Reeves' plan to tax houses over 500k

[FridayFeelingmidweek]

Just been reading news about Reeves's plan to tax https://www.theguardian.com/money/2025/aug/18/rachel-reeves-stamp-duty-property-tax-council-tax

AIBU to already be worrying about living in the south east? Surely this will force people either to never move, or move away from SE/London.

I'm glad that there is finally something that isn't negatively affecting areas outside the SE but does she actually understand that 500k isn't much down here - 3 bed terrace at best.

Unfair:

A 3-bed house in London might cost £1 million+.
The same house in Manchester might be £350k.
But both homeowners have the same living space, utility, and housing needs

It’s not like the London homeowner:

• Has triple the income,
• Uses triple the services,
• Or lives a triple-luxury lifestyle.

As usual, Labour just target the part of society that looks to be wealthiest - but actually isn't.

The cost of living is cheaper out of the capital. Where do they think we are going to get this money from??

No wonder so many people are leaving.

Oh brilliant. Fuck the housing market even more then.

It won’t affect the vast majority of houses where I am in the Black country, but where I used to live in West London, 500k is only getting you a two bed flat.

Read what I wrote.

The level of income tax on higher rate payers is already aligned with other European countries. It’s the basic rate of tax and nil rate band that’s far lower here than in other countries.

Do people not buy annuities any more?

You certainly could put it into a manifesto. And then do nothing about it when you're voted in.

Yeah we know that but not all at once! Like salary tax.
We honestly don't mind paying tax.

What I was saying is we will run down the pension pot so that as it will be included in IHT now there hopefully won't be much left, and if there is it means the teenagers have lost both their parents at a younger age, so there will be much more to worry about than a tax bill.
Basically it's something along the lines of, you can't give them thousands as a cash gift but you can pay their credit card bill. That sort of thing. So we can give them money without being taxed but not directly.

I see a lot of comments saying that £500k properly does not = wealth. Fair point given the extent of house price inflation.

My reference to wealth is about what it means as a concept not the extent of what is 'wealthy'. By wealth I am referring to the income earned from assets, which is under-taxed compared to income earned from working (as highlighted in the Capital gains tax (CGT) top rate being just over 20%, much lower than the top rate of income tax). For that reason I support a tax which gets a percentage back on the extent of house price increase when the property is sold (so for that reason which goes a bit to @RedToothBrush's question, you should be tax on the equity realised, or more the increase in the equity)

The contenious point I think is whether you consider a primary home where you live to be an asset as much as a second home or business. Currently the state does not, CGT does not apply to primary homes. I think the extent of house price inflation means it should - so you should only pay it when you sell, but you should be taxed on the income earned by house prices going up.

How does that sentence make sense?

You need to be fairly well off and have a fairly good income to buy a house for that money. Thats a simple fact. Unless you have money given to you of course.

What is the North West to do with whether someone is wealthy or not and what are new homes being built in your village got to do with whether someone buying it is well off or not.

Ergo, you need to be fairly high earning to buy those properties no?

Sounds very Liberal Democrat. Worked well for them didn’t it.

Same with us. My dh is a manger at a local authority. Exactly the same job as he did in London…. Same pay.

My pay was the same for the equivalent job too.

Only difference here is that we’re no longer shelling out almost 2k a month in rent, we have bought a house here, which we could never have done on our wages in London (infact, I don’t have to work here at all, one wage is fine).

It’s such a myth that you get paid more in London.

Is London weighting a thing of the past?

On this basis, will the state reimburse you if house prices fall?

not reimburse, as is the case with benefits - you don't expect the state to pay you at your current rate if you lose your job and have to rely on benefits - but i do expect them to house me if i am homeless, such is the state of the public finances that currently they cannot really do this!

It is yes. Even when it’s paid (and it still is in public and ex public sector) it’s very little- £4/5k a year maybe.

many places keep it to compensate for the cost of public transport, it hasnt been a reasonable reflection of housing costs for decades (it was set to to meet the difference between social housing rents in London vs outside London. As the social rent formula also charges more for London rents)

Thank you. I thought it was still a thing. Shows how bloody old I am!

It will not affect 80% of the population and 50% of the homeowners in london based on the 500k threshold.

It will encourage older people to downsize when they retire and younger people can buy their homes so would help younger families.

It will replace council tax and 80% of people would pay the same or less. Owners of low value properties in the north could pay as little as £800 which is fair as my friend in a 70k shared ownership flat up north is paying only £300 less than me though I own a 2 bed flat in London.

If rich people try to sell up and leave the uk, the stamp duty levied on their properties will at least provide a source of revenue. Also the £20 million houses in my postcode on bishops avenue will be charged £156k annual property tax which would be great for my council. They currently only pay £4k per annum which is an actual joke when they pay far more for their private security!

I hope labour cam try to rush it through before the end of this Parliament.

Yeah.

Most people I knew, with average paid jobs were topped up with housing benefit, including us until we moved from London 5 years ago, as rents are horrendous.

You’re spot on, however, people (well off or not) normally buy the house that is at the top end of what they can afford or around that amount with a very small disposable income left for extras as holidays etc. the extra tax proposed on houses has not been accounted for when people bought their houses. People aren’t sitting on a bottomless cash pit.

Its not called that by name no, but there is often a higher pay for London based jobs, certainly public sector roles pay more, the difference depends on the LA and the job of course. And unlike the past it doesnt compensate fully for the cost of living and commuting in the capital. Im not saying it used to full compensate but it was more doable financially with the additional pay

@Letgoofmyblank you told me upthread that people would leave their pstents houses empty and pay for their parents’ care directly if this scheme goes through, exacerbating the housing crisis. I think not:

ONS says there are about 137,000 self funders in care homes. The average stay is between 2 and 3 years. So on the order of 50,000 self funders pa enter care.

A significant number of those will not have family members who can afford to sport their fees, which carehomeuk.com says now average over £1200 per week or £60,000 pa. I would bet that fewer than half of families can cover this expense without selling. That’s a generous estimate, IMO, of 25,000 pa. In reality I feel sure the number is far less.

Rightmove says that on the order of 1,000,000 properties change hands each year. More, actually, but I will continue tipping the numbers to you. 25,000/1,00,000 is 2.5% of all house sales. That is not going to cause any sort of crisis.

So just checked as an example, the same job as I do in the SE, would pay me about 7k more in a zone 2 local authority.

Not enough to compensate for the cost of property.

What happens if you happen to live in a town where house prices have shot up, not because of anything you’ve done, but because people from London moved in during Covid? I’m not rich or wealthy by any means. My home isn’t quite worth £500k yet, but it could be one day. And then what? If I can’t afford this tax, am I really expected to sell the family home my children have grown up in - just to hand it over to someone wealthier and more cash-rich than I am?
This isn’t just a house, it’s our home. It’s where my children feel safe, where they’ve made their memories, where they have friends they run out to play with after school. Uprooting families like mine doesn’t just shift numbers on a spreadsheet - it rips communities apart.
Policies like this pile even more stress on ordinary families who are already stretched to breaking point. And it won’t just be the South East - it will affect towns and families right across the country. Why not go after the big corporations who bend the rules to avoid paying their fair share, instead of punishing people who just want to hold onto the home they’ve built for their family?

That was in your post at 10.50 am, @Letgoofmyblank

Its when you sell it.
And presumably when you sell it you'll buy something else?

Presumably also you have made a lot of money on the house, you said yourself prices have shot up. You have extra money that you havent worked for. Like many of us. Why wouldnt you pay tax on that as a theoretical query?