Younger people should be rewarded for lockdown via affordable housing

[Ordree]

As others have noted, young people (not just those in frontline roles) are making enormous sacrifices to protect others, mostly but not exclusively from much older age groups. They will be bequeathed a damaged planet, a ruined economy and they will have done further damage to their mental health by staying indoors for months on end. They are the ones paying older people's pensions when they won't have anything like the same financial security to look forward to themselves. Yes I know older people paid their elders pensions during their working lives, bit never has there been such an imbalance. As the economy is likely to be ruined short to medium term anyway, would it not be reasonable to start the biggest givernment-funded housebuilding programme ever, allow younger people who have just bought to write off negative equity losses against tax, and essentially redress some of the appalling imbalance between generations and classes?

@BubblesBuddy

Are you aware that Section 106 of the Town and Country Planning Act (1990) requires developers to provide a certain proportion of affordable housing in developments of more than 10 homes?

These are often sold to a housing association at “golden brick” stage i.e. before they are built out or (usually) they are sold for 60% of their value with covenants to ensure they are only resold and certain criteria to be eligible to buy.

There are various other schemes, but there absolutely is a statutory requirement for developers to build affordable housing.

@plainsailing01

Clearly as a young person your earning ability is greater than an older person of retirement age. How can you possibly take issue with that?

I’m well aware of what the requirement is. I’m also aware of the horse trading that goes on regarding the size and density (and price) of other homes on the sites to compensate for that requirement. And the bare minimum being provided too. The government could make more sites available and ensure a higher proportion of homes to rent.

If any pensioner has several houses that they rent out then, by definition, they are rich.

Depends on how you define "rich". If the majority of the value of the property is mortgaged, then their actual asset value could be negligible e.g. property worth £100k, mortgage of £90k, actual assets of the owner £10k. Even with a stable of properties, that doesn't make them rich!

The reason many went into property as a form of retirement income are for a couple of reasons. Firstly, until a few years ago every defined contributions pension had to, by law, be used to purchase an annuity at retirement; this meant you were totally dependent on the annuity rates at that exact time being decent. Secondly, if all their pension was invested in a standard pension scheme then if there was a crash in global markets their income could be drastically reduced - my Godmother fell foul of this, her income in retirement dropped by almost a third in the last global recession.

A minority of elderly have an income which is just the old age pension.

According to government figures, about 1/3 of pensioners have no income other than the state pension. So you are right in saying a minority, but not exactly an insignificant one. Then add in people like myself, where my personal pension will be just enough to prevent me getting any top up benefits but little more than that.

a higher proportion of homes to rent.

This thread relates to home ownership rather than rentals?

A younger person has to wait until they are older to make maximum salary. Under 34 they are not yet there. The potential is there but the majority won’t catch up where people have several houses and large pensions and wealth. Unless they are given it of course!

The op was about house building. Not ownership. You can read it if it helps.

I can’t believe how low people are setting the bar for the “young”. It’s like life just happens to them, victims of a cruel destiny. They have choices, they can be driven and ambitious. They don’t just have to sit on their arse whining waiting keys to property to land in the letter box.

I think we need to define here what people mean by "rich" or "wealthy". And what people consider to be a reasonable income in retirement for people who have worked all or most of their adult life.

Bandying words like rich or wealthy around is pointless without context as well. Property values in some parts of the country mean that what will buy someone a 3 bed family residence in one area would be enough for someone in another area to own their own residence plus 2-3 rental properties.

@BubblesBuddy apologies, you’re right. I inferred from OP’s following posts that the goal was homeownership rather than rentals. However, like the rest of their responses to this thread it’s a bit woolly and not entirely clear what OP was hoping to achieve.

Interesting that the most vociferous argument on behalf of “the young” is claiming elsewhere to pay £70k tax, isn’t it @plainsailing01?

Just because some pay a lot of tax (DH has paid huge amounts) it doesn’t mean we cannot see the issues facing younger people. They are not mutually exclusive. I realise I’m well off and I don’t like it that others may not have our advantages.

If you ever pay CGT you are wealthy. It’s a tax on wealth. If you own any property that qualifies for this tax if you sold it, you, by definition have wealth.

Good points on the thread above. They are not easy issues.

On Plainsailing's - this is always the issue - what measures should be put in place if any.

" CGT rates are too low. Capital gains is how most of the wealthy make their money and this needs to be revised upwards to prevent the brunt of the tax burden falling on those who pay it via incomes."

Lawson brought upper rate income tax down to 40% and CGT to 40% (although after taking account of inflation - indexation which is essential to be fair on taxing gains if the rate goes up). Instead now we have up to 45% income tax and 2% upper end NI so 47% tax/NI and CGT at complex and varying rates with no indexation depending on if it is property, share gains etc. but with a maximum of 28% I think it is for property with no allowance for inflation. I don't mind if CGT other than on homes goes up perhaps to the upper income tax rates so we get a bit of tax simplicity (but with the indexation allowance).

"- Council tax taken each year as a % of the property’s current value. This is what is done in the US today, taxes are approximately 2% of current year property value. Council tax in the UK is based on value from 1991 and in bands which tops out at £320k. This means irrespective of if your property is worth £20M or £5M or £800k today, if your property was valued at more than £320k in 1991, then you all pay the same amount of council tax."

My council tax is £3800 a year. If we brought in say £30k a year tax on my house - something Labour might have done I could accept that if I had to pay no income tax and had a refund of all the stamp duty paid (and eg had no inheritance tax as Sweden has none now).

"- Much higher rates of council tax need to be levied on all properties owned except primary residence."
I don't mind the above. I only own one house.

"- University is most certainly not a gamble! The 17% you mentioned have limited their career options and earning potential because they don’t have a formal degree."
I agree as long as it is a reasonable degree at a reasonable university.

Actually university is not a gamble for the majority

So if the majority are making something of their degree why are only a minority paying their loan back.

Dd has never been put off applying for jobs that state they want a degree.

She does do a job where it says you need a degree. At 18 she was managing the staff who are degree educated and were working to get to the managerial level she was at.

She has been offered several jobs on a starting salary of £40k per year to come into a company and manage varying departments as a teen.

You might need a degree to be a doctor but for the most part companies might like a degree but it isn’t necessary for what the job entails

If any pensioner has several houses that they rent out then, by definition, they are rich. If they have not taken advantage of putting money, tax free, into a pension scheme as well then they are stupid

You mean the pension schemes that are linked with the stock market that has gone into free fall.

Or the pensions like dfil and dmil had who found a significant proportion of their pension was lost through the banks negligence.

I know how pensions are supposed to work. Unfortunately in rl I have seen a lot of people I have known over many years who have worked throughout their life and found the pension they got was a fraction of what they were promised because the stock market hadn’t worked how it should.

And seen people walk away with nothing because their pension was used to prop up a failing company.

It really puts you off having a pension when you see people trust others to look after their money.

You do have to get your mind round the fact that most pensioners don’t have a portfolio of properties.

Even if they did and it cost more to rent them out then all it would mean is an increase in rent.

Look what happened when they removed the tax relief on btl mortgages.
People turned their rental properties into holiday let’s and the supply of rental properties went down so demand and prices went up.

It’s also really difficult for people to plan when the goal posts. If you make such significant changes to taxes too quickly you’ll leave a lot of people who thought they were financially sound in difficulty.

Yes, even university fees which when they came out cost me £1k for the fee element for my daughters very unfair and with very very little notice ramped up to £9250 a year. Had we all been told that 20 years before we could have all set up college funds like the Americans do.

Coronavirus itself is a change as those living off rents to buy food or pensioners with private pensions which are not in the state sector which are therefore not guaranteed in terms of final salary or living off dividends now have much less. I suppose the old truism that the only certainties in life are death and taxes remain as true today as ever.

Part of our problem is a regional one. I am from NE England and properties are not particularly expensive up there unless you want a footballer's type house. If more people can work from home they might choose to live in one of the most beautiful parts of the UK in rural northumberland for example. Eg here is a £475k 6 bed detached www.rightmove.co.uk/property-for-sale/property-68992002.html

Or at other end of scale £80k 3 bed terraced www.rightmove.co.uk/property-for-sale/property-65289442.html

@TriangleBingoBongo

"Clearly as a young person your earning ability is greater than an older person of retirement age. How can you possibly take issue with that?"

Plenty of people of retirement age have had the opportunity to build wealth over the years due to soaring asset prices, pensions etc. which are then being "ring fenced" for growth by the government by propping up house prices, guaranteeing YoY pensions growth.When was the last time a graduate job rose 3% YoY? Though there are jobs that pay exponentially based on certain sectors, the majority, over the last 10 years have barely kept up with inflation. Also, take the current crisis as an example, economists have called out that in this recession, the younger you are, the more likely you are to be affected by furloughs, redundancies etc.

@Alsohuman And your point is? I have always been vocal about my willingness to pay a higher rate of tax, much higher that what I am on now, not only on MN but also in real life. Unlike some people, I am not deluded into thinking that my current rewards are purely through hard work (no matter how hard I've worked). If anything, I'd say it was 99% luck and 1% me. Society, to me, is unfortunately, significantly unbalanced and we all need to help "right the ship" or there will come a time when someone else will do it for us and I'm pretty sure we won't like the result then.

Plenty of people of retirement age have had the opportunity to build wealth over the years due to soaring asset prices, pensions etc. which are then being "ring fenced" for growth by the government by propping up house prices, guaranteeing YoY pensions growth.

That’s the point it’s not guaranteed in the case of a economic downturn, like now. If your assets and pension pot have fallen in value your ability and time to earn money is significantly reduced. Whereas for the likes of me, my house and pension and any other assets may have dropped in value but I have many working years ahead of me to reinvest, work and save.

A little confused here - how is the government .. propping up house prices?

As a wealthy person by your own definition, I assume you have a decent pension pot (so you will be paying tax on your pension income). Will you be selling your presumably high value property when you get to retirement age and willingly handing over a large chunk of it's value to support younger people?

House prices are high predominantly because it is supply and demand.

Whilst we have more people than houses then house prices will remain high.

DH and I are eagerly awaiting the influx of properties on the market. We have been sat tight waiting for a price correction. The drop in prices might make us less dependent on an immediate sale.

There’s usually approx 200 properties a day coming into the market in our area, there’s been 2 in as many weeks. Presumably they can’t be photographed or marketed because of the restrictions. That plus all the unfortunate deaths will undoubtedly lead to some lower prices. 🤞🏻

Not to say we’re celebrating, but looking pragmatically.

Triangle, that is true although agents are still going into properties (empty ones) to photograph as they did for one of my children's boyfriend last week (to let it out in that case) and the legislation www.legislation.gov.uk/uksi/2020/350/contents/made does allow going out to move house etc and the Land Registry weekly sets out all it is doing to keep going during this period.

@Allergictoironing "Help to Buy". Flooding the market with easy credit is how the government has increased house prices. This has had a far greater impact on house prices that dropping interest rates.

Also, I'm in my early 30s so I've only really started building my pension. But yes, I am happy to be taxed, at a higher rate, on the value of any assets etc.

@Oliversmumsarmy And "demand" is driven by need + affordability. This is why house prices fall in recessions because even though people still need houses, their affordability has fallen, making them look for properties at a lower price range, forcing the market to correct itself to meet demand. Affordability till date was

** Affordability till date was driven by the influx of cheap credit and that has inflated house prices