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.

Who said it was based on the value of the house when it was last sold? It's based on supposed current value.

They could just add more bands to take that into account.

No, but my point is that Council tax is a local tax used to fund local services. It doesn't make sense that expensive areas automatically pay more Council tax if the cost to deliver their services isn't actually more at a local level.

It's definitely a good idea to get rid of stamp duty which is a stupid tax that stops old people downsizing and puts people off moving for job opportunities.

A property tax seems like a sensible alternative. Using your .48 percent figure, most people where I live would be paying less than their existing council tax, so I fear it will have to be a much bigger percentage.

I don’t think it’s unfair, to be honest.

A lot of people live beyond their means.

There is a reason that houses sell for higher prices in some areas than others. If people don't want to pay higher prices, they can choose lower priced areas, but often the infrastructure isn't as good, which is why it's cheaper.

Wealth taxes where you take say 1% of someone’s wealth a year don’t work. They never have and never will. But this is a form of wealth tax that does work. It taxes the value of an asset (home) a person owns. Yes people may have a big mortgage and that’s les fair, but trying to build that into cal a makes the tax more complex and easier to game.

A revaluation of house prices would have to happen before the tax is brought in which is why this particular can has been kicked down the road for so long. But this is good. This is progress to a fairer tax system.

Maybe the plan is to have a property tax to replace stamp duty and council tax.

That is exactly the plan

That's completely untrue as someone that comes from an area with better infrastructure than the place I've moved to. The former was much cheaper.

Lots of people are tied to their areas through support networks and employment. This is especially true when there are caring responsibilities and niche employment

Is it to replace stamp duty or council tax?

If it replaced council tax I could kind of get on board.
If it replaced stamp duty, then would it only apply to new sales, or people who already had to pay stamp duty have to pay again?

I think it would be fairer that the current system using house values from 1991. I would pay about £400 extra under the proposed property tax at 0.48%. I am happy to pay if public services are improved. It is costing me more that £400 pa to replace tyres damaged by potholes and private GP appointments.

Thing is, that £1m house may well cost even less than the £350k house, if it happened to be in that part of the country.

Two-up two-downs in London sell for that. You have to spend far, far more on mortgage repayments to afford what would elsewhere be considered a very modest house.

So why pay huge amounts of additional tax for doing so too?

0.48% would also mean a slight reduction on our current council tax bill if I take the top end Zoopla estimate, it would be a significant reduction if I take the lowest one. The devil is in the detail (should it ever actually appear) but on the face of it, it does seem like those who own small houses in expensive areas would see a disproportionate hike - but that’s mostly London and the South who have had all of the investment and advantages for the last 50 years so maybe a tax like this would work to rebalance the country

The money raised would replace existing taxes. There would be no additional funding for improved services.

I think it’s unfair. Not from a north/ south perspective.

From an owner / subsidised renter/ social housing perspective.

Whats going to happen is those renting on UC (getting their house paid) will be exempt. Same in social housing and same for private renters.

People who try to own secure housing even if they themselves are poorer on a take home basis than those on UC/ being subsidised will be penalised.

Gov gets a worker bee nation of work work work, pay for everything, own nothing.

Say that people leave the expensive areas and start to move to the cheaper areas to avoid the tax. What would this mean for people in the cheaper areas? Increased house prices and suddenly your tax will go up too? Is this really good for the area?

People think of council tax like that, but it's not a genuine reflection of that is going on.

FWIW the vast majority of local government spending goes on Adult and Child social care, not on services like emptying your bins.

People with more money get taxed more in a progressive tax system. If you have a more valuable home then you are more wealthy and so the government would like more of your money. The tricky thing, from a policy and messaging perspective is that we are not used to 'wealth taxes' in this country, which leads people to think they are 'unfair' when actually they are just unfamiliar.

We have lots of 'bad' taxes in our system (council tax being one of them, incidentally) but people rarely complain about them because we accept the status quo and any change leads to winners and losers so it's politically very difficult.

No, if you 'own' an expensive house you could actually have a huge mortgage and be less wealthy than someone that owns a much cheaper house outright. It's not a wealth tax because it isn't taxing wealth. It's taxing ownership of assets even when they are highly leveraged.

Any tax on private landlords is passed on to tenants in full in the form of higher rents. Many, many studies have proven this to be the case.

Surely it will have to be? How on earth can landlords absorb such large sums?

The thing I hate about any property or wealth tax, as opposed to a tax on income or transactions, is that it seems to imply that nothing you own is really yours, it's just what the government allows you to keep at any given moment, and it can be taken off you. I think it's quite sinister.

North-east here…I’ll swap with you. You can retire to the countryside in a massive house by selling your London home. Someone in the northeast wanting to do that would have to find triple the value of their home (and some).

If you think it is so great living in the north east then come here. Your mortgage will be tiny but you’ll have limited job prospects, your children’s education will be worse, life expectancy will be lower.

Ridiculous to act like people in the North East have it better because they have a cheaper house whilst ignoring all of the other impacts. People up here work until they die, or retire with significant health problems, all of this information is readily available.

To get a big mortgage you have to have a high income. People make different choices about how to spend their money and how much to 'stretch' themselves with their mortgage but you can't by a very expensive house unless have a lot of money to buy it outright or a high income to support the mortgage payments.

One reason economists tend to like property taxes like this is that it incentivises people to downsize when they can, this improving the efficiency of the housing market.

Fairness is subjective not objective.

There are threads on here arguing that people who have made significant housing gains over the past few decades and underpaid (relatively) council tax for those decades by tens of thousands will be unfairly treated under taxes like this.

There are also people that argue that someone in a two million pound house in London that has appreciated significantly over the past decades paying less than half the council tax than someone owning a £300K house up north for the past 30 years is fair.

Council tax is highly regressive and unfair in my opinion and needs to be changed. The tax itself was instigated by the Tories, so that should pretty much tell you who it was designed to benefit - it benefits those at the top end whose houses are banded together with much lower value properties because of the low dynamic range/resolution in the banding system. People in the bottom bands pay far more in relation to their house value compared with people in the upper bands.

Multiple mechanisms have been proposed to mitigate the impact of the changes so no one will be forced out of their house unless they want to move.

If there is any unfairness in the system for me, it is because of stamp duty paid by people who have moved recently. But it is always the case that some people benefit and some don't from changes.

If we basically said we weren't going to do any changes because some very small minority of people might be disadvantaged then we would never change anything, and changing something that is so obviously wrong is a no brainer for me.

Of course multiple governments have shied away from doing anything about this. Even the noughties Labour governments who should really have done something to fix the inequality.