To think an annual property tax is incredibly unfair?

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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.

Yeah I posted about it a few pages ago and honestly still outraged we are being taxed on properties we struggled to buy to begin with.

To get a big mortgage you have to have a high income. People make different choices about how to spend their money

Yes - and high incomes are taxed with high rates of income tax. This is local/property tax we're talking about.

Two people each earn £1m a year and are charged a hefty chunk of income tax based on it. One of them spends most of it on flash cars, multiple world cruises, masterpiece paintings, diamonds etc. and they are taxed ONCE at the point when they buy them.

The other lives an otherwise very modest lifestyle and devotes the majority of their (already-taxed) income on a very high mortgage for what may not even be a massive posh house, but just happens to be somewhere expensive. That person is then taxed every single year - both on the equity and the amount still payable as a mortgage loan - with the justification being 'because they have a high income'? How is that remotely fair?

It's a massive improvement on the unfair council tax+stamp duty+bedroom tax system but it needs some tweaks. 0.48% is exactly what people pay in the Netherlands, it is a system that works well, is generally accepted. There it's 0.13% as local/council tax, 0.35% to HMRC. Any value over €1.35 million get taxed at 2.35%. I would like them to add a similar 'villa tax' threshold for expensive houses.

I would pay around £2.8k a year, a 0.13% council tax element would be £754 - significantly less than the £1860 I pay now.

https://nl.wikipedia.org/wiki/Wet_waardering_onroerende_zaken (press the auto translate button). Renters only pay the council tax element, and it's also used to calculate fair social/affordable housing rent prices.
The campaign Burnham is backing: https://fairershare.org.uk/faq/#ptax

People are keen enough going by these threads.

Not anymore unfair than the current system. I live in a newer build so am paying more in council tax than houses much larger and higher value than mine. Any system will have its downsides

I bought a house 5 years ago and paid nearly £60,000 in stamp duty. We then spent over £500k sympathetically renovating and restoring the house. It’s lovely now. What should I be paying Burnham’s property tax on? The value I bought it at? I already paid stamp duty on that. The value it’s worth now? Well I paid a lot of money to get it there (probably more than it’s worth), so it’s not like there’s a “gain” to be taxed. Should I pay more because I live in a nice (expensive) house regardless of circumstance? Maybe, but that’s just a tax on owning (not buying) expensive things which doesn’t seem very fair.

Burnham and crew are trying to figure out a way to tax people who have benefitted from massive property inflation - ie the 50-80 year olds sitting on property. They’re also trying to encourage those people to downsize so need to remove stamp duty.

But they won’t find the right way to do that, so they’ll just tax all of us because it’s easier…

I agree about disposable income. An obvious example is teachers. They get paid the same in Kent/Essex as in Lancashire, but living costs in the south are significantly higher.

A lot is said about the south east being rich because property is expensive, but local businesses like restaurants are struggling to survive and closing because people don't have the money for luxuries like eating out. I'm often in the north west for work and restaurants there are busy even on a Monday or Tuesday evening.

He seems to be quite focused on getting more money into the treasury.

Yes, this is the elephant in the room. People are arguing as to whether this change would make things fairer or not; but ultimately the single reason why he is considering/planning to overhaul all of this is to rake in far, far more tax overall. An individual may pay less (initially, at least), but if so, that will be purely incidental to the main drive in doing it.

I agree that if they’re going to do this, there should be a general wealth tax too.

It’s not fair to penalise those who have had to take out massive mortgages just to live in the area where they work/ are from.

And surely it should be the equity you have, not the overall value?

Current council tax is unfair but this doesn’t help. It would carry on the penalising of single adult households. There should be some kind of tax payable per person (not household) to replace it.

Yes exactly my sentiment

I'm not saying it's fair. What I actually said is that fair is a totally nebulous concept. There are many 'unfairnesses' (from my perspective) in our existing tax system - other people may have a different view of what is unfair to me. Since there is no definition of fairness in this context, 'fairness' is not a good criticism.

Paranoia much?

It should be income based, then it adjusts according to affordability, and also needs to take into account income from benefits. I have friends (usually well off ones) who think you should pay based on the number of people using the services (ie how many people there are in your house) which is a nice idea but in principle I can't see how that can be justified. For me affordability should be key to so many things rather than assuming everyone is at the same level. Example, I live in a 4 bed house. It's worth a bit (think £550k, not millions!) and we have some equity in it. But the mortgage is large following financial restructuring, a situation forced by the fact I have a husband who isn't well enough to work, but isn't ill enough for any benefits. 3 kids under 15, one is autistic. I struggle to pay the £300 a month council tax on my take home pay plus child benefit and DLA over, say, my neighbours, both parents working, 2 NT kids, will have a combined income in excess of £100k. We have lived here over 20 years and circumstances have changed, but it's not like we can move and release equity, unless we moved up north (we are near south coast) and I tool a massive hit on pay. That's just our circumstances, but I really feel policy makers actually don't think through how to make things truly equitable. Too difficult, perhaps?

They're in for a shock I think. Not everyone who owns a decent sized house has a decent sized income. It'll also affect disabled people who have inherited their house via a trust, but whose income is low. They don't want people owning their own homes. The future is rental only with private property only for the very rich.

People are comparing this system to other countries systems, but don't realise that things are going to change. All the people who love the labour party are going to be crying into their low alcohol, ethically sourced, vegan beer.

The current council tax bandings are unfair, but it's fiendishly brilliant to move to a purely percentage-based system. It removes the element of corporate society (i.e. 'everybody together in a low/average band property seeing their bills go up by X%') and makes it potentially unlimited on an individual basis.

If it's a new property tax of X% of your property value, BUT it's dynamic and not set at a particular point in time like with CT, that will be the absolute killer - as anybody complaining will be told that it's perfectly fair for everybody, as it's strictly based on how much your house is worth, and so you have no moral right to complain - especially if it also replaces the stamp duty barrier to moving, so they can say "You can always move somewhere cheaper to pay less".

Not only will that percentage of value represent ever more and more hard cash as house prices rise, the percentage can easily be hiked at any time. A percentage-based charge should work itself out and keep track of real value regardless of inflation, but that certainly doesn't prevent dishonest governments and other bodies from hoodwinking people and double-dipping by claiming that they need to rise 'because prices are all going up'. Enough people won't understand this basic principle for them to be able to get away with it.

I found this video really helpful for explaining the issue with stamp duty which the land value tax may replace:

https://youtube.com/shorts/dHXKqrFgWXA?si=MeZ5KZyHVvl3a9ej

Essentially, stamp duty incentivises people to stay put. This is particularly a problem where people would like to downsize because, due to lack of new builds, this reduces the pool of larger homes for people to move up into, pushing prices up.

With an annual land tax instead, you're incentivised to downsize because moving will reduce your bill, instead of creating a lump sum of thousands, possibly tens of thousands, to pay.

If the idea is to get pensioners to downsize, they need to increase the stock of bungalows, either by imposing a quota on developers or by preventing buyers from converting bungalows to two story houses (as a believe one council had already done/tried to do) In this area, as soon as a bungalow is sold it is extended upwards.

CPI over the last 20 years has been about 55-60% so the SE house prices have beaten that by about 25%- 30% unless I am missing something?

Either way, like I said, it is not relevant.

Fairness is not well defined in this context so arguing over fairness is pointless.

Governments tax what they can get away with. Many 'unfairnesses' exist in the system (from my perspective), others will have different ideas of fairness.

Spot on. We’re amenable to downsizing, despite the stamp duty we’d currently incur, but suitable properties round here are like hens’ teeth. There are virtually no bungalows and houses that would have been suitable have been extended so they’re unaffordable.

Then you've got a lot of money compared to the average person. Burnham will be after it one way or another.

It’s also very unfair if you have already paid stamps duty recently.

The annual property tax being suggested is that everyone pays 0.48% if their property value each year. Do you think that's fair?

Of course not. I was taxed on my earnings, paid stamp duty on my house and then to be taxed more to live in a nice house that I worked for is the most left wing thing since the idea of having as many kids as you like that other people will pay for.

Even if it’s less than the council tax you’re currently paying?

Ever booming house prices are widely considered a great thing for all property-owners, but it's actually a negative thing for almost everybody apart from the bankers and mass landlords, who can cash in on people not being able to afford to get on the property ladder.

If you own a home worth £100K and rocketing prices nationwide mean that your home is worth £1million before long, you still own the same: one identical home. Unless you're in a position to release that equity, you're no better off if you only own one home that you need to live in.

Yes, you can potentially downsize or move to a cheaper area - to a point - but those areas and cheaper houses will also be ever increasing in price too. Even if you remove your need for a home by dying, it just kicks the can down the road and your and everybody else's children will eventually end up in the same boat - albeit a better boat than those who can never manage to buy or who are forced to sell up for financial reasons and rent from one of the very few people who have their own mega-boats.

I completely agree. I've never seen anything in my life that's so clearly the thin end of a wedge than this 0.48% thing.