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

Much like much of the UK.

@nearlylovemyusernamereally? Perhaps the below will help.

https://www.gov.uk/government/publications/housing-affordability-and-productivity/housing-affordability-and-productivity-accessible-version

https://almaeconomics.com/research-post-homelessness%20/housing-affordability-and-productivity-homes-england/

https://www.london.gov.uk/programmes-strategies/business-and-economy/business-and-economy-publications/housing-affordability-and-economic-productivity

I think what mean is that high housing costs strangle the economy, particularly for younger people. An increasing share of income goes on housing instead of being spent in the wider economy or on investment or entrepreneurship etc .

Yes, agree completely. I'm not sure about productivity though.

And yes, we do need root and branch tax and welfare reform, but it has to encourage growth, investment and productivity and discourage hoarding and idleness, means it has to reduce tax in many areas and reduce spend in some areas as well. I'm not positive about Labour doing it though

High housing costs deter skilled workers from moving to an area. It also prices out essential workers eg nurses, teachers, etc. Higher costs take up more disposable income that could be spent on other areas. A concentration of jobs in one area with high housing leads to longer commutes as workers are pushed out. It’s also exacerbated by the fact we have so much concentration in one part of the country.

@nearlylovemyusername read the links to understand the relationship perhaps…

It may be doing something for you, but it isn't doing anything for the greater economy. No one can buy kitchens, cars, raise kids or have holidays when all their income is being pumped into ever increasing mortgage costs.

High prices have also forced many people to bet the farm on a single asset to fund their retirement - house price increases. This isn't good for two reasons. Firstly if prices tank then all your money is locked in one asset (through no choice of your own) and it becomes more difficult to time the market as houses are generally illiquid and people have considerable inertia to movement, whereas if all that money hadn't been spent on mortgages it could be invested in diversified assets instead.

Secondly it harms the ability of the people who pay the pensions and provide the care (younger cohort) to live, raise kids, and provide their labour for care at low cost. If house prices go up all the time, care costs have to go up to enable carers to live unless they are expected to live in tents.

Many of the older people who have held houses for a long time have seen significant house price inflation and have significant pension benefits, so I don't think it is harsh to negate a portion of that to bring prices back down to make them more affordable in order to make housing costs in general more equitable.

The cycle of HPI needs to be broken and the market rebalanced for the general good of everyone. If the cycle is broken some people, probably older cohorts, will suffer more significant asset loss/taxation. But in general they have the broadest shoulders on which to bear it.

Just for the hard of thinking, "older cohorts" and "in general" means people who have benefited significantly from HPI and have large assets/pensions. It doesn't mean older cohorts surviving at subsistence level on state pensions in rented/basic level accommodation.

Re this : " That isn't creating wealth and stability it's bringing tomorrow's money forward to pay for today's spending."

That wealth never existed in the first place. See the South Sea Bubble and Tulip mania. There's a difference between money and wealth. We don't all get more wealthy sitting around while house prices increase, even if we might think we do.

Not forgetting of course the extra money that would come in from developers that hoard land
That land would be assessed and taxed based on the land value

For some areas like mine ( SEast with lots of land being held and left idle, including by Prince Williams new massive housing development ) the extra money from this land tax would mean they either build on it immediately or farm it.
Leaving it idle whilst waiting for a better market will not be so desirable

Whilst we don’t know the details obviously
it’s likely
that inherited property left empty could face a 0.98% tax. ( I’m guessing after a reasonable amount of time ).
That's double the tax so people will be quicker to sell on and less property left empty.

Many of the older people who have held houses for a long time have seen significant house price inflation and have significant pension benefits, so I don't think it is harsh to negate a portion of that to bring prices back down to make them more affordable in order to make housing costs in general more equitable.

The cycle of HPI needs to be broken and the market rebalanced for the general good of everyone. If the cycle is broken some people, probably older cohorts, will suffer more significant asset loss/taxation. But in general they have the broadest shoulders on which to bear it.

How realistic is this though with an ageing population? We already have more over 65s than under 25s, every party will kowtow to that large voting share.

We don't all get more wealthy sitting around while house prices increase, even if we might think we do.

A lot struggle with this concept though & I think it’s a big part of why wage stagnation hasn’t had the attention it should have.

Well the answer to "how realistic" it is is clearly not very. Otherwise we wouldn't be in the state we are in.

I doubt whether any government would get elected on a ticket of taking house prices down, and taking them down could cost them an election.

That's why we will probably get what we've always got from these sort of situations. Politicians knowing things are very wrong, but kicking the can down the road in order to avoid taking tough decisions that they know the majority won't like and hoping the bust happens on someone else's watch.

The end point of this is normally them running out of road, a massive asset bubble being blown and a massive bust happening as a result. The longer they avoid tackling the issue the worse it gets.

Is Burham the person to actually proactively tackle the problem ? I don't know - I can hope. He seems to be making some of the right noises, re stuff like council housing and this tax for example.

I feel the end of the road is approaching and the window to change our trajectory is getting smaller. I think the changes needed are so big & the benefits so far in the future that we need cross party consensus.

I've heard there is going to be a Speech Tax, anyone who talks "proper" and encuciates all their constanants will face a small surcharge when making conversation out in public .

I’m moving now and SD is 30K so it’s really unfair if this comes in or perhaps it should be offset

Excellent points

Burnham has already said it won’t be offset
Apparently you should be happy that with forthcoming moves you won’t have to pay it

it will be a bit late unfortunately.

I haven’t moved for years’

hate the LP and they don’t represent working people

I can’t see how someone can pay stamp duty & then the next year pay a new tax, that’s very unfair. Means I won’t move until they have made a decision on what to do.

Might take years!

I am not as pessimistic as that. Governments do play around with the housing market and attempt to influence house prices, it's just all recent interventions, like HTB and talking about relaxing mortgage constraints are directed at increasing prices rather than lowering them. Its possible to come up with more stealth/oblique policy that achieves the objective without turning the electorate against them.

There are a couple more players. One is the industry itself. At some point the smart ones will figure out that lower prices with increased turnover is better than no turnover at all. Them being EAs it might take a bit of time for the penny to drop but I think they are finally getting there. To be fair it does take a bit of time to adjust after mostly 30 years of boom and property (at least in the South) being a 1 way bet.

The other is the financial markets. Who have a habit of turning up when the government can't and provide a convenient get out/scape goat. I'm pretty sure the government would like interest rates lower at the moment (and thus house prices higher). They don't get to set the interest rate/cost of money though. Even though a lot of people might think they do.

Something will have to be done.

We have such an acute wealth distribution crisis. Wages have not kept pace with inflation and property prices have boomed. The family home my parents bought when were children is now worth 349% (yes that is correct) more than when they bought it in 1980. That is taking into account the monetary value of the price they paid in 1980 and turning it into the monetary value today. My mother still lives in a few rooms of it and refuses to move - which is of course her right to do so. She isn't responsible for the property price increases but she is part of the problem of supply.

In the meantime, there are very few people in their mid-30s these days who can afford such a property. The equivalent wage that my father earned in 1980 definitely has not increased by 349%.

For most people a huge percentage of their income is spent on rent or mortgages, meaning less money going on other things. Property ownership peaked in 2003, meaning that increasing numbers of people are having to rent, which means that more property is owned by fewer people.

I do see LVT as being part of the solution. It certainly won't be solved by dipshit advice that some well-known people have proposed that young people should drink less takeout coffee!

Housing costs have been a long time issue. Thirty years ago DD was working, as a nurse in London. She had trained there some years earlier. Shared, rented accommodation was all she could afford. Moved back north, bought a flat, the difference in salary was far less than the cost of housing.

@Seymour5Im not sure what that has to do with my post? And there were plenty of affordable areas in London in the 90s where normal families grew up.

I was agreeing with you about high housing costs deterring workers. The same sized flat in London was at least 1.5 times the cost of one further North back then. Not nearly as big a difference as now, but still significantly more than she could afford as a single woman on a staff nurse’s wage.

Should housing (rents, prices) be roughly the same everywhere? Is that the aim?

Why would you say that?

67 results for Croydon, 71 results for Bromley, 130 for Havering, 31 in Barking and Dagenham

All 3 bed semis. Probably be even more if I changed the search results to include terraces as well

I wont bore myself by going round all the rest of the boroughs.

I dont know why people make these claims all the time.

It is not necessary to spend a million on a house in London

He seems to be keen on targeting many things in the south to help the north.
Including setting up a northern parliament .