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.

It also has the potential to grow to impact everyone so nobody can buy anything without fearing that taxes will one day make it unaffordable to keep the asset you're trying to buy.

People often buy a house because they want some security. This makes me feel like my house could be taken away at any point as I could be taxed out of it. It's scary! I can't imagine how you could plan for old age with the knowledge that 0.48% could increase at any point and be demanded immediately.

Agreed, OP.

We obviously need a general election to provide a mandate for such a sweeping overhaul.

Yes I think it’s absolutely fair, if you can afford a more expensive house then you should pay more tax. If I can afford an expensive house but choose a cheaper one, my excess money is taxed in other ways such as interest on savings/investments and VAT on purchases, I don’t see why spending on a larger than average property should escape this. I’m also in favour of it removing stamp duty as it will boost the transition in the housing market and encourage more people to move or downsize, which IMO is a good thing.

ETA - we will pay more under this scheme and I still think it’s fair.

Yes it's fair. At the end of the day (once you've paid off your mortgage) you will own the London house. And it will have appreciated in value because it's in a city, and then when you sell it to downsize and move to the country you will get more for it than you bought it for (not necessarily more than you ended up paying for btw)

I think you're whining cos you think it will adversely affect you and that's why you are arguing with everyone who posts an opinion different to yours.
Yes, it's your thread but you have asked a Q and MN is trying to answer you!

But you need a certain level of income to get the higher mortgage and to service it, the larger the mortgage, the higher the income needs to be so while it may not be a wealth tax, it’s progressive in that those with higher income pay more.

It’s really going to depend on the detail. If this yearly tax will replace stamp duty AND council tax for everyone then what’s the plan with those with fixed incomes? What’s the plan with those people who currently enjoy the 25% reduction in council tax due to single person occupancy?

Putting in place a retrospective tax that is fair and popular is a very very hard thing to do. You might plunge someone into poverty who had previously been able to afford their bills.

No it wouldn’t be particularly fair IMO. It’s also not fair that a household with 2 adults earning £60k each gets child benefit, whereas one with 1 adult earning £85k and the other nothing doesn’t. Many things in life aren’t fair.

no it doesn't, but the system is already unfair. I live in a 2 bed bungalow, band C, and my parents live in a 3 bed semi, band A. They have far more living space than I do, and 2 bathrooms. They are rural, I am on the edge of a village. They get the same council services that I do apart from street lights. Both properties have the same financial value but they pay less than I do.

I do think it would be fair to pay a % of your property value. Those who own more will pay more. It should be a cost factored in when you buy a property.

People do choose where to live and there will always be those who can afford and those who can't. A lot of people do stretch themselves to buy the biggest thing they can get rather than buy what they can afford and live comfortably.

I had forgotten that I receive the single occupant discount, so working it out again, I would pay less than half of what I do now. No its not all about me, but it does seem like a much fairer system.

House prices haven't increased in the past few decades so your premise is wrong for a start. The increase happened in the 90s and before then. The average first time buyer was 30 years old in 2000 so would be mid 50s now. Anyone younger than that likely has zero 'unearned' equity in their house.

Why then does it make sense to penalise to penalise people under 55 that happen to live in an expensive area?

I have very little sympathy for those living in a large house with a fixed income. The answer is easy. Downsize. Pay less tax and no stamp duty due to the new tax removing stamp duty.

Sounds like it may be based on US ones? My colleague used to pay $12K a year, she lived in a 3-bed semi in Milwaukee, which is not that expensive I don’t think. We are lucky with our council tax, it’s very low. I guess US income taxes are lower though (but not when you include healthcare premiums.)

No. Its not a fair concept.

Fair would be based on area of house rather than value.

Our house is worth about £700k (4 bed detached) so this would be cheaper for us than the current council tax.

The reason why people stretch themselves is because sure the housing ladder doesn’t exist anymore and moving is so expensive. It’s often the best plan to move into a family house once than it is to buy a flat, move to a terraced doer-upper , move to a semi, move to a detached. You may as well just stay with your parents and hoard as much money as you can and get the detached as your first home.

It’s very standard in a lot of countries.

most tax is unfair in one way or another.

Over the last 20 years, average UK house prices have increased by 74%, climbing from roughly £113,900 to around £268,200

0.48% to replace council tax and stamp duty would be a bargain for me! We current pay double that for council tax.

Even at top end it doesn’t sound that high to me and really shows how different areas have such different council tax. I know my friend in their 4 bed £1.5m London house currently pays less council tax than I do in my 2 bed northern house.

How much is your current council tax?!

I’ve just put the figures in for our house that’s worth a lot less than yours, and what’s popped out is much more than our current council tax.

People have already bought houses though without this being factored in. What if Burnham decided instead of implementing a percentage value to implement a LVT that was targeted specifically at bungalows? Would you be so supportive if I suggested that people could make a decision to buy a bungalow based on the new tax? It's not exactly useful to you as a bungalow owner already is it?

I don't think it's been confirmed that a single occupant allowance would be permitted using the new tax. Afterall if it's a weird form of wealth tax, why would single occupants get a discount? You are wealthier than homeowners who have to share the value of their assets between two adults.

If house prices haven't increased relative to amount of council tax paid absolutely nothing to worry about then.

The current proposals are a tax on property value. So no price increases, no high tax.

Do you live in some sort of weird bubble? We bought our house in 2018 and it’s gone up by 25% since then.

He seems to be quite focused on getting more money into the treasury. I left London as I couldn't afford to buy but in addition to the rich, there's plenty of cash poor who bought before 1997 and also those who bought council properties and are have a council property. Those are now worth so much more but with an inability to pay a tax based on current worth.

I partly agree with the proposals although they won’t actually affect me, to be honest.

There are far more job opportunities and the salaries are higher in the south of Britain so more jobs and employment and training opportunities need to be made available further north.

The rot started in the 1980’s with Thatcher closing down and selling off the manufacturing and steel industries and successive govts. have only paid lip service to this growing problem and still haven’t done enough to tackle the yawning chasm that’s become the north/south divide.

In real terms they haven't increased. You can't just ignore inflation.

Something urgently needs to be done about council tax which is dreadfully unfair on childfree and single people. Especially renters. They use less and pay more to subsidise families who suck up all the resources in the area. Land tax should be paid by the owner - in the case of rented property the landlord. They are the ones who gain from the asset. The current system penalises the least selfish group and rewards the most selfish.

Unless of course your wealthy enough to avoid paying it.