Calls for Help Freeing Up Family Homes

[CogitoErgoSometimes]

Free Up Family Homes The charity 'The Intergenerational Foundation' is recommending tax breaks to encourage older people to leave oversized homes. They estimate that there are 25 million unused bedrooms in England. Half of over 65's have 2 or more spare rooms in their home. Housing minister Grant Shapps doesn't sound keen on the idea. But what do you think? Should home-owners and tenants be encouraged to trade down for public-spirited reasons? Or should they be able to rattle around in their multiple spare bedrooms and left alone?

I think that people should be encouraged to downsize. There should be a great financial benefit for them to do so.

But it still has to be their choice. You cannot force someone out of their home.

But there is nothing at all wrong with making an attractive financial proposition! I bet many people would take it.

hec I am sure some would, yes.

"The whole point of an inheritance is that it is free money gifted to children who have done nothing to deserve it other than have the good grace to be born to wealthy parents!"

Scroobius, that is absolute bollocks. People who have had the good fortune to buy their property when it cost a relatively small amount, had to work hard to pay off the mortgage, scrimped and saved and then perhaps seen the value of their home skyrocket through the last 20-30 years are not necessarily wealthy parents. Yet, because of the stupidity of the housing boom, "normal" houses fall into the inheritance tax bracket. People who have very little money inherit these houses - and have to sell them to pay the inheritance tax, because they don't have enough to pay it up front , or pay it off over years with interest, usually still having to sell it. An inherited house is rarely a benefit these days.

Also you may have parents who spent everything on their children with no property or those with properties maybe didn't take them on holiday or buy new clothes for them so they could pay their mortgage. You just don't know peoples individual circumstances

But Thzumb, why should someone benefit financially from their parent's hard work?

I guess my view is that parents have a duty to ensure children are brought up and educated until they are 18, after which those of us who are fit and healthy need to make out own way in life and accrue wealth on our own merits. That way lies true social mobility.

Increased inheritance tax on deceased estates (including stricter rules around passing assets to children before death) is also a fairer way of gathering revenue (and getting the UK out of its current financial woes) than any income or sales tax on the living.

True Tip, but something needs to change to get the economy back on track and taxing dead people is a darn sight fairer than taxing the living.

I have the opposite view - that I believe in capitalism and the right to create and pass on wealth as you choose, that we are all born with very unequal circumstances, genes, looks, personalities and that there is no moral or other merit in trying to even everyone out and that differences financial and otherwise are absolutely fine.

In terms of housing, taxing dead people effectively penalises the living- it prevents descendents from being able to move into a place with 4 walls and a roof perhaps needing modernisation which the family know and love.

that's a slightly different point, isn't it scroobius. In the current financial climate, many old people are having to sell their homes anyway, or have them sold, to pay for their nursing fees - fair enough - but it's ridiculous to suggest that it's only the privileged wealthy who are benefiting from inherited property. Frankly, it can often be a complete fucking millstone.

Custy - I also think it depends on where you buy - our homes have all been within 30 minutes tops of Plymouth, due to dh's work, and as prices there aren't as huge as they are elsewhere in the country, we could afford to trade up.

We could not for instance, afford anything like we have in Cornwall elsewhere, in Hampshire for instance. I often drool in the windows of the estate agents in Winchester or the small village where mil lives.

Yes, dh has a fairly secure job in that he survived the redundancy round in the RN last month, and the next tranche isn't until next year. He doesn't have long left to serve until he has to retire, so there are not enough savings for the MOD to make him redundant at the moment.

I agree it's hard, but it has always been hard, as Xenia said, and you know, high interest rates, no help with childcare, having to pay an extra insurance for a high LTV, compared to low rates now and tax credits and it seems greater lending multiples. I also agree that a lot is luck and circumstance. However, planning as much as you can helps.

I don't think that turfing the elderly out of their homes will help, as the prices they would want would still be unaffordable; there is the problem of ring fencing your assets against care home fees; the desire to leave an inheritance to your kids (otherwise why bother to aspire at all?), and of course many can take out loans against their homes that pay off on their death and the sale of the house, so the property can still generate an income stream.

Scroobius - but you are taxing something again that has been paid for out of taxed income.

If you want to take everything into state control on death, then think about the ramifications when people are alive. Would I bother to buy a house if I knew ds wouldn't inherit it when we die? Would I hell; we'd rent and spend our money so that the state got nothing. I'll bet many others would think the same way.

Is that such a bad thing, Scary? It would bring property prices down for starters if we went back to a society where rental was the 'norm'.

I concede I'm taking a fairly extreme view here. But it does feel as if we all know that house prices are too high, the economy is stuffed, unemployment rates are too high yet no one wants to bear the pain of fixing those things. Someone is going to have to pay - should it be our children through higher taxes and ever-increasing student and mortgage debt or the elderly as they pass away?

(And no, I'm not saying inheritance tax would fix everything, just that we need to start looking at the fairest ways to get the economy back on track and house prices down etc without overly burdening our children).

It's interesting that 'we' (depending on your age) are the first generation in the West since industrialisation that have less than the generation above them.

erebus Interesting point!

It wouldn't bring property prices down though. I live in Belgium where rental seems more normal than in UK. True, I live about 20 minutes outside Brussels, but I could not afford to have here the kind of house I own in UK. I am currently sitting in a rental property here which is badly built and appallingly insulated (and the bloody double glazing lets draughts in), which was built in the late 80s, is 4 beds with study, bathroom and shower room, garage, cellar and garden, and the rental is 2150 euros per month. As it's counted as service accomodation (no married quarters here) we pay nothing like that for it. To buy this house would cost about 650,000 euros.

A house is only worth what someone will pay for it. If people are willing to pay silly money for houses, then that's down to them. We bought our last house with the view that it was the house we would live in long term (and we've owned it for 20 years next year), and that it didn't matter what house prices do, because we are in for the long haul and want to live there for most of our retirement as well. That seems to be the problem to me; people are in it for short termism, not finding a house and staying there. My ils have owned their house since 1959, and are still there(well, she is, he died last month).

'It's interesting that 'we' (depending on your age) are the first generation in the West since industrialisation that have less than the generation above them.'

In what way do you have less? My ds is 16 today. He has more than I ever had at his age materially and has had throughout his life. You have access to tax credits and benefits that weren't available when I was in my twenties, and the technology that you take for granted (internet, mobiles, iPods) wasn't even invented when I started work in 1984.

The only incentive I could see working would be to cap the exemption from care home fees at the level of the median 2BR flat in any given health authority area.

So if one of a couple in a giant house has to go into care, the other can either move, draw on their savings, or get a reverse mortgage on their property if they wish to remain in it.

I really don't see the logic of making younger generations of workers pay for care homes for property millionaires.

There is no exemption from care home fees if you have a certain level of capital or income though is there? Fil has just been in one, and if there was an exemption I certainly didn't spot it and I went through the regs with a fine tooth comb. The only 'dispensation' as it were, was that their property wasn't taken into account as mil was still living in it. Regardless of that, they still wouldn't have got help due to savings and income levels, and that was fair enough.

Sorry haven't read the whole thread but I do think this is a big problem and under occupiers should be encouraged to down size. I think the council tax discount for single person households should go unless they live in a single person house. Second homes are also a big problem in some areas of the country to solve this they should only allow houses costing over, say, £800,000, in other words out of the reach of ordinary people with ordinary jobs, to be second homes.

My Mum has just downsized from an old 3 bed to a new bulid 2 bed. It's a shared ownership so the idea is that it frees up more for her to live on.

More of these should be bulit for this purpose IMO. However in her development there has been a v slow take up of these flats. maybe people dont know about them?

The problem with downsizing in this day and age is stamp duty. If you live in the SE, or in a popular city, then you are going to pay thousands of pounds in stamp duty and estate agents fees, solicitors etc. Stamp duty being the larger chunk.

If you don't free up a chunk of the capital in your larger house, there is very little financial incentive to downsize any more. So why should an older person move out of their home, leaving behind their memories, their neighbours and having to downsize a lot of their possessions?

I think there is a lot of unpleasant ill-feeling and envy demonstrated towards the elderly on this thread

Yes, our parents and grandparents generation may not have had to struggle so much to get a mortgage but many started with far, far less material wealth than many of us have enjoyed during our lives. They had far fewer educational and career opportunities too.

My parents (father deceased, mother 85yrs) both lived through a war with attendant rationing and everything else it entailed including loss of family members.

And not all elderly people conform to the steretype of "lonely" and "rattling around in a house far too big for them".

My mother is 85yrs old and (having brought up 4 dc) enjoys living alone. She has an active life despite not being physically very strong. She enjoys the space she has which isn't huge (having already down-sized once). Once you are confined to your home - the space available actually becomes more important, not less. My late father worked hard all his life to pay for their house and to ensure they didn't have to rely on a state pension. In my view, she is entitled to live wherever she wants.

I'd be interested to see how opinions would change on here thirty years hence!!

I agree that inheritance tax should be lowered or scrapped. We are taxed left rigth and centre on every penny, why should they get to tax it again?? If my parents want to leave their money to my sister and I why the bloody hell shouldn't they?

Here here. I am totally with the last 2 posters. Some people always seem to want something for nothing at the expense of those who have been prudent and careful.

I am not unlike that myself. We are prudent and careful and watch every penny (mind you I think most people are in this awful recession). Some of my dd's Y13 friends have their own car, we cannot even afford to put my dd on my insurance but that is another story.

I mean exemption in that the home could be valued at up to the median price of a 2BR flat. If you're living in anything more expensive, you pay, your family pays, or you downsize.