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 doesn't appear to take account of:
a) how much capital gain there has been (you may own a house worth £1m, but what if you paid £1m for it? You have made zero, why should you be taxed?; or
b) how much stamp duty you already paid on the property. So if you bought it last year you would have paid £43,750 (out of already taxed income) before you even moved in. Why should you pay more tax when you haven't yet broken even?!
I'm not adverse to an ongoing property tax but it must offset the stamp duty people have already paid, which was the 'privilege of owning a valuable house tax' up until that point.

Exactly. Mn is quite good at backing that line.

Rolls eyes.

Can you not understand the concept of an illustrative example?

And do you not understand that many isa dont allow you to take money out and put it back in - which is what happens with a volatile life.

My point is that hammering an old dear’s estate for accrued tax in 15 years time when she finally dies, is not going to pay for schools and Defence now, or are you assuming the purpose should be to punish “the rich”/those with houses?

They'll be a lot of people around the 75% mark who neither gain or lose significantly.

The big losers will surely be those in the extremely valuable houses such as £10 million houses who at the moment may pay the same as much lower value but under a 0.48% scheme will pay significantly more. Unless of course they introduce some kind of cap.

Under CT if a £1 million house and a £10 million house were in the same band they would be paying the same council tax.

Under this new system the £10 million house pays 10x more.

Stamp duty as a tax may or may not be unfair but what it visibly does do is stop people downsizing because after stamp duty it isn’t worth it.

getting rid of stamp duty and replacing it by frankly almost anything else will help the economy.

Not read the proposed policy in full but will a valuation be required each year? Who and how will this be calculated?
What if house prices fall?
I understand renters are excluded - renters often have more disposable income so why are they excluded? Are those in social housing going to be wholly excluded from paying? They would still be using the services that this tax would generate so how is that fair?
Its everyone’s responsibility to contribute to society.

Maybe the alternative idea could be to increase costings etc in “the north” in line with “the south” and have slightly higher wages etc so that all areas of the country are experiencing the same quality of life.

All current proposed policies still seem to be insistent on taking from “the south” rather than empowering all.

This is a crazy idea, is it replace council tax bandings? surely the amount of tax raised is to cover costs in that locality? How would councils offer services in areas of low cost homes.

Andy Burnham will be coming up with lots of ideas to fleece us. So we better get used to it.

We missed out on a few financial opportunities by a matter of months - e.g. no stamp duty for FTB.

But by virtue of missing that window, we got a mortgage rate and period that meant we renewed our mortgage before Trussageddon happened. Probably saved us more in the long run.

I would be pissed if this was introduced just after our next move though - I'd hope it was given a grace period after introduction for those who have just paid SD.

WTF. This is so patently untrue it’s absolutely crazy

Tax income not assets.
Get more people earning money.

Because they’ll get a bigger government grant. Council tax doesn’t cover council services just now does it?

House prices. It’s utter nonsense to say they haven’t increased in decades. The “value” of ours has quadrupled since we bought it in 1999.

https://www.statista.com/statistics/289129/uk-housing-market-nationwide-house-prices/?srsltid=AfmBOoo-iFNKrRVSqoPPO6NiTzsHpqcclAvsVxlDMC9kBUZmIW2_MQmB

https://www.cladco.co.uk/blog/post/history-of-uk-house-prices?srsltid=AfmBOoqF8Au_HEBOsJcD4I_4ZshgyQAefRzxtFO7oZhk5I03LNDR4px5

Thing we were starting with a system that is arguably unfair an creates unfair incentives. Changing it will create winners and losers but I believe something bolder would be better.

problems as I see it:

1. stamp duty creates some really odd perverse incentives. I’ve never liked the fact that first time buyers have to factor it in as well as a massive deposit and mortgage. If it exists it really should be on the house being sold and not bought.

2. council tax can be ridiculously uneven across the county. I had friends in London paying an absolute pittance including people sat on rather a lot of property value.

but

1. I agree with previous posters making the point about equity versus house value. Older people (generally) will be sat on more equity and therefore actual wealth than youngsters.

2. it will probably be Londoners and those in the south who pay more. That is fine for the very top but there will be a lot of people with mega mortgages who would struggle and then feel pretty pissed off.

I’ve run the numbers and mine would potentially go up significantly if it was a 0.48% levy. That money would have to come from discretionary spending elsewhere which would in turn reduce money into the economy.

So, I think I could get behind the idea but maybe at a lower threshold.

Yes. I’m not even sure where I stand on this tax proposal, but OP’s posts are making me support it - simply as a
means of delivering the sharp dose of reality she desperately needs.

That is also an interesting point. Surely you’d have to offer some sort of taper or relief. It doesn’t bother me personally as have been in our house for ages but you’d be mighty pissed off if you had to pay stamp duty just before it was abolished and then pay the new tax that incorporates it.

Good idea.

But it will replace council tax, which is hugely and fundamentally unfair at the moment. I’m saying this as somebody who is paying the same amount of council tax as houses a couple of streets away worth 4x what mine are.

For many, it actually works out cheaper with the 0.48% than the CT alone, myself included. My CT is currently nearly £500pcm, this would work out about £320 and that’s before the savings for new buyers on the SDLT (I’ll just cry about the 20k we had to pay).

On a £200k house for example it would be £80pcm. Again, cheaper than CT which even band a in my area (north) is £120.

It’s the £1m+ properties that will feel it. Which actually does seem fairer to me than hammering the middle and working classes as usual.

Do have house prices increased in real terms over the past 20 years

I think its a great idea. Taxation in proportion to wealth is not a new idea and anything that helps cool house prices in the south will make it far more livable for everyone who's not rich enough to support a 500,000 mortgage.

A property tax? Interesting. I suspect this is how they'll wrestle people's private property from them. The amount will increase until the homeowner can't afford it any longer, then private firms attached to corporations will come in, buy the property then rent it back to you. When you die, it'll belong to them and they will rent it out to someone else.

I was wondering when this would start.

? If you are asking if house prices have increased in real terms over the last 20 years then the answer is yes. Ask your friends in the south to explain it to you.

As a comparison with a near neighbour, Ireland has a Residential (Local) Property Tax, plus Stamp Duty, plus bin charges, but no water rates or council tax.

The way the property tax is calculated there is on bands and is totally self assessed. It doesn't apply to renters. Audits happen and the owner must prove that they based their valuation on the best available information at the time of the self assessment which is done every five years. Collected by the Revenue (HMRC).

Just thought I'd throw it out for info if anyone is interested.

https://www.revenue.ie/en/property/local-property-tax/index.aspx

I thought I’d look this up : according to this article which was the first AI suggested, London house prices have gone up 10% in the last decade and flat prices by 0.5%, the Bank of England’s inflation calculator indicates £100 in 2016 would be £141 now, so she may have a point. moneyweek.com/investments/property/london-house-prices