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.

Stop stirring. @Itchthescratch

Nothing has been decided and if people paid purely on property prices SE councils would have vast amounts of funds and those in rural Wales very little. It's certainly worth looking at whether the council tax system can be improved though and local funding generally.

It depends if it is restricted to those who own their homes rather than the value of the house you live in. Otherwise anyone who budgets, struggles and manages to get a mortgage will be penalised and those living in rental properties wouldn’t pay anything.

Well of course it's not even a proposal at this stage is it - just one of Andy Burnham's pipe dreams. So it's a bit hard to comment.

BUT, in principle, I think we need a wealth tax. What's unfair is that our current taxation system relies heavily on taxing work - through NIC and Income tax. The truly wealthy hardly pay these taxes at all, yet they own fabulously expensive properties.

So, yes, in principle I am in favour of an annual property tax.

To the person complaining that Stamp Duty is preventing her moving - I would say the £43,350 stamp duty on a £700,000 house (in Scotland - it would be a lot less in England) is only just over 6%. Whereas the combination of Income Tax and NIC can take anything from 20%-40% of your paypacket - does that prevent you working?

This tax would cripple us as a family, rising from about £2k per year council tax to £4k at the very least based on the value when we bought our property 2 years ago when it was half derelict. We do live in London, and we are privileged to have bought when houses in our area were pretty cheap - prices have risen a lot since then and so we have benefitted but not through our doing. We've worked hard to do up properties ourselves to save money. But DP and I work in the creative industries / museums and don't actually earn very much. Those on lower incomes are being forced out of our area as property and rent is so expensive. This tax would also cripple many in our area which has pockets of wealth but a lot a poverty - people forget that London also has immense deprivation alongside the wealth - some (many?) people would be made homeless by this tax for sure.

Yes but we’re not all on big salaries here in London.

I think it is unfair OP, unless it’s capped (or scrapped). Already mortgaged up the hilt for a tiny one bed, definitely not on a high salary, can’t afford to move. It’s not a one-size-fits-all scenario, & will leave a lot of people up shits creek if implemented. A massive change that wasn’t voted for - not very democratic.

It is expensive though because you have to produce it up front here and agree the amount you paid is huge, ours will be more than my wages for a year

Lol I would love to be on £100k too. Don't forget the current Labour government deem anyone earning over £40k as rich. You are no longer a working class person. So that sucks in hell of a lot of people. Imagine that you are considered wealthy if on £40k and have a house.

If council tax was replaced by a property tax of .048% of the value of the property then I'd be MUCH better off! It would be 38% of what I currently pay. I would vote for that😄

But eventually you pay your mortgage off and end up with a massive asset. But under the current system you then don't want to sell that massive asset because selling it is expensive. So you never really get the value out of the asset when you need it. Whereas under this system it would be much more attractive to sell and you'll actually benefit from your (much larger than you friend up north's) equity one day when you're ready to downsize. Which help the property market also.

It’s 0.48% per year that has been suggested. If you have bought your house since 2014 when affordability checks were brought in you have been tested up to 3% interest rate increase so most people should be able to afford 0.48% particularly after council tax payments are removed. I think it’s a better system than the current one and if you are particularly wealthy and don’t want to pay you can always downsize or move area, at least you won’t have to pay stamp duty !

And yes I do think that people in London have far better services, tube, bus network, night buses. Most areas outside of London have abysmal services so I don’t feel sorry for you OP. You have good services and the ability to move to reduce this tax if you feel that strongly.

As another poster said “fair” is a completely nebulous concept and almost impossible to measure.

Buckingham palace pays a lower council tax than a 3 bed semi in Blackpool. Tell me why that is fair?

divine right of kings, innit

Yes because people can just up sticks and move just to make their tax cheaper not taking into account their jobs, commuting costs, family. 🙄 ridiculous to suggest you can just sell up move somewhere else.

In my case ill end up pay over £100 more per month on a single income contributing far more than a household of 2 working adults for the same services. 👏 yes completely fair..sure...

No initiative exists.

💯 agree. And social housing isn’t limited to council houses that I remember from my childhood. I know of people living in housing trust owned social housing in UNBELIEVABLE areas in London, far more than even high earners could afford to rent let alone buy.

My understanding of council tax is that it broadly pays for local services such as bin colllections, grass cutting, social care, civic administration, libraries etc. Not sure I want to subsidise these services in another area because I happen to live in a high housing cost area. As OP says I already have to pay a much greater cost to live in this area, SE born here so not moved for work etc and therefore have a much lower disposable income.

Surely levelling up would mean everything gets super expensive up north as well as down south… from what I see wages aren’t that different north and house prices are lower. My friends and family north can have much more disposable income than south, been struggling for years now.

some agree op, same tax (which I completely disagree with in principle) to all

It wouldn't necessarily work that way. In the U.S., property taxes are assessed, collected, and spent locally only.

House prices definitely have increased in the last decade!

I bought my house in 2012 , and even taking into account the money I have spent on extending it and renovating the price of my house has doubled!

Bought for £190k - in need of modernisation, rewiring and didn’t have plumbing for a washing machine.

Spent £190k on renovations

Worth approximately £600k (according to our bank when valued when we remortgaged)

Because council tax is based on the value of the house when sold, my neighbours on the other half of my semi are Band C for council tax, out house has a small extension on the kitchen which means we are Band D - we have both substantially extended our houses by the same amount - so they are evenly sized now… but they pay less council tax than us!

Incidentally a new build two bedroom apartment on my road is Band E, yet both of our semi’s are four bedroom houses with three bathrooms and reception rooms after extensions.

The council tax system is inherently unfair and if we downsized on our road we would pay more council tax!

The system needs reform!

Would there still be a single person discount ?
Im down in south and currently with the discount I pay £1600 / year , if this 0.48% goes ahead that would take me to a bit above £2200

This system would replace the council tax system and stamp duty system. It would not be in addition to council tax.

How do reckon you’ll be paying £6k

No discount

julieh1968

75% of your council tax pays for adult social care and children’s service.

most of the cost is to private companies for care

The fact you earn enough to qualify for that mortgage shows that you can afford that property.
The disparity between council tax payments across the country is huge.
I object to paying the same council tax for my modest family home in Newcastle than people in multimillion pound properties in London regardless of their size.
I also object to paying more than those in homes in my local area that have increased in value significantly since the bands were created so their houses are worth double ours (so we could never afford to live there) but they pay less council tax than us because our house was built in 2000 and has not increased in value by anywhere near as much as there’s. This seams like a fairer approach to property tax.

You may save on stamp duty when you move, but you would replace it with an annual property tax that could rise as your home's value increases. Many people couldn't afford to buy their own home if it were on the market today, not just downsizers. Yet people will be expected to pay an annual tax based on on a value that acts as if they are.

Even after you've downsized, there is no guarantee your housing costs will stay affordable. And it's not just downsizers either. If your area is regenerated, a new station opens or the local school becomes outstanding, house prices are likely to rise, and so will PPT, but your salary probably won't.

So what if it's "only" one in four affected today? Do people really think it will stay like that? The numbers don't add up. So what will it be in five or ten years' time, as more areas benefit from new homes, regeneration and the infrastructure built to support them? I'd be very surprised if it remained one in four for long.

People may want to look at what is planned for their area before they breathe a sigh of relief.