Anyone else in the South East worried about Andy Burnham bringing in a land tax?

[Beachbooks]

With it looking likely that Andy Burnhan will be the next PM, I was interested to see if anyone else in London / the south east were worried about potential tax raises specifically around the land tax rather than stamp duty ?

A lot of my friends who live locally are worrying that he will make the land tax for the South East so high in proportion to other areas of the UK that it will be financially very difficult to afford but then also extremely difficult to sell!!

BTW we have very standard house and garden but we live in an expensive area

Agree it’s confusing
but I used a calculator for land value in my Kent area which is based on 33% of property value.
Then I used Burnhams calculator method and my revised council tax came in at
£980. That’s Very nice because it’s currently £4100

So that method doesn’t work imo or I’m a happy Trout

Here’s a London Example
Of note land value obviously in London is higher than most regions
For central London it’s 60/70% of the property market value
This % decreases as you get further out but some zone 2 and 3s are 50% ( some as low as 30% )

Looking at N19 ( an area I used to live in )
land value is 15 - 30% for the area
3 bed terrace value = £820,000

Current council tax £2108

Using 0.48% of total market value
new tax = £3936

Using LV only @ 30% of £820,000
LV = £246,000
Calc as below
£246,000 x 0.0048=£1,180.80

that’s a reduction of nearly £1000

Using Land value seems to result in a reduction for just about every scenario I have looked at when using the calc type below
Using total market value of property results in the same of higher

calc from Burnhams proposals from The Independent

The Tax Rate: Homeowners would pay a flat levy—typically proposed at around 0.48% or 0.5%—assessed against the capital value of their land. about:blank 1, 2, 3]
The Calculation: Annual LVT = Assessed Land Value × 0.0048 about:blank 1, 2, 3]
Valuation Process: Government authorities, such as the Valuation Office Agency, would regularly assess the underlying economic value of each plot, rather than assessing the property as a whole.

Let’s not forget wims
if you are planning any extensions or
anything that requires planning or building regs and might increase the size and / or value of your property

That will be accounted for in the new valuation process of Burnhams

(assuming LV is used in any format

so if you’re not desperate
Don’t do it yet

just a thought

@BrownTroutBluesAgain

Thank you for sharing this.

I think it's very complex to implement - land value cannot be properly approximated based on property values, especially for properties bought long time ago. 0.48% on property value, especially for recently bought homes, will be a huge hike up and hugely unpopular. They'd need to do land valuation first to implement this properly and I don't see this happening in this parliament.

a very good point. Will be interesting to see what this info is going to do to housing market.

Agree
usually when you do improvements your council tax stays the same and only changes when you sell for the new buyers

But a revaluation will kick in all the improvements and having researched
councils have records of all those and if there’s any doubt they use satellite images

Agree
Unless they’ve got a magic trick up their sleeve
or have already been secretly doing the homework I just can’t see it happening in this Govn

A home is only worth what someone is prepared to pay for it. Until it is is sold and money changes hands, the paper valuation means very little.

If you think your home has quadrupled in value, that's fine, but until someone actually pays that price, the valuation remains theoretical.

If the weight of that paper valuation is weighing you down, nobody is stopping you from making a voluntary contribution to Labour.

It will start low and then creep up. They have huge liabilities, big spending plans and virtually no growth.

The social care bill is only going in one direction. Then there are all those homes that need to be built, the NHS to fund, as well as state and unfunded pension schemes to honour.

Well, not a beer-swilling metals trader, obviously.

A land value tax incentivises efficient use of scarce land in the most valuable areas. Take a town house - the sort of London base that every aristocratic family had. Currently one of those would be Band H and paying £2k. Yet if you were living in a tiny Band A studio flat, you'd still be paying around £700, despite having less than a fifth of the living space of your far wealthier neighbours.

Tax the land value on the other hand and the townhouse which is still a complete unit would pay the same amount as the identical former townhouse next door which has been divided up into five individual flats. So the struggling young professional in their attic studio is only paying a fifth of the council tax paid by the mansion, not a third. So this actually benefits the bottom rung of Londoners.

If it encourages freeholders to divide buildings into flats then it improves the housing supply in London and might therefore help deflate prices back down to sensible levels, therefore reducing land values and allowing you to pay less. Likewise if it incentivises people and employers to relocate to Manchester or Newcastle, it'll help rebalance the country.

Everyone can win from levelling up. The north gets better employment prospects and the south east gets lower house prices.

There is nowhere inside the M25 where a 3 bed semi is less than £500K.

I said “parts of the South”. The South isn’t just within the M25, it’s a big old place!

PS. Just checked Rightmove. There are 547 3-bed houses for sale within the M25 for £500K or less.

Well there’s this and ten others in Uxbridge.

https://www.rightmove.co.uk/properties/173419613

The house is in Hillingdon off Long Lane

hmm I’m not buying it

If it encourages freeholders to divide buildings into flats then it improves the housing supply in London and might therefore help deflate prices back down to sensible levels, therefore reducing land values and allowing you to pay less.

So the answer is more commoditisation of housing? More subdivided properties and smaller flats because that's where the financial incentives lie. Lower headline prices, with likely higher costs per square metre. That's very different from building more good-quality homes appropriate for each groups needs.

Likewise if it incentivises people and employers to relocate to Manchester or Newcastle, it'll help rebalance the country.

Businesses and employees relocating to the region could help rebalance the economy, but only if housing and infrastructure expand alongside them. Otherwise, you are simply importing London's affordability problems into Manchester, Newcastle and other regional cities, rather than solving them.

And that's before we even get to the public-private partnership challenges that successive governments have yet to solve..

Labour's skill is racing to the bottom not levelling up.

@Neurodiversitydoctor did a search of 3 bed semi-detached properties for under £500k within a 15 mile radius of Westminster, which keeps you within the M25 orbital and 954 results came back - all currently for sale.

If there are so many "affordable" homes in that price bracket and inside the M25, why did Angela Rayner buy an £800,000 three-bedroom home miles from both Westminster and her constituency? Surely there were plenty of more affordable properties with better transport links to Westminster.

It takes an hour to travel to Westminster from Uxbridge. It’s exactly the same from Hove. I suspect affordability wasn’t an issue.

Which is inside the M25, no?

I wouldn’t call a £460k house that needs a refurb affordable. And once you have refurbished it, you will have spent more than £500!

I live in the south east and the calculator suggests we’ll save £350 a year compared to our current council tax.

Yes there is, and also plenty of others in the south east outside of M25 too.

So it sounds as if the Valuation office agency (4000 staff) would be doing all the revaluing and they'll use a zoopla type algorithm to assess if any renovations or house improvements will need to result in paying more tax.

Will there be some sort of punishment if you fail to disclose making your home more valuable?

Yes of course but a different area other side of A40