Housing isn't a source of unearned wealth

[Itchthescratch]

If you bought in the last 20 years.

Houses are now worth the same as they were worth 20 years ago in real terms. We need to get over the idea that every homeowner is sat on a money making asset and therefore is in a preferential position to pay loads of tax on all this non existent unearned wealth. Too many people don't understand how inflation works. £1 in 2006 is worth £1.65 today. House prices need to go up 65% just to be worth the same in real terms.

Nominal prices have risen by nearly 50%, so not far off!

Houses that may have cost less than £30,000 in London in the 1980s would have been around £100,000 if they had kept pace with inflation but are changing hands at £600,000-£750,000 - so greatly exceeded inflation

My parents house was 40k in the 80s, worth 1.6m ish today.

No one pays CGT on their main residence so a non issue.
The money has not be earned by beneficiaries of estates. Nor have they paid tax on the income used to buy the house. Therefore an inheritance is unearned income.
IHT redistributes to some extent the good fortune of having comparatively wealthy parents/ family. Which is pure luck.

We bought our home in 2000, which was when property prices had skyrocketed and nearly 26 years later (if the neighbours sales are anything to go by) it's not appreciated that much. Disappointing, but ok, only if we want to move.

Bought 14 years ago.
House has doubled in value

I agree OP.
We are behest to a huge mortgage, which of course costs more than the house did, and yet so many people get all smug about how much their house has 'risen' in value.

It does suck to be younger

More expensive housing
Wage stagnation
Less generous pensions.

A dd bought an ex council house about 11 years ago. She paid almost exactly 1% of what the former owners had paid in 1971 (incidentally well before Thatcher and Right to Buy).

We also haven’t seen higher interest rates with such disparity between house prices vs salaries. The landscape is entirely different now & still has to play out but the days of huge equity gains in a few years are over for the majority

Its a tax. We need more tax to fund better services etc. The country is currently bringing in less tax than it pays out in benefits etc.

There is another answer to this quandary.

A palatable one?

Eh? As in the house was sold in 1971 for say £30,000 and she bought it for 1% of that 45 years later for £300?

But what investment did they make into the property? When a kitchen can cost £15-20k and a bathroom £10k, carpets £2-3k, any building work done in that time? Suddenly £87.5kprofit becomes £45-50k profit over 20 years

Property definitely hasn't been as good an asset in the last 10-20 years as it was previously. Yes, in some places it has worked well, but it isn't the booming business it used to be, partly due to taxation (which is much more than CGT for second home owners, higher stamp duty, council tax, income tax on any rent). And thresholds have been reduced in the last few years making higher proportions taxable, with rates also increasing. There is a legacy belief that you can make a lot of money from property. There is definitely potential, but it isn't as lucrative as the 80's-00's. But honestly, instead of complaining about it, diversify your investment. The stock markets have performed comparatively much better, and you can make larger portions tax free by using ISA's.

However, as a multiple home owner (which you would be for CGT to be a concern), you are significantly more wealthy than the majority of the country, with a large portion of younger generations struggling to buy just one, and who are frustrated that they can't afford to buy with earnings much lower proportionally to property values. Better tax planning as the changes were introduced over the last few years could have helped reduce any future tax bills you are now potentially liable for. You have clearly chosen not to sell a second/third etc property, but are complaining about the way it is now taxed?

Yes they have : CGT is only payable when the asset is actually sold and they have actual cash money in their posession which is £100,000 more than they would have if they had left the original £400,000 under a mattress for 5 years and that additional cash money is worth exactly the same as the £100,000 earned by the owning wage-earner

I made 200k on my flat in 2 years, all I did was paint it once.

Or parents who have sacrificed and worked hard to leave something to better their children.
There is a huge difference to being a billionaire leaving a countries GDP to some spoilt influencer wannabe and someone with a family run business, where sacrifices have been made.

Aren’t you the lucky one! Did you pay any tax on that unearned wealth increase 😜

Well some of it went on stamp duty for the next move.

But doesn't that £87k allow them to buy a larger house which frees up an affordable house for you!

Which is where most of it ends up. Still you were lucky to get £200k to go towards for just painting.

I also agree. There needs to be more distinction made between those investing in property for gains and those buying a family home. We had to pay a lot of stamp duty when we bought our home together because although I was a first time buyer my partner was not, and he sold his flat to move into the new house with me. They shouldn't charge people starting out in life ridiculous taxes just for wanting a family home.

Strictly speaking there isn't. The billionaire's beneficiaries will just pay more tax.
(Except they don't pay all of it because they can afford to pay tax advisors to reduce it, but that is not what we are discussing here).
There is an allowance. Which is £500k if leaving a house to DC or GDC, and surviving spouses can use their partners allowance as well. So in house terms for a married couple leaving their main residence to DC or GDC there is a £1m allowance. 40% paid on the value over that.
if you are leaving a house worth £1m plus that isnt a typical 'hardworking family making sacrifices' IMO.
And it does not change the fact that beneficiaries didnt earn that money. The parents made choices.

Not sure where the OP is getting her data from. I live in an average 3 bed detached that has always been valued around that of the average national price for Uk. In 2006 it was around £170000 it’s now valued around £301000 so about 45% increase. We actually bought it in 1995 for £73000. This was at the bottom of the market and I had lost £10000 on my previous house so net cost was more like £83000. Overall growth has been fairly steady with the value doubling every 10yrs. There was a bigger increase in the first 10yrs but since the market had suffered a big collapse in the early 90d and was pretty stagnant for a number of years it evened out the gain.

Property buying is always a long term investment unless you buy and sell rapidly within a period of rapid growth. If you are just buying for residential reasons then it’s definitely a long game.

Average annual inflation has run at 3.20% over the last 20 yrs but there has been a couple of spike years associated with the pandemic and currently the fuel crisis. Great if you have savings but not so good for cost of living. So most years inflation has been closer to 2%. The spikes in inflation have led to interest rates increasing which impact the housing market. Some may say that stagnation of the current market is needed to allow wages to catch up. Ok if you don’t need to move, but a problem for those that want to move up the property ladder.

All depends on where you live though. £500k to 1mill in the south east is far less property than £500k - 1mill in other areas of the country