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.

Yes that is definitely the issue

Exactly, that’s exactly what we need ! This bubble is decades old and ludicrous.

Negative equity is a good thing for the economy? Really? Making ordinary people sell their homes to the super wealthy so they can turn it into flats and make even more money is the best way forward?

When house prices fall, who do you think will be buying up those properties? Who do you think will be better able to compete at every price point? In the end, it is those who have money who will out compete those with less.

Well, I don't care because I only paid £60k for mine so it's got a bit to fall and it would mean DS could buy a house cheaper but I guess if you recently maxed out on a 95% mortgage on an expensive house you wouldn't be very happy

Only 0.48% of homes in the UK are worth £2M+.

Yes, and a lot of them are owned by people in the category I described.

Exactly. It will be the equivalent of fiscal drag and you can bet that in the future, that threshold will creep lower and lower.

who will actually buy £2 million-plus homes

It’s £200 a month extra. If you’re looking at a £3m home I’d assume that isn’t a massive issue that you’d choose to go for something worth £1.9m.

Maybe homes that would currently be listed at £2m might have to accept slightly less, but I just don’t believe that most people purchasing these homes today cannot afford this.

A lot of them look like something you would pay about £400k for where I live.

As long as you are alright? It's okay for you to be alright but not for others? It's okay for you to have enjoyed inflationary increase but you begrudge those who happened to have benefited just a bit more than you?

Your DS won't be able to buy a cheaper home because he will be out competed. The demand for lower value homes will be even higher than it is today. So getting on the ladder is even tougher now than it was before as there will be more gazumping going on.

On one hand people say it is unearned wealth because inflation has driven up the value of homes. On the other hand, they say that those people in these homes can afford to pay extra.

If you hold the former, then surely you must understand that many people in these homes could not themselves afford to buy their homes. I know many, many people who live in homes worth over a million who simply could not afford to buy their own homes. Not just those who are retired but ordinary folk. And this is not just for million pound homes. There are some people in homes valued at less than a million, who, because of inflation could not afford to purchase their own homes.

Your OP was about the effect of this policy on “ordinary people”, unintended consequences etc. which is an interesting discussion.

If you actually mainly want to rehash the same arguments about the people live in those homes now, you should have just done that.

People who can't afford the prices at the moment, that's who.

Think of any product. Price is £50. Does it matter if that £50 is paid by somebody with £50 until payday or by somebody with £50,000? It doesn't.

I thought you were going to say the tax would go up and fiscal drag would eventually catch normal homes. I’d agree with that.

I think a property value tax is a good idea. It’s the only type of wealth tax that works.

I just wish they had been bold enough to do proper reform, scrap SDLT, update the council thresholds, make property tax more sensible and efficient.

This is just tinkering. It raises almost no money (half a billion) and adds one more complexity. Just to give Labour backbenchers a headline to smile about on the day.

Where would you position the tax so that ordinary people aren't affected?
5 million? 10 million?

I don't live in London so 2 million is a helluva lot to me. I think most of those who own 2 million pound homes and can't afford the 2.5K annual charge have had stories in the papers at this stage.

Do I really think the only impact will be at the £2m mark?

No, I don’t, that’s why I wrote “Yes, there will be impacts on the housing market. The most obvious being…”

I don’t get why people post like they want a discussion then don’t bother properly reading the posts they’re responding to.

If I had £2m+ to drop on a house and I liked it I wouldn't give a fuck about what I was paying stamp duty wise.

Taxing wealth (assets) has always been a bit of a taboo in the UK. The good thing is that this very minor breach of that finally opens up the idea of wealth being taxed. With luck, this can now be expanded over future budgets.

Expanded to whom exactly though?

normal working people who live in SE where house prices have inflated

It will be interesting to see the fall-out (if any) from this. Two things the data bears out:

• more people than not change their behaviour to avoid any tax they see as unjust or too high - it costs us handsomely
• the treasury is terrible at adjusting cliff edges in line with inflation, it's almost like they do it on purpose to raise its coffers by stealth 😉

“People will be put off from buying homes at £2m to avoid the tax.”

if you can buy a £2m house, you can pay £2500 a year. Listen to yourself.

This is a tempest in a teapot. I would much rather pay a proper tax - call it CT, property tax, or whatever you like - and increase the chances that essential services such as ambulance, police and fire brigade will be available as needed. We desperately need to invest in so much (whilst yes, the benefits bill is a problem which is not to deny that many people are in genuine need)

Downwards pressure on housing prices from this tax will be incurred slowly, so people can adjust. UK house prices are very high relative to incomes, compared to other Western countries, and economists generally think that slowing house price rises will be a good thing.

I just can’t see how it will make any money? The government itself predicts it will bring in £400m by 2031. Not sure how they factored in the costing of all these houses and administering this, but assuming that is true…
If you buy a £2.5m house, you pay approx £220k in stamp duty. Not an insignificant amount, I think most people would agree. There are approx 145,000 houses in the UK worth £2m +. It would only take 1900 of those home owners to decide actually, we won’t move, or be unable to sell and this policy nets the government zero?
I don’t know, perhaps my maths is just shit!

Really!?
You'll be happy when the Chancellor starts taxing all your assets on an annual basis - your car, your jewellery, your expensive hobby gear, your i-phone, etc, etc.

My fear is that this the thin end of the wedge and it will evolve into an annual property tax like they have in the States. I think in California it is 1% a year.