To think an annual property tax is incredibly unfair?

[Itchthescratch]

I come from an area with low house prices. It is great! My friends can generally afford houses even with lower salaries as the earnings:house prices ratio is better. Rents are also lower so they have proportionately more disposable income.

I have moved to a more expensive area where house prices are higher and people have really had to push themselves to buy a property. Salaries are higher but not high enough to make up the difference. They have had to pay more stamp duty , pay more interest and have less disposable income each month.

I am really struggling to understand why my friends in the South should also automatically be paying more property tax under the new proposals being suggested by Burnham supporters? What is the justification? They would love to buy a large detached house for £300k like my friends from home but this isn't possible. It feels like they are being double penalised.

Just to add house prices haven't risen in real terms in the area in live in now for 20 years so the value of my friend's houses is simply money they have paid in.

I don’t think any asset tax is fair, because it fundamentally changes the relationship between government and private property. The implication of an asset tax is: you don’t really own anything. It’s sinister as Hell.

I agree.

Isnt that the conspiracy theories you will own nothing...certainly seems thats where we are heading.

I don’t think any income tax is fair because it fundamentally changes the relationship between government, employers and employees. The implication of an income tax is that you don’t really earn anything. It’s sinister as hell.

Look this tax would be dire for me. It would cost me an absolute fortune, but I’d pay it cause I work in tax policy and it is SO MUCH fairer than our current property tax system. Anything but the diabolical stamp duty. We’ve got to start changing taxes to make them fairer and boost growth. This is an excellent place to start and I will applaud Burnham if he has the balls to go through with it.

There’s tax on so much already. It really is Labour’s every meeting is what can we tax.

If this is fairer in your opinion, what do you propose for people who recently purchased and have just paid stamp tax? Any taper for them? Or are they just collateral damage?

Fairness and consistency...
When taxed:
Salary: When you receive it.
Interest : taxed when it is paid.
Dividends: When paid
Capital gains: When realised / sold
Rental income: taxed when received
A potential property tax on your home: Every year on a theoretical unrealised market value.

Sure, Council Tax exists in bands, but it's generally at a more manageable level. For many ordinary people, the jump could be from around £4,500 a year to approximately £9,000. Most people would struggle with that kind of increase.

The people in these home are generally not wealthy billionaires, they are more often, ordinary families, singles people, couples on ordinary PAYE salaries, who have made sacrifices. Forcing people to sell their home or take on debt simply to fund wider public spending doesn't strike me as fair or proportionate.

I'm genuinely interested to hear why you think it is. Why do you think that unrealised gains is a fairer basis for taxation than taxing income and gains when they are actually realised/ received?

100%

Those who have paid stamp duty should be exempt until the amount they owe exceeds the stamp duty they paid, seeing as this tax is supposed to replace stamp duty. For example on 200k house,property tax would be about 1k per year. If they paid 10k in stamp duty (all theoretical amounts) they shouldn't be paying the property tax for the first 10 years after they buy.

I’d really appreciate it if they could freeze SDLT immediately until they decide/I’ve moved house.

9k per year would be a £1.8 million house.

With our 800k house, we would be paying similar to our council tax, about 4k. It's those in London, who have higher property prices and lower than average council tax in many areas who will lose out the most - just what the 'King of the north' wants.

You work in tax policy and yet you think it’s called ‘stamp duty’.

When I lived in America our property taxes did fall during a housing crash.

As long as renters, who do not have any financial interest in the property they occupy (particularly in the case of social housing, where any 'choice' may have been 'live here or be homeless with no further help because you turned it down) don't have to pay anything, that sounds pretty fair - compared to paying band G council tax because a disabled accessible newer build SH is valued higher than a 5 bed Victorian villa because the valuation of the latter was made over two decades earlier in the middle of a slump in property values.

I wonder if England would do the same, and how they would administer it?

Which tax policy are you referring to, that costs more than it saves? If you are talking about the hypothetical LVT, remember that a lot of land, such as undeveloped land owned by builders, will be taxed for the first time.

Also it is possible that the tax on second homes will be at a higher rate.

It doesn’t seem to be difficult as many countries with LVT manage to assess properties every couple of years.

Well of course those who rent privately would probably find LVT absorbed into their rent. It is a landlord expense.

Why not? They pay CT.

Not everyone pays CT (or the full rate anyway).
How will this proposal affect people that are currently receiving Council Tax Support? Some of which are homeowners, so not renting.

Your ISA allowance is nowhere near what a leveraged house purchase is worth...

Those two things aren't mutually exclusive. Someone living in a £5 million home can pay more than someone in a three-bedroom semi in Blackpool, while it still being reasonable to question whether an annual tax based on the paper value of the home someone lives in is the right way to do it.

It's all very well talking about £5 million homes. My brother lives on his own in a terraced home worth around £450,000 - SE, but not London. Under this proposal, he would pay more. The house needed a full refurbishment when he bought it, and he's only just finished renovating it. It's supposed to be his final home. Financially, he's only about breaking even. millions of people like my brother up and down the country. They aren't sitting on vast fortunes; they're simply living in the homes they've worked hard to buy and improve.

So I call bullshit on the £5 million example. There are significantly more £450,000 homes than £5 million ones. If we're debating the impact of a tax, we should be talking about the people who are actually most likely to be affected, not outliers.

You’re pro the US system is that right?

Doesn’t it mean some areas flourish due to higher property taxes

In the U.S., schools are highly dependent on local property taxes . Wealthier neighbourhoods with high-value properties can generate massive school budgets, while lower-income areas often struggle with underfunded schools despite having higher tax rates.

I really hope it goes through. We pay a fortune in council tax as we are just on the cusp of a bracket and fall in to the higher one. I've questioned it but didn't get anywhere.
I've already worked out we'd save a £110 every month if we moved to annual property tax.

What is it called? I don't work in tax policy and am genuinely interested!

This!
based on our purchase price we’d pay around the same as our current council tax. But based on the most recent sale on the street we’d pay over £6000
And based on the actual state of our house 😬 it’d be somewhere nearer 4500 but they’d need to look inside to assess this.

haven’t rtft but also…

how will local councils survive? because the equivalent property (3 bed terrace) where I grew up would be liable for a bill of around £800 at today’s prices… so my local council will get loads more income than the poorer area of my school days … how will that help levelling up? And is that huge disparity for the homeowner really fair?

genuinely concerned about how we will get by if our bills increase any more.