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.

Someone may have already pointed this out, but how would a new system be there to those who have already paid stamp duty on their homes? Do we then pay a second tax while new buyers swerve stamp duty?

Im so sick of not being able to budget my life and plan for the future based on forever changing and failing governments. Our house, which i considered a good investment, is becoming a financial burden. We can afford it but our reserves are depleted. We work ridiculously hard for a good lifestyle but most of our money disappears to HMRC.

People may want to wait for the details before worrying prematurely. No proposal exists currently.

Apart from envy, I just can’t understand your logic. Your local council tax payments fund your local services. If there are not as many costs in an area, or that council is better run, why should a more expensive house pay more just because your council has higher costs/is less efficient etc? The more expensive house will in all likelihood have been purchased through taxed income - often significantly north of a 40% average rate. Plus paid stamp duty. If you earned the same money and chose (as you could afford to as your house cost less) to spurge on cars/jewellery/holidays should we apply retroactive taxes on those assets/memories?

I don’t see how it’s any more unfair than any of the other taxes we have. We don’t pay tax based on what we use. I use significantly less health services than my elderly parents and I pay more tax than they do or ever did. Lots of people outside London pay significantly higher council tax than those in London for comparably worse services (transport, public services like libraries etc). You’ve got high earners paying huge amounts of income tax and not getting funded childcare hours that someone on £17k a year (who pays far less income tax can claim). Couples earning £59k a year each getting full child benefit whilst a family with one person earning not much over that getting a reduced amount or nothing at all (and falling into a higher tax bracket to boot). Taxes aren’t just decided on what’s ‘fair’ it’s a far bigger picture than that.
The reality is that the current system of stamp duty (which this would replace) is causing damage to the housing situation in this country because you need to find an enormous sum of money upfront which many can’t afford. Most economists agree that it is not a good system and it needs reforming. We’ve got older generations sat in huge houses with several spare rooms who won’t move because they don’t want to pay stamp duty on a smaller house and entire younger generations who may never be able to buy a home because there aren’t enough for sale and they likely couldn’t afford the stamp duty anyway. We also have a decline in rental properties so it’s really tough for younger people. I can see why you think it’s unfair because you will be worse off but there are also many who won’t be. The proposed changes might have a positive effect on the overall economy which in turn benefits everyone.

If buyers spread the cost over 30 and 40year mortgages, house prices can continue to rise, especially in some sections of the market with lower PPT. If property taxes are linked to annual property revaluation, more homeowners could find themselves paying higher PPT even though there has been no increase in their income.

I think it’s incredibly unfair. I also think the existing system is unfair.

A poll tax for services used make more sense. However statistically people from lower income families often have more children or inter-generational living, so this didn’t go down well with the voters.

Say family of 3, of which one is a child, live in a 3 bed detached, why should they pay more than a family of 6 up north in a 3 bed detached? It’s the tax of envy. Zero logic to it.

I think however the current tax system is very outdated meaning the North are often disadvantaged.

That is pretty much what we pay in council tax where I am, for a small 4 bed semi. So fair enough from my point of view.

YABU it's not unfair.

If you're in a big or expensive property then you pay for the privilege of that.

I do think he needs to take account of regional values though - what's a mansion in the NE might only be worth £500k, a small flat in London might be upwards of £350k, but then wages in the two areas are different too...

My property tax won't change (current band E) which I think is fair. Properties near me have not climbed the same way surrounding areas have.

At the mo due to IR35, my stoppages are c60% and I'm OK paying it, but honestly too many people relying on benefits when they could work gets my goat. We should get those who can working, the country would be back on its feet in no time...

I think people living in a large house with a smaller value because it’s in a cheaper location, end up paying more council tax than those living in a house the same size in an expensive area. This is because both councils need to raise enough money to pay for all the services they are obliged to provide. In an expensive area there will be more houses in a higher council tax band and so they can set a lower council tax for that band and raise more money than councils in a cheap area where few houses are in higher to council tax bands. It then follows that those living in the expensive area should pay a property tax. It’s a way of levelling up with those in less affluent areas. Whatever changes are made somebody will lose out unfortunately.

By your argument you pay for the privilege...

But a £500k mansion on in the NE really should pay lower council tax charge than a 350k flat in London?

Nothing contradictory about that at all.

Were you originally working outside of IR35?

But people who buy houses like that don't pay tax like workers do....

Absolutely and there are some very wealthy people living in the North because the housing is cheaper and they won’t have paid so much in mortgage costs

It would be hugely unfair and sends the wrong message that aspiration should be punished.

You do realise there is already a department of valuers? It is called the Valuation Office and is part of HMRC.

You could almost call it a Ponzi scheme dressed up as fairness.

If it is .48% of your house value annually, it works out about the same as council tax is currently? I don’t know the ins and outs but I assume whatever they are proposing replaces council tax?

I assume it would also replace the high value council tax scheme currently being developed as well?

For business rates values are revised every 3 years - I would assume a similar system for domestic property? So people would have some stability in their payments.

The current council tax system is very outdated and they currently have to revise it to modernise and bring the values up to date.

So if they don’t go with a % of value how do you propose they do it? They can’t afford to scrap it completely - the tax needs to be paid somewhere. If they don’t tax property at a local level how do local councils obtain funds to operate local services?

You are failing to recognise that some people live in areas where a small 2 bed flat can cost £650,000 and all their earnings go to pay the enormous mortgage. Or the pensioner living upstairs mortgage free, but with a minimal income. Burnham's policies are half baked.

Andy Burnham only cares about the North of England, the South are going to be completely fucked under him.

Why is a poll tax contradictory? A house that’s been bought for £500k, irrespective of its location has already had stamp duty paid so amending payments retrospectively when they will have paid considerably more tax than a house of 200k is not fair.

People in the North can often have more disposable income than those in the south due to living costs. The gap between earnings and mortgage is smaller in the south for many in London. Yes earnings are higher but it’s relative.

As I said I don’t think the current system is fair either as people are paying disproportionate amounts today. That doesn’t mean we flip it the other way either.

Services used are completely irrelevant to the house size you live in.

unless I have misunderstood your view?

I totally agree. Shafted by the house prices, shafted again by the tax.

Its not like income where youre getting more money in to offset the cost. Its the opposite where youre getting less money in and this just adds insult to injury. 🙄

I suspect this was a political ploy by Burnham to keep his popularity up North, but he's going to have to warn quick and leave his parochialism behind if he wants to run the country.

Personally I think it was a naive and impulsive move and will spook many of his potential voters in London, where Labour has its last remaining heartland, seemingly. Eg Sadiq Khan's safest mayoral seat ever.

Duplicate post

I think AB is more intelligent than this. He knows it does him no good to carry the north at the expense of the south.

The current system is vastly unfair and quite odd. I guess people aren't going to like a system that has the potential to leave them worse off and I do get that, but the housing market is part of that problem too.

Not only do I pay more Council tax than the same band in Westminster (which is ridiculously low for the levels of wealth, if you've never seen how low I'd go and look) but I pay more than many other band D's under different councils (and get less in the way of services).
My dad lives in a bigger house in a more affluent area yet our bands are the same and his band D is charged less. Based on the value of the properties in 1991. Not what either of us paid, nor it's current value.

It's also quite an odd way of charging. I am surrounded by neighbours with working adult children at home on a long term basis, but they will pay the same as a house with two adults and only 50% more than one with one adult. I guess that wouldn't change with property value based tax though.

Weirdly the 0.48% of current value is about bang on what I currently pay in council tax which may be why I'm just shrugging over it.

I would hope it will reign in the huge increases in house values and put an incentive on them staying more stable. I know that's a weird thing for a home owner to say, but it can't carry on as it is. People talk about London being unaffordable but it's fast becoming the case in every majority city in the UK

I'd also like to see stamp duty abolished for older people who want to downsize as it is such a big blocker for those that would actually quite like to move and for whom moving might actually allow them to live more independently for longer.

Would people who think they would be adversely affected by a property value based tax prefer that council tax was abolished and income tax were to rise? Or if there was a much simpler but higher method of taxation generally (perhaps cheaper to administer and less being taxed all over the place)?

What would you then suggest about empty property? I personally feel that this should be taxed higher, particularly the flats in London, Manchester that are owned by investors, often offshore. If not in council tax there needs to be tighter rules on ownership and habitation. Again, maybe unpopular to anyone who feels as though their holiday home or investment may fall under those brackets