he’s treating you like a belligerent child. As a result, you’re going into child needs rescuing mode. If you can’t get through to him, I think for your own mental health, you should consider going low contact at the very least.