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.

Inflation has increased by 26-30% since 2018 so your house is actually worth less in real terms. Sorry to break it to you...

You also own a higher value asset and probably have a higher income relative to what the same job would pay in the North. Not to mention that many job sectors don't even exist here.

And why did Thatcher do that? What was the drive behind that?

My understanding is that it would replace both council tax and stamp duty, so on your property you’ve already purchased, it’ll be capped as you’ve already paid stamp duty, and were you to move again, you’d then pay the full 0.48% or whatever but you wouldn’t pay stamp duty. In those circumstances I think it’s actually very fair, and for most people, it’ll be a saving!

This, council tax isn’t fair. I’m in a 3 bed semi near Glasgow and we are band E. During Covid when people got money back there were people in million pound mansions in the south east getting the benefit as they were band C 🙄

Im scotland, so I don't have skin in this game...but that would mean I was paying half what I pay now. And I live in a fairly wealthy rural area.

I dont have time to read up on it, but I guess if house prices weren't insane in some areas it would be fairer.

I personally think that it should be a tax per person in a property, and that it varies based on age/services used.

But we tax people to keep up with inflation. If I want my cash to 'keep up with inflation' I have to invest it and I get taxed on that. Even in a cash savings account (which won't quite keep up with inflation) I get taxed on the interest. Even if your house only keeps up with inflation (on average houses have beaten inflation, in some places, like London, they have massively outpaced inflation) you are still paying not tax on that, which you would if you achieved that by any other means.

And with that higher salary and higher house prices comes higher prices. How much are you paying for a litre of milk where you are? A loaf of bread? What are the price of swimming lessons per term? How much was your child’s residential this year?

So childless people are least selfish and parents more selfish? Surely that’s not what you’re saying here?

No, once again, the house prices:earnings ratio is worse here so the difference in house price is more than the increase in earnings.

I have to plough more of my money into the asset, money that has already been taxed. I also need to pay a hell of a lot more interest over the lifetime of the mortgage.

I agree that certain industries only exist here. That's true of all major economies where it makes sense to centre some industries in one geographical area. It's just another reason why people can't and we don't want skilled workers to move areas.

I know it was universally hated, but sometimes the poll tax doesn’t see such a bad thing, council tax is a joke

Agreed. Based on this, our payments would go up significantly. We have average salaries (for London) but live in the SE.

I would pay less than half. £960 a year compared to £2400

This.

Council tax was regressive from the outset and is now based on property values over 30 years old.

If not capital tax as proposed what other proposals are around?

I don't think people's homes can be treated in the same way we treat other investments. For a start most people have mortgages so it's not like they have simply paid the value of their asset outright and need to keep apace with inflation. They will have likely paid almost double the amount they bought the house for once interest is accounted for.

The broad point anyway is that there is a weird belief that homeowners in expensive areas are sat on loads of unearned equity in real terms i.e. profit. This may be true for older homeowner's to some extent but for most under 55 it simply isn't.

The SNP promised to get rid of council tax and introduce this many years ago. They make lots of promises they don’t keep though. The Scottish government if they introduced this would keep stamp duty no doubt as it is ludicrously high here and they make so much money from it. And so it would be less fair that the system in England, like pretty much all their tax rules though.

You've said yourself that wages are higher in more expensive areas. That would seem to suggest that supplying services in those areas just taking higher wages into account will be more costly for the councils involved (do they still put London weighting on salaries?).

Yes agree it's very unfair. We've paid stamp duty, let that be the end of it!

The new proposals would also be regressive in that they don't take account of people's ability to pay.

Not up North they didn’t!!

I bought my first house in the Midlands in 1990 for £40k and it languished in negative equity for several years until I sold it in 2002 for £12k more than I’d paid. Meanwhile my DH bought his house for £50k in Bristol in 1995 and sold it for £150k in 2003.

We also made very little on our next house sale (less than 50k after living there and improving the house over a 12 yr period) but have now moved abroad where we could finally afford to buy a house with no mortgage. We’re both retired and living on tiny pensions. Not everyone who’s over 50 is wealthy!

(We both have postgrad degrees but not especially well paid jobs)

It is mooted to replace both stamp duty and council tax and to be deferrable until the property is sold.

Yes I think it is fair - far fairer than the current system.

Well I just calculated 0.48% of my property value and it's less than this years council tax bill. I know the value because we moved last year. I don't agree with my properties council tax band compared to others in the area.

I loved up North any my parents house doubled in value in the 1990s. I guess it was area dependent.

We'd be paying just over £100 less which seems too good to be true. IME tax changes mean you're rinsed for more money, not less.