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

It is how it is done in very successful cities where they need workers like Silicone Valley and Zurich and there are deductions so those with large mortgages are not penalised. It is precisely done so the workers can live there not the generational rich who are no longer working I think. And if they want to stay they just have to pay the tax or move to the burbs.
The thinking that you park all your wealth in your home and your savings is bad for growth. That is irrefutable.

.In Zurich, where vacant rentals are extremely scarce and prices are at a premium, employers manage employee retention by offering hybrid remote-work policies, subsidized corporate housing, and relocation allowances. Because residential supply has failed to keep pace with international recruitment, companies use these benefits to prevent a "talent drain".

Zurich-based companies and mobility teams use several specific strategies to support housing
Corporate Housing & Serviced Apartments: To ease the transition for international talent, employers partner with providers like Blueground or AltoVita to provide fully furnished corporate apartments in transit-friendly hubs like Oerlikon and Altstetten.

Relocation Packages: Firms offer cash allowances, direct rent subsidies, and assistance with Swiss rental deposits (which legally cap at three months' rent).
"Work Where It Works" Initiatives: Zurich's corporate sector (including Zurich Insurance Group) has adopted highly flexible, "place-to-work" programs allowing employees to work remotely for a significant portion of the week. This allows staff to live in more affordable cantons (e.g., Aargau or St. Gallen) while commuting into the city.

Internal Mobility: Zurich heavily prioritizes filling vacancies internally and offers part-time or job-share roles to help employees balance the high cost of living in the region. 1]
Beyond corporate efforts, the city relies heavily on housing co-operatives (Genossenschaften). Approximately 25% of the city’s housing is community-owned. The city of Zurich provides long-term land leases to these co-ops, enabling them to charge below-market "cost-rents". This stabilizes long-term residents and keeps the broader urban workforce housed without forcing them out due to private market inflation.

the tag is more on flexible work and part time work

@Araminta1003

It’s not just London that will be affected
It’s not just big cities either
RTT
for locations

The point is the local authority decides how to regulate property taxes to optimise the local economy. In the US and eg Switzerland property taxes vary hugely by area. So those who don’t want to pay can find somewhere to move to where you don’t have to pay much. Typically less vibrancy though and less economic activity in some of those places. I think the idea is that there is flexibility in every area. There won’t be one size fits all.

Basic economics also says you need the money (or debt) to pay the price, if people can"t pay the asking price (or don"t want to because the price is just silly) you get demand destruction. "Supply and Demand, not making any more Land" was just another banker meme to get gullible people into big mortgage debt.

London
you are the one who equated those who are earning and those who are not ….referencing age

You also noted they are not contributing enough relative to property wealth

Property wealth isn’t realised and it’s worth noting when someone dies, if applicable, their estates will pay IHT and that’s more likely to be those in more expensive properties and hence more likely to have paid more on death

No one knows though

Now if there’s a cheap admin way of working out how much tax everyone’s has paid in their lives and base IHT or some other tax on that so on death they pay back. Fine

However atm it is assumed and quite rightly if you own an expensive house you had a bigger salary and paid more tax
( with the exception of other growth markers that led to massive house price increases like eg millennium regeneration areas )

In terms of who pays most tax
and I’m aware people don’t like reminding of this but
Lets consider purchasers of a £200k and £2mill property

£200k couple A buys
Salary needs to be £25k each 4x
£25 salary each
tax / yr £2,486 ( abt £5k tot )
ni / yr £994.40

£2mill couple B buys
Salary needs to be £250k each
£250k salary each
tax / yr £98,703 (abt £199,000 tot)
ni / yr. £7,010.60

The later quite obviously paying remarkably more isn’t rocket science, I am aware.
Important to see the figures though when we remember

couple A won’t pay IHT on that original purchase
couple B will pay £400k IHT on that original purchase

To then consider taxing more for no more services
as acceptable given the extra financial contributions already to the economy on some idea ‘they don’t pay enough relative to the size of their house’ when clearly they do
Is nonsense

That’s not to say
a 4 bed in London should have a vastly lower ctax than a 4 bed in Leeds of course and it’s only right to rebalance the books after so many years
but a flat rate 0.48% is going to ruin many people’s lives and the housing market at both ends

Important also to note as houses increase in price it’s still the ones at the higher end that eventually pay vastly more IHT
The tax man gets it in the end

of note
i will get a reduction of £1k in my council tax if Burnhams scheme is introduced so I’m not speaking from a personal or selfish perspective

My comment obviously was in reference to cheaper properties

inc demand due to inflated ctax prices will push up demand and prices.

Tax will push down the price of affected properties.

The point is there are billions and billions stuck in generational property wealth and IHT threshold is very high and only a minority pay it AND main residence capital gains tax exemption is internationally anomalous.
All 3 of those factors are holding the economy back and keeping the younger generation trapped. Pretty plain to see. Not sure how exactly they will solve it as there are always cries in the press. However, if it is devolved, there cannot be backlash against central government, so quite clever really. The whole point is that too much centralisation has become divisive slow and bad for the economy and people whine too much. Local authority areas should be able to use the tax system to kick start the economy based on what may have worked internationally in other areas.
The COOP idea is good. Singapore has a lot of live work hybrid models. There are lots of ideas to explore that may work.
The entire country here is held back by ancient traditions and systems and people being reluctant to try new things. If it is does not work, it can be withdrawn again.

Yes it will
and demand will push up the price of cheaper properties

plus as a pp noted the same re expensive properties will come down in price then so will their ctax burden

Before we know it the tax man is losing out and everyone is paying 0.75% of the value
Down they go again and it’s 1%

I’d be in favour of abolishing all trusts used to avoid IHT
with the exception of those on family businesses

As @NorthXNorthWestasked below but was unanswered as seemingly too hard, how will people paying the actual money isn’t there

It’s not disposable income and many are stretched already. As for people ‘wining’ well it’s up to politicians to deliver. If they don’t they get ousted as happily people still get a vote.

Demand was falling long before he brought this tax back up though, can"t see it being a massive game changer really, rates are still heading up IMO. His speech today mentioned really vital things like having "Number 10" in the North, no mention of immigration though? LOL, they have the blinkers on with bags over their heads, they are just going to continue being useless until Reform take over.

Why would there be a mention of immigration?

That was one of the last questions KS asked before the door was shut on him I heard.

@EasternStandard - I think the idea is let’s say someone bought a house for 100k many years ago now worth 3 million in Central London who cannot pay the property tax - if their income from pensions and investments is high enough they sell those or remortgage to pay the tax. If not they move. And normally the mortgage costs are somewhat deductible from these kinds of property taxes anyway.
So two very high earners who can afford it especially without stamp duty will buy it at a slightly cheaper rate and then pay the property tax. The local authority will use the property taxes raised locally towards coops or social housing (and to get the ridiculous UC top ups down that are crippling the country too).
But to make it all work I think they do need to have even higher property taxes for non resident second homeowners as it is too easy for internationals to buy up UK property especially as the pound did go down. As far as I understand it, in Zurich, for example, you cannot own freehold if you do not have at least a long term visa of some sort to remain in the country.
Local housing for local workers is the aim here. Not London subsidising the rest of the country. London decides how it stops its own city dying too by investing in social housing. There are not enough keyworkers or children left now. Whatever they come up with will be to ensure the long term thriving of London, not the opposite.

How is this not a wealth tax based on fairness? LVT is fair precisely because it is transparent and easy to collect. It does require a changed of viewpoint. Being unused to the idea, perhaps you like some others on the thread are focused on the negatives. New taxes are seldom popular.

Those of us who have experienced the benefits and services know there can be a point when done right.

True. It didn’t work out for Starmer.

I posted these calcs above, but let me try again:

Proposed tax on 3m x 0.48% is 14.4k pa

Let's assume current council tax is 2.6k pa
Let's assume this house price dropped to 2.5m for your high earners to buy, so SDLT would be 214k.

This will take more than 15 year to collect the same amount of tax as per current system.
So in order to not lose money Andy has to ignore SDLT already paid by current home owners and apply it to everyone.

But given that houses would be evaluated on a regular basis I'd be very wary to buy a more expensive one, even as a family of higher earners, because the amounts involved are huge and unpredictable.
And with London being a scapegoat for the entire country, whilst being the only net contributing region, the tax collected will be redistributed, so Londoners will pay much higher taxes just for the sake of living in London and services not improved. I really do not see the appeal for younger families here.

My post above was for @NorthXNorthWest in response to this quote.

I had asked for something substantive in response instead of a personal attack. Each may judge whether I got it.

For the record, I do think a transparent LVT, properly phased in (as I’ve now said four times) that is easy to enforce and hard to dodge, is a pretty good ‘wealth tax based on fairness’ as @NorthXNorthWest seems to find theoretically acceptable.

The 0.48% was chosen to be revenue neutral against the combination of stamp duty and council tax.

Council tax would not be owed.

People the world over have got used to property taxes particularly when phased in properly. Lack of stamp duty (see above) which seems likely to be part of a revenue-exchange programme will also help.

I know. That's exactly what I'm saying - that it will take over 15 years of 0.48% to bring the same amount of tax as SDLT+current council tax on a house in Araminta's example. For cheaper properties it will take 20-25 years.
So the only way to make the numbers work is to impose LVT on the houses which have paid SDLT already.

@Araminta1003 The point is there are billions and billions stuck in generational property wealth and IHT threshold is very high and only a minority pay it AND main residence capital gains tax exemption is internationally anomalous.
Google IHT rates and scope - very few countries, at least in Europe, have IHT at all, many abolished it many years ago. Those which still have IHT have comparable threshold but way much lower rate. So we are an anomaly by a large margin and not in a good way. I think what should be done is to abolish IHT but apply CGT on assets. This would tackle unearned wealth, but wouldn't tax the same money twice. Or indeed apply a "levy" but at a much lower rate, 10% seems reasonable, but on all estates with no threshold.

Well you need a starting point. We must see what details professionals devise.

The policy need only be revenue neutral overall, not for each house separately.

Also, @nearlylovemyusername , remember that many more parcels of land will be taxed, that are not currently taxed - eg undeveloped land owned by builders.