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.

I think a regional wealth tax would be fine. Take the average salary and index a wealth tax to that.

I haven't really had time to study the (proposed) proposal enough to comment yet. However, just thinking that other countries in Europe have property taxes AND Stamp Duty aswell as council type taxes in some cases.

I reckon there might be a combination of these in UK in the end. A vastly reduced SD maybe in addition to the land tax. As pp said, the SD yields billions, and that will have to be replaced somehow.

I'm reading the thread with interest!

Ah, if it's in addition, then the 2 together would represent about 20% of our pension income. Bugger that.

@Itchthescratch id love to know where you live if the property prices haven’t changed in 20 years. As far as I can see, house prices everywhere are up. Proportionally maybe, but definitely up.

Is the mortgage debt also an asset? Do you understand equity?

Ah well I expect they'll stuff it up before doing it and will get voted out.

Well because in 30 years time you both will have paid off your mortgages but your wealth will be substantial higher than your northern friends.

Use your ISA allowance. Can't blame the government if you're not using the tax avoidance schemes they provide.

I'm talking about real terms increases i.e. taking account of inflation. So a pint of milk now might be worth double what it was 20 years ago but the farmer isn't actually earning more if inflation has also increased. It's the same idea.

That’s great for people looking to move, not necessarily for those who’ve just bought and paid stamp duty. But I agree in general this sounds better than stamp duty as it also makes it easier for people to move and free up houses

Are we just pretending that they will pay their mortgage off much more easily than me and have surplus money to invest or buy a larger house with? I will also have paid a hell of a lot more interest and stamp duty than them.

I have a similar job to my friend up north and she earns about 20% less than me. Her mortgage payments are less than half mine. She can use the extra money she saves on her mortgage to invest in anything she likes which could easily be more rapidly growing assets.

My council tax bill is approximately 0.48% of my house’s value. I’d be really angry if I had to pay the same again in some fake ass made up property tax, made up so the government can steal even more of our ALREADY TAXED income.

Salaries aren't wealth though?

What guarantee is there that she will have paid off her mortgate?

First the current stamp duty tax is a really bad tax - it taxes transactions rather than value or capital gains. It therefore discourages people from downsizing and takes no account of any wealth or value creation.

That said an annual property wealth tax on paper sounds like a great idea. However in reality it would be a nightmare to manage and enforce. Let's say the annual tax is 0.5%. Owner A has a property worth £1m but with a £900k mortgage. Owner B has a property that they bought for £500k as a doer upper on a 50% mortgage and spent £300k on renovations over the years and it's now worth £1m and Owner C that bought a £100k house in 1980 and it's now worth £500k with no mortgage.

Under this policy :
Owner A has a "wealth" of £100k (£1m - £900k) but will pay £5k a year in wealth tax
Owner B has a wealth of £450k (£1m - £300k renovations - £250k debt) but pays £5k in wealth tax.
Owner C has a wealth of £500k but only pays £2.5 k in wealth tax.

Of course you could try to amend the policy to take account of how much mortgage debt there is or how much has been spent on home improvements etc but the administrative cost of this will start to outweigh the revenue generated from the tax.

A far simpler solution would be to simply apply capital gains tax to all properties including primary residence.

They have this in the Netherlands. There is also tax in relation to emptying bins/sewerage etc which is similar to council tax but lower.

Not sure what you mean here a salary is income and subject to income tax already.

No that’ll just deaden the market.

1. That council tax gets spent locally. It doesn't. It all goes to the government who dish it out according to perceived 'need'. In the SE, councils don't get to keep most (or in some cases, any) of this tax. If AB plans to change this so it stays locally along with local control of it, he has my support. But I will be very surprised if he does, because 'Northern' councils will get less; unless they increase their local rates significantly.aac

So mine and eveyone else's council tax is sent by my council to a huge central govt fund and then the council get a proportion back dependant on what central government perceives as what my council needs to run local services? Have I understood what you are saying? I have never heard of this being the case. Councils get funding from central govt in the form of grants but to the best of my knowledge they raise money via council tax and business rates. I live in an area which has the second highest council tax in the country, it is certainly news to me that it all goes into a central pot and could be spent anywhere in the country

Do we actually think this will happen? It seems madly difficult to implement fairly.

Our property is expensive for the area (about 550-600k give or take), but cheap for somewhere like London so I don't understand why we would be set to gain, but I'm not complaining 😁

Agree. I’m going back a long time to when Blair was PM. There was an article in the press about the mansion he bought in I think Connaught Sq. at the time it cost 7 million and according to the article he paid less council tax on that then I pay on my 3 bed semi in the north. Which also doesn’t seem fair.

Perhaps it's worth remembering Pat McFadden's comment to Mandelson: "Every meeting I have is 'who can we tax in order to pay benefits to others'"

As so many have said we don't know the details yet, but for decades the above has been Labour's key mindset so it seems reasonable to expect they'll clobber - in the words of a Labour politician of my acquaintance, "All them posh rich bastards"

The rest of the country that works and bought houses is paying it already!

Surely the new system will create more of this though rather than less. You will have huge houses in the north paying less than grotty flats in the south.