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Is London really full of normal working people living in million pound houses?

144 replies

Morosky · 24/09/2009 23:21

Because Heseltine seems to think there is, he just said so on Question Time.

Who is out of touch me or him?

OP posts:
morningpaper · 25/09/2009 09:52

I think anyone who has forsaken holidays in order to pass money onto their children is bonkers

No I fully intend to spend any money I may have (which is bugger all as I don't even have a pension)

sleepwhenidie · 25/09/2009 10:10

In response to OP, yes there are - in May 2009 average house price in London was £352k, East Anglia £182k, North £140k - when you consider that, how can a blanket rule be fair? Property values do not necessarily correspond to income either Onebatmother - how do you automatically link £100k salaries to £1m houses ?

morningpaper · 25/09/2009 10:13

At the end of the day every family is likely to be worse off by several pounds a year in 2 years' time

No means of accomplishing this is going to be perfect

But at least this is one tax that people CAN opt out of (by moving house) - we are all going to be whacked by taxes that we CAN'T opt out of, so I think that worrying about this sort of tax is mad

sleepwhenidie · 25/09/2009 10:21

great plan morningpaper, whilst you are right about all of us being worse off, I'm not sure about the benefit of selling your £1m plus house (which may just be £1m due to you having owned it for 10 very happy years)to move to a smaller (say £800k), less suitable one, to avoid paying this new tax but pay £32k stamp duty plus moving costs on the way?

Not that I am worried about this tax though, apart from not owning a "mansion", itsnever gonna happen...even the lib dems themselves don't seem supportive of the plan !

shonaspurtle · 25/09/2009 10:34

I may have missed a post or too, but the consensus so far seems to be that people are living in average houses that are worth 600/700k but not a million.

Is it that you're worried (hoping) that house price inflation with push them above the magic mill? I wonder if this tax would actually stop that happening for "normal" houses?

Is it really not worth considering taxing the very well off in the rest of the country because a few people in London who are not considered well off (millions would beg to differ) may be affected?

Isn't that what tends to happen with all taxes?

fiercebadrabbit · 25/09/2009 10:38

Our house in SW London is worth more than £1m and it is a) biggish with a reasonable sized garden (for London, nothing special by outside London standards) and well located in zone two but by no means a mansion and by no means in the best location (on a main road, plus it is fairly tatty and we are very slowly doing it up.

By that token we are by no means rich, and nor are our parents,though we're not poor either - middle class I'd say. But eg we struggle to fund an annual holiday abroad for all of us. Like someone else on here, dh and I both profited hugely on properties we bought during the 90s boom and were able to take a huge leap up the ladder on the back of that. We're self employed and if we applied for a mortgage on our house now we wouldn't get one.

OrmIrian · 25/09/2009 10:46

"If normal houses go for over a million we need a property crash "

Yep.

willali · 25/09/2009 10:47

I think there will be very many situations across the South East as follows:

Couple in the 60's / 70's bought a family home for tens of thousands. They brought up their family in it and they flew the nest. The couple decide not to down size as they like the neighbourhood, have lived there for decades and the extra bedrooms are useful for the grandchildren to stay. THey managed to pay off the mortgage years ago and so the upkeep of thr house is quite manageable on pension income.

Lo and behold the property is now worth over £1m due to the prevailing market...

Should people in this position, probably on a fixed income, really face an additional tax just because they have lived in the house for a long time......

Madness and badly thought through

wilbur · 25/09/2009 11:14

AvengingGerbil - "Inherited wealth is iniquitous" - that's a pretty strong statement . While inheritances on the scale of Paris Hilton may be ludicrous and self-defeating, how can you say that about people who work hard, save for old age (as we are told to by the Gov't, and that's every govt, not just the tories) and have some left over when they die? I inherited money when my parents died - my mother died very suddenly at 60 and my father after an illness a few years later. They had both worked all their lives, they had a nice house and a few assets which was split between the tax man (by far the lion's share), my sister and me, and various charities. So yes, I suddenly found myself with a fair bit of money - what would you have had me do with it? Give it all to charity? Knowing that would have broken my parents' hearts, that they should have worked so hard for their daughters and possibly grandchildren and then we treat their money with contempt? It's easy to paint this kind of issue as black and white - people who pass money down their families = capitalist bastards, but I really think you should get in touch with some grey areas.

morningpaper · 25/09/2009 11:18

I don't know anyone in that situation

and they will need to down-grade their house

we're all going to be shafted tax-wise, at least this one is OPTIONAL

springlamb · 25/09/2009 11:20

No. He's full of it. Well, I think he is talking about anywhere within 4-5 miles of Westminster. I live 11.5 miles from Westminster, still within Greater London, and about 50 minutes by public transport from Westminster (25 mins by car outside rush hour). Lived in London all my life: Brixton, Tulse Hill, Streatham, now a couple of miles further out.
Just sold a 3 bed townhouse with garden and garage in S London for £210,000 (after 15 months on the market!).

morningpaper · 25/09/2009 11:20

If people want their children and grandchildren to have money, they need to GIVE IT TO THEM. Their hearts can't be broken because they are DEAD. Inheritance should be flat-rate taxed at 90%. Better to tax the dead than the living!

susie100 · 25/09/2009 11:28

I strongly disagree with you. Your money is taxed at source and then again if it produces an income. 90% inheritance tax, are you bonkers?

Whether or not you think saving for your future rather than going on holiday is crazy or not surely it should be UP TO ME to decide to do with it once it has been taxed. Why should there be an extra penalty for being prudent or wanting to give you children a chance/advantage you did not have.

susie100 · 25/09/2009 11:29

I would not worry about it too much, it is a lib dem policy after all.

artichokes · 25/09/2009 11:30

But MP inheritence tax applie to cash gifts given in the 7 years preceeding death. As I said earlier my Mum gave me money for my first flat and then died aged 60 - five years after the gift was given. We paid inheritence tax on the gift as if it was part of the estate. So essentially I wasvpunished for losing my mum too young.

EldonAve · 25/09/2009 11:34

I agree with susie100 - it's the libdems so it won't happen

springlamb · 25/09/2009 11:35

I know you are all concerned with somewhat loftier things, and I know you perhaps see 'London' as ending at Zone 3, but I shall continue waffling on about us here on the borders of Zone 4/5, just for the complete picture.
We certainly don't all have £100K salaries or all work in the media/city. In this road we have a painter/decorator, a water board man, a council man, a builder, a motor mechanic, 2 teachers (secondary), a chauffeur, an accountant, and several little old ladies one of whom's parents bought the house when it was built in 1931 for £500. She's 83 now and lives there with no central heating!
See, quite normal, but we still can't find a window cleaner for love nor money!

wilbur · 25/09/2009 11:52

artichokes . That's very tough. MP - I support the general principle of inheritance tax (although I think there should be a more generous nil-rate band) but what about the whole nursing home payments issues. Parents can't just give all their money away as they wish, there are rules about how much can go tax free and it's incredibly complicated. Much of people's money is often tied up in the family house anyway, and it's a bit rich to say blithely that someone should move out of a loved home in order to distribute their wealth - it can often be that move which finishes an elderly person off anyway. If you gift a house to your kids and still live in it, it still forms part of your Estate and so on. And if they need 24 hr care towards the end of their life, they need money to pay for it or they need to know that their children will hand back the cash they were given to pay for it. And yes, the Council is supposed to cover fees, but in practice (going through this with my aunt at present) what they offer can be substandard and difficult to access.

If we all knew exactly when we were going to die, clearly it would be much easier to manage our money, but in the meantime, people need to protect themselves and it seems unfair that they attract such disapproval (not to mention taxes) for doing so.

Sorry to get off topic, OP.

jeee · 25/09/2009 12:01

I find it difficult to see how people can disapprove of inheritance tax. After all, the person who benefits from the inheritance is NOT the one who has worked for the money. And my parents are worth around about the million pound mark, so I have a vested interest in raising the threshold.

morningpaper · 25/09/2009 12:42

But it's DEAD PEOPLE'S MONEY. I don't see why anyone is upset about taxing it. They are DEAD. If they wanted holidays then they should have taken them - and taken their children and grandchildren along too! There are millions of people on benefits in this country - we HAVE to distribute wealth more fairly - and taxing the DEAD is utterly fair!

ib · 25/09/2009 13:02

I'm very confused about this thread. Have I read it all wrong? I thought the proposal was to tax the amount OVER 1million - so if your house is worth 1.5 million, you pay on 500k.

No one in the 600-900 bracket need worry, and I believe they had also proposed an exemption for people on low incomes?

Yes, house prices in London are bonkers. But this scheme doesn't sound that insane, does it? If it might put downward pressure on prices in the borderline area, might even be quite good for stabilising the market in that range.

ib · 25/09/2009 13:02

I'm very confused about this thread. Have I read it all wrong? I thought the proposal was to tax the amount OVER 1million - so if your house is worth 1.5 million, you pay on 500k.

No one in the 600-900 bracket need worry, and I believe they had also proposed an exemption for people on low incomes?

Yes, house prices in London are bonkers. But this scheme doesn't sound that insane, does it? If it might put downward pressure on prices in the borderline area, might even be quite good for stabilising the market in that range.

ib · 25/09/2009 13:03

oops. sorry about double posting

wonderingwondering · 25/09/2009 13:15

The problem with inheritance tax is that produced very unfair results: the seriously wealthy don't pay tax on their estates: instead they 'donate' a painting or similar to the nation in lieu of the tax owed. And instead of it being carted off to the National Gallery, it's usually deemed culturally advantageous for it to remain where it is. The public have a theoretical right to go into these homes and view them. Do you remember Mark Thomas started knocking on the doors of country estates asking to view the publicly owned artwork.

Also, when parents of dependent children die, the estate would have been taxed at 40%, significantly reducing the pot left for the children's upbringing. That problem has been eased now by the ability to pass around £800k free of tax by being able to use both of a couple's tax allowance.

And very wealthy families help their children out during their lifetime anyway, so the unfairness exists, whether ou impose death duties or not.

The fact is, the people who paid IHT were the relatives of the middle classes, typical PAYE all their life types - not the extremely wealthy and privileged, nor those with enough wealth to make it worthwhile entering into tax planning arrangements. It was seen as a largely voluntary tax.

And to return to the OP's point: if you buy a house worth a million you pay a massive amount of stamp duty: it would be better to raise the amount you pay on purchase through stamp duty if you are serious about taxing people in large houses. Then is is genuinely voluntary, in that you don't have to buy such a house - to tax it on people's existing property is retrospective and unfair.

fircone · 25/09/2009 13:19

I think older people should downsize. We live in a road with several houses worth £1m + (not ours, though!). All these houses are occupied by pensioners, who bought the houses 30-40 years ago.

One woman complained to me that her children couldn't get onto the property ladder and how unfair it was. I was incredulous. She clearly couldn't see any correlation between her good fortune and her children's difficulty.

Older people may have saved and grafted to afford their homes, but it is house price inflation that has caused their wealth. So someone could have worked far harder and saved far more but because they live in, say, Hull (sorry, Hullites!) they are vastly less wealthy than someone who bought a house in Surbiton.

I think in the future we are going to have huge divides amongst ordinary people (not just landed toffs) in wealth based on what we inherited from our parents. And that is unfair.

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