To be depressed about how much it costs to move house now

[Pavementworrier]

Purchase tax alone where I live is about £30k on a very ordinary bungalow. Then there are all the random compulsory extra costs (an energy report which always concludes that you'd get a better rating if you used energy saving lightbulbs... Even though you already do because aren't they the only ones available now?)

I want to move house and I've found a lovely place but scared to do it because if it turns out not to be manageable I can't just move again I'll be stuck for years.

Stupid modern world.

Possibly. I don’t live in London. Where I live the more expensive houses have languished for years. You’d think the asking prices would come down, but they don’t. Some people give up. I suppose a private house might eventually come on the market and have to reflect local affordability.

*probate

I sold a flat in London in October and split the tiny profit with my exH as part of our financial settlement. I moved to a rental in the East Midlands, because I can't afford a mortgage now. I moved to a cheaper part of the country with the hope I might top up my savings and eventually have enough to buy a small terrace or bungalow.

Selling the property had so many fees in itself. Land Registry, tax, solicitor fees, and of course I was tied into a leasehold with a housing trust so there were costs associated with that. Then there were the fees for the moving van, and costs relating to the rental like the deposit etc.

I had to lean on family for help when my savings ran dry.

My tenancy agreement is only 12 months long so there's every chance that the landlord might sell next autumn, or decide to rent to someone else, so I might have to move again. It was so hugely stressful last time, that I hope I can stay a bit longer!

I know it sucks having high house prices... But someone is affording them locally to you or people would have to lower them.

If we want to lower house prices / make housing more affordable we either have to increase supply (but house builders wouldn't do this to the point it lowers house prices as that's not in their interest) or we have to reduce affordability (reducing these extra long mortgages, restricting investment properties, increased stamp duty on particular house buying populations).

Unfortunately anything to reduce affordability is incredibly unpopular, as in this exact example, people see it as the thing getting in their way of owning what they want, not having a damping effect on the market bringing down prices overall.

I don’t like stamp duty as it’s just not logical. Tax should be vaguely logical. Why is there a tax to buy somewhere to live? Just because they can I suppose.
I paid about £14k in SD to buy my tiny 3 bed terrace in outer London where I sleep in the living room so DC can have a bedroom each. I want to downsize when they leave home (soon) but have done the maths and the costs of moving have made me conclude I’ll be no better off buying a 2 bed so I’ll just stay here when I retire.

Believe me - they went selling. Sellers think they can still get 2021 prices. No one is buying at the top end.

I do agree. The 90s house price boom was preceded by a relaxation in borrowing / mortgage regulations, allowing banks to lend more.

Denmark ensure house prices reflect local affordability by restricting the sale of domestic housing so that foreign nationals not resident there can’t buy holiday / investment properties and out price locals.

Such a lot wrong with our housing market
it will take decades to sort out
I think it will be taxed and taxed a bit more , there will soon be a trickle down of wealth as grandparents and parents in large houses leave it to off spring and younger relatives
SDLT will only increase on higher value properties

I think you are missing the point here - which is that the high cost of the transaction creates an incentive to not move / limit moves.

And - that has wider economic consequences too. People moving spend money on renovations, new kitchens, painting, lawyers, surveyors etc. If they don’t move - that potential activity is lost.

Another impact is that people might decide to extend vs losing money on stamp duty. This reduces the number of smaller / affordable homes available.

As for ‘do you not want to support the NHS’ - let us not forget to have £100k to spend on stamp duty… you have probably earned £200k and spent half of that on income tax and NI already…!

It’s not about sympathy - it’s about economics.

I agree. Due to the costs we decided to future proof our move to (hopefully) make it our last.

Everyone thinks we were mad to skip the large 'forever home' in favour of a bungalow. But with the costs alone exceeding £50k, we did'nt want to do it twice.

I think it will be taxed and taxed a bit more

it’s inevitable, they can’t tax PAYE any more & our economy hasn’t grown for years.

My point is though that reducing stamp duty doesn't make it 'easier to move' unless your downsizing... As there's a fixed amount people have to pay towards their house and how much of that pie is tax is irrelevant.

If stamp duty was 50% but all houses only cost £20K you'd see lots of movement. People don't move because the cost of purchasing the next step in the ladder is significantly more than their current step. Lowering stamp duty will raise prices, so the next step will remain as unaffordable.

Interestingly people who don't want to pay tax often find a way to justify to themselves how it's better for everyone when they don't

Then house prices aren't that high in your area (at the top), what you have is a bunch of people with houses they think are worth more than they are.

House prices are set by what people will pay for a house.

Lots of countries do better at restricting houses to bring down house prices - if we had it here there would be a Mumsnet post bashing about stopping people from being able to grow their own wealth.

But your logic only works if people are moving anyway. When they have a choice of whether to move they will factor in stamp duty as an unrecoverable cost of each move.

Not really, people always have a choice on whether to move or not. If they can afford a substantially nicer house they'll want to move for it, irrelevant of which chunk is tax or not. Everyone else is in the same housing market having to pay the same tax (except second home owner, etc.), if it was built into the price I think we'd hear about it less. But essentially it is, people's affordability includes the tax, bring the tax down and their house prices go up in their current and next home. I mention that downsizers are impacted, however because of the price of housing if they're downsizing they'll still probably do well, potentially it may put a few off. But to be honest, they're unlikely to be that many that would truly want to downsize but be put off by a small chunk going to tax.

The only people who may make the choice not to is someone moving for a like-for-like house, but say a different location. Then they'd not be feeling any benefits of moving and having to absorb the costs.

Incorrect - when you pay stamp duty, you lose money, which creates an incentive to not do it. You are thinking about the overall cost of housing to the market - I am talking about the cost to the individual.

If I buy a £1.5m house and spend £100k on stamp duty, I end up with £1.5m of assets.

If I move again, I still have my £1.5m of assets but would need another £100k on top to buy that house again… so I can only now afford to spend £1.4m on the next house or acquire another £100k to pay the tax on an equivalent house.

I’m losing money with each transaction. So the incentive is to move less.

I’d make smaller ‘steps’ on the housing ladder if each transaction didn’t attract a huge tax bill. As it is, it does, so if I move again, that will be it! It’s a widely acknowledged issue and criticism of stamp duty - it reduces liquidity and particularly once you get to the 10-12% rates.

I agree. That is definitely the case. And estate agents don’t help by giving them unrealistic estimates.

I still think there is a trickle-down effect whereby people are currently deciding to remain in smaller houses and spend their money on other things like foreign holidays because the stamp duty, possible mansion tax etc make them cautious about investing more in housing. This creates scarcity lower down and keeps more modest houses expensive.

People are more comfortable with reduced stamp duty vs higher house price because they assume they will at least sell the house for what they paid.

I don’t think people understand that your overall assets reduce in value every time you move because of the tax paid.

And that even if you can afford a £1.5m house, losing £100k in cash to the tax man is brutal once - let alone multiple times.

@Namechange234567 ”Not really, people always have a choice on whether to move or not. If they can afford a substantially nicer house they'll want to move for it, irrelevant of which chunk is tax or not.” - well no, that’s the point, they won’t (and the data shows they aren’t). Paying £100k in tax to move once is appalling - having to pay it twice is impossible, you’re losing very significant amounts of capital if you move.

I hope everyone who complains about inequality will appreciate that everyone benefits from the huge amount of stamp duty charged for expensive houses.

well its like VAT isn’t it? You pay it in everything you buy and each time you shop you pay more

but in many cases home values rise much more quickly
so the impact of tax can be less than the price rise in a couple of years

if we want the benefits we need to pay the taxes

House prices aren’t rising at that level that quickly though are they - and, you need the cash up front to pay it, not on a hypothetical future value you may achieve if and when you sell it.

You are still missing the point about incentives - the cost of stamp duty is so high it’s impacting transaction volume. People aren’t selling because of it, they stay put. That isn’t of benefit to the exchequer because it’s actually reducing the amount they could claim.

Stamp duty has not always been this high - the current rates were introduced by the last government, and being frozen become more punitive every year as house prices increase but the thresholds don’t.

Have you moved to Ringmer?

No one not thinking of moving would go for it. If you had just bought your forever home and had paid stamp duty and were then told stamp duty is being scrapped so you have to keep paying x thousand a year because of all the poor buyers who don't want to pay stamp duty, would you vote for it?

Yes stamp duty is too expensive and the government should have left it as it was last March

Interested to know what effect on house prices you would predict by restricting or penalising second house ownership. Not sure what methods there could be but what would be the consequences do you think?