To wonder how the next generation will buy a house

[macaronitoni]

Surely there needs to be a massive overhaul of the system. A new build home with two bedrooms on a new development nearby is £315k. Not London. Midlands. Who’s going to be buying that? Too small for a family with more than one DC but way out of budget for most first time buyers.

Without significant family help, how will today’s children and young people manage to buy a house? Something has to change!

We need a massive wealth redistribution- or accept that we are going back to Dickensian Uk - with massive poverty, ill health, only the very wealthy own property, eat out, afford nice things.

m.youtube.com/watch?v=ZXP8gH0wddE&feature=youtu.be

This is worth watching. Ex city banker about why we need to tax wealth if we want home ownership to be the norm.

But someone worked for it. Why should I work hard and save for my DC to have it all taxed?

If you can pass on £1 million untaxed to your DC, someone will be able to pass down £5 million, £6 million untaxed to their DC. So your DC has effectively become poorer compared to these people. And will still be unable to afford property as he or she will be competing with these people for the same housing stock (which is finite and as of 2022, subject to strict planning laws). Its why now someone who has saved up a small legacy of £10k for their kid's deposit in London is not really providing any significant help today when today's mums and dads are downsizing and donating £280k to their child's deposit. Its no surprise that most of the people I know who have bought property in London also have London parents.

By minimizing these huge cash transfer, it would encourage a closer link between earnings and housing; which is overall more meritocratic.

Very well put. x

Nobody worked for most of it because the money exists as a result of property inflation. Our house is valued at four times what we paid for it, that’s a lot of money nobody ever worked for or has ever been taxed.

Most of the young adults I know that lived at home and moved out at 30 ish saved a lot more than £20k though.

That's a fair point. I think it's the investors who own multiple properties, or the ones who have flipped properties for profit, or the ones who land bank or have houses sitting empty that should be the most affected, rather than a couple who only has their family home.

The problem is that many of the richest people, those with multimillion pound estates, seem to avoid paying IHT currently so certainly won’t be handing over all their assets to the government. Any increases to IHT will only affect those who have much smaller estates and don’t employ crafty accountants.

My children will inherit a lot less from me because I am divorced so they will pay tax above £500k ( my personal allowance plus £175k for leaving them my house). Had I been a widow, my IHT allowances would be double that. Now maybe that is something to change first?

I’m planning to give my children large sums of money over the next few years and hope I live longer than 7 years so the tax man can whistle for the tax when I die!

IHT is only 1 million for married couples or widows/widowers. For single or divorced people it is £50k.

I think that is an inequality to consider changing.

That video attached earlier, Gary's Economics. Taxing the super rich. Well that's never going to happen is it?

A near relation and BF have just bought a house, not in London. They are late 20s and not highly paid, saved £100,000 a bit of help from relations but the majority they saved. Being careful, no expensive phones, clothes, holidays, cars etc.. the travel around in BFs work van.

Some rather naive posts about taxing the rich etc, the majority of tax is paid by a tiny number of people, there was an article last week, some pay 100s of £millions.

no government will be elected on this concept. The super rich own everything in offshore companies and trusts, many have houses abroad they can move to to avoid tax, like my friend’s multi £billion employer. The tax havens were set up in 60/70s when a Labour government taxed people at 98%.

many super rich that own a great deal of property are Russian, Chinese, Saudi, Indian etc. the royal family are way down the wealth list

I think a land value tax should be brought in. Get rid of council tax and tax the land the house is on based on the rental value. it should be around 5% of the rental value.

So not only are you punishing the Uber rich, but every home-owning middle income family. Or any family who have "put a little by" for a rainy day. Nice.

Wealth inequality is not as black and white as you think though. 90% of the population are essentially equal, and this has been constant for generations. What has changed is the difference between the very, very, rich and the very, very, poor. The top 5% and the bottom 5%. This is where the inequality lies. You won't change that by taxing the middle/majority.

It’s £500k including a property left to children for everyone. Obviously it’s doubled for a couple and transferable from one to the other on death. Why do you think that’s inequality?

No. The system needs to change in order to tax wealth not work. Reduce income tax in return for increasing land tax

Parents will have to make more effort to set their kids up with inheritance. The winners will be those with frugal parents and those with no siblings. Those who work hard will never be able to catch up with those who are handed a free house by an accident of birth. It has ever been thus, but not to this extent. It’s creating a real two-tier society where those who inherit a house have vastly better lives than those who don’t.

90% are roughly equal in terms of what they earn for themselves. But they’re not equal in terms of what they inherit. We now have people earning the same but having hugely different lifestyles because one has been handed a free house while the other hasn’t.

It’s inhibiting social mobility, because now it’s not enough to work hard and succeed for yourself - you also need to have parents who succeeded. You can’t make it on your own any more.

What you describe was never a ftb home and expecting it to be is confusing people

DD bought her first place for cash (4 figures). It didn’t have 2 bedrooms, it wasn’t ready to move into, it was hundreds of miles from where she needed to be. But it was a start. It was what she could afford and would, (if the pandemic hadn’t occurred) afforded her the next level

FWIW I know a few young people who have already bought their first place. None went to university. The ones who went to university are only just starting out.

Like it's that easy ??

Unfortunately so x

Unfortunately it is. My ex was given most of the money for his first house by his parents. In our early 20s the same happened with a good friend. It took the rest of our friendship group nearly a decade longer to get on the ladder (west London so crazy expensive and all those of us who didn’t inherit had to move away). By that point the other two had already built several hundred thousand in equity on top of what they’d been given. It would take most people many years to earn that from actual income!

Plus there’s a knock on effect, not having to pay more than a tiny mortgage on his first house (a four bedroom detached house in West London), which was more than covered by having a lodger, meant ex was able to live on less than those of us paying rent, and could therefore max out his pension contributions. By the time I could even think about putting money into a pension, he had a half million pot built up. That will spend the next few decades compounding, so he will also have a massive pension. So even if his parents’ entire estate goes on care, he’ll still be so much better off than me, even though I actually earn more than him and spend less day to day, because my money all goes on my mortgage.

To make jealous people feel better?

Their solution is not to be the family member that starts generational wealth, but to take away everyone elses. Stealing (via taxation) is easier than earning and saving, I suppose.