To think that the new tax on £2m will eventually be harmful to ordinary folk?

[IwishIcouldski]

I'm concerned that the new tax on properties over £2 million will push more buyers toward homes below that threshold. Increased demand at lower price points could intensify competition at £1.5 million, £1 million, £500,000, £300,000, and so on, as buyers adjust their expectations downward in response to pressure higher up the market but still below the £2 million mark.

It also raises the question of who will actually buy the £2 million-plus homes. I can imagine many sellers pricing their properties just under £2 million to attract buyers, which could drive prices down at each prove level across the market. Meanwhile, some of the remaining £2 million homes may end up being purchased by the very wealthy or by landlords who convert them into multiple flats. There may need to be big drops in prices because when you buy, you would not want to be dragged into the £2m mark after a couple of years because of inflation.

I feel it will eventually harm ordinary people over time but the wealthy will be able to weather the storm.

The government doesn’t want your asset. It’s taxing owners of £2 million properties 0.1% of their value. If your asset is worth seven figures the expectation of a state funded subsidy for you to realise its value is simply bonkers.

The housing market is so reactive because of the lack of supply. There are vast developments of flats in key commuter towns in the SE and many of them lie empty; purchased in their entirety by foreign investors who hold on to property for around 3years before selling. A very effective way to ‘clean’ money. The UK is widely recognised as a major global hub to launder money.

The problem is well known; the previous government made a weak attempt to address this by introducing the Economic Crime and Corporate Transparency Act 2023. However, no enforcement or funding was put into place.

Germany, France, the USA and Canada are amongst the countries with property tax on the primary residence that are not notably Marxist. The USA and Germany are two of the world’s three largest economies.

Do not misled. Those countries or at least the I’m the US doesn’t charge separate council tax or stamp duty. Nice try.

But if they did want me, or from anyone else, to downsize then they should pay instead if charging me to stay in my home.

The mansion tax is ill thought through and typical Labour ‘tax the wealthy’. There’s talk that the people who can’t pay as they are asset rich and cash poor and have to defer payment will get another massive hit of interest on their ‘debt’. I have no doubt that when this doesn’t raise what they want they will come to be next band down at 1m, that will hit loads of normal working people. The fact is that the whole system needs looking at and the way council tax money is spent needs stripping back to the essential basics and then built back on based on affordability

As regards the comments re growth, again Labour are great at creating jobs in the public sector. These jobs are a drain on the tax payer, these people who at HNRC, the passport office etc are not jobs that create growth. They also add massively to the unaffordable public sector pensions bill (which no one talks about).

LOL - nice try 😂

But they don’t want you to downsize. No government has ever had this as a policy. The market value of our house has risen 400% since we bought it - all unearned and untaxed. If we downsize we should use a fraction of that profit to finance it.

Asset rich, cash poor? In a £2m house?

Maybe sell it then? Get a lodger? Release the equity?

I am so very sick of these pathetic sob stories stating that some "poor" people owning or residing in properties valued at £2m can't pay this proposed tax & that we should feel sorry for them.

It's just plain nonsense.

And the constant fear peddling too that "Ooh, it's just the start, it will be £1m houses next" when there has literally been no mention of this at all.

Except in the right wing media who have a clear motive to make sure their readership distrust the Labour Party & anything that might affect their own wealth.

You can’t imagine a situation where someone has a large house but would struggle to pay the extra tax? Really?

it’s not that hard

Then what's your problem?

I said that they should pay me if they want me to downsize, you said they don't want me to downsize.

So why are you getting all upset about some hypothetical payment?

Are you the nation's finance gatekeeper?

Enjoy the lovely sunny day. Bring some sunshine in your life.

I am a US citizen who paid a lot of property tax there for a long time.

Property tax is roughly the analogue of council tax. Eg we are Band G in a fairly high CT area, paying less than £5K pa on a property worth roughly £1M. Even a 1% property tax, which is on the low side - and doesn’t account for special millages - is £10K pa.

I don’t happen to agree with stamp duty, because of its cliff edge nature. But since you are determined not to mislead, you should have mentioned the Capital Gains Taxes, both national and state, that are due in America when you sell your primary residence.

The exclusion available to most people is $250K of profit for a single person or $500K for a couple. Beyond that long terms CGT of 15% or 20% federally apply as well as, in many cases, state CGT.

Long term owners in major metropolitan areas can easily be caught out by the same issues facing London’s elderly homeowners. Eg in the Bay Area and Silicon Valley where wages and prices are high, the exclusions don’t touch the sides. Many who live fairly frugally from necessity pay 20% federal CGT plus 13.3% state CGT on the majority of the sale price when they move. I know a number of them.

Undoubtedly you simply forgot to share this information, in the interest of presenting a balanced picture.

Exactly, it’s the politics of envy and resentment against success, much the same as vat on schools, anyway they will be reversed as soon as the tories get back in. What was really unforgivable was that there was no welfare reform.

Then what's your problem?

My problem is the inconsistency of your argument. You object to the state giving money to people with nothing and try to justify giving it to those with wealth in the top 1%. Like a reverse Robin Hood.

There’s not much success involved in living in a house for 40 years and benefiting from a £1.9 million increase in its value @1457bloom. That’s why the return from investments is known as passive.

I defined my objections.

Giving someone a fish as opposed to teaching them to how to fish.

But it seems you don't want to fish. You want someone to catch it, scale it, filet it, and fry it for you.

I’m not the one who thinks the taxpayer should pay for me to realise my unearned, untaxed property profit. 🤷‍♀️

Agree with this. If the 2 million doesn't get adjusted in line with house price inflation then every year it will capture more and more. History shows that once a tax is established it is easier to increase it, so that's highly likely too. It's an easy and inexpensive tax to collect and hard to get out of paying with no obvious minimisation strategies other than trading down which is a big decision to save a few thousand a year, so it will be targeted in the future to increase government revenue, no doubt about that.

I agree, but that doesn’t happen overnight. In my example of our area going from very high unemployment after thousands of government jobs were created (It’s Merseyside, if anyone was wondering), people started to have a bit of money to spend, which boosted the local economy. This had a knock on effect and more small companies began to open, employing more people.

Our local economy is now mainly based on tourism, thanks to those small businesses. But that wouldn’t have been possible without initial investment by the central and local government.

On the flip side, most of those jobs are in hospitality, part-time and insecure.

All new taxes are harmful for "ordinary folk", because they restrict people's discretionary spending, and there is a knock on effect on the whole economy. If someone has to pay increased tax they might, for example, delay some non-urgent building work. So the building company loses the work, their employees earn less and those employees have less money to spend themselves in shops, restaurants, venues etc. It filters right down to minimum wage workers.

What about if you bought the house a week before the budget, it’s a bit different then.

I suggested that incentivising people in houses that might be too big for them to downsize is better than hitting them in the pocket, and that's if the government wants them to downsize.

It's a simple suggestion that seems to elude your reading comprehension.

Also, mortgages are paid with taxed money.

The profits aren’t taxed - ever. Unless they fall into inheritance tax. I know what you suggested - take money away from low paid people and give it to the asset rich. Don’t blame the insanity of your suggestion on my reading comprehension and try to gaslight me.

Yes, it is sad for these few people. Edge cases make bad law.

I wouldn't worry about builders too much - a lot of their work will be cash in hand. But that kind of thing is ok, right?