Does anyone actually know what the property tax is rumoured to be?

[kirinm]

I’ve read a few bits and pieces and all I’ve gathered so far is they may get rid of stamp duty (a good thing for me personally) but then bring in other taxes which might include a general property tax and / or capital gains?

For buyers, surely the change is a positive one unless I’m missing something?

(Stamp duty on our current purchase is nearly £60k so if we somehow manage to avoid it, that would be brilliant).

It won't happen. Stamp duty works because at the point at which stamp duty is payable people have arranged finance for the purchase so they have access to cash (albeit they have had to factor it into their buying decisions). There are hundreds of thousands of property owners who (a) have already paid the stamp duty and/or who (b) don't have access to additional cash on an annual basis.

It isn't workable in practice and if it is implemented it will be very short term and they will either reverse it or the next government will abolish it.

The market has been broken since 2008. Before that there used to be around an average of 100,000 transactions per month, and since then it has been around 70,000 per month.

Exactly this - we are trying to relocate from the very nondescript outer suburb of London where I’ve always lived. Can’t sell, despite lots of viewings, because house is a bit quirky but also (largely) because the downsizers who would be our ideal buyer are very wary of what may be coming in the budget. We’d be affected by a new property tax, despite our house being 2 beds plus a box room and less than 1000 sq ft.

Every single 2/3 bed terrace in the not terribly fashionable, affluent looking or even in some cases salubrious area around us sells for upwards of £500K. The people who live in them are overwhelmingly young dual income families who send their DC to our very mixed local state school, and who are priced out of the larger ‘family’ houses in the leafier surrounding streets, which are now almost solely inhabited by older people. These go for between £1M and £2M, which given the borough we live in and the fact it’s far from central is ludicrous.

As a purchaser in your price bracket op, you also need to seriously consider how any additional tax burden on the property will affect its value.

That would be my biggest concern. A property tax does make sense tbh.

think the problem is not that they are trying to break it now - more that it has been pumped with so many props for so many years and has been awash with tax free gains. This was temporarily an easy way to create percieved "growth, wealth and jobs". Great for a limited amount of time...
The problem now is it's having an opposite effect. Such a high proportion of income is being used to service mortgages, debts and rents around housing - that real growth is becoming almost impossible without severe inflation.
The truth is that cheaper housing will help massively because that extra money would return to more productive use in the general economy. I'm heavily invested in property personally but I can't argue that cheaper housing wouldn't be better for everything other than my own net wealth.

This, it's damaging productivity

£500k won’t get you a flat in half of London. I’d imagine that lots of people (including us) stretch themselves to extreme levels to be able to buy at all.

Not sure about that

£1.0m buys you a 3 bed terrace where I live. It’s totally ridiculous and it is not a fancy area.

It has to be a relatively nice area though.

What I do know is that just because people living in London are having to pay ridiculous prices for housing doesn’t mean they’re all ‘wealthy’

We aren't poor though & plenty have not earned that money just bought at the right time.

Things like utilities are also going to get more expensive which will not larger homes more as people will be less reluctant to take it on.

It is an area we love as we’ve been here for over a decade (in a one bed flat) and our DD is at school and there is a great community here. But it’s in one of the poorest boroughs in London. There is a lot of crime still. It is South East London so it’s also not served by the tube.

It has rapidly changed because people from more expensive areas have moved in because they’re priced out of their once cheaper areas.

Well we made basically no money on our flat despite spending tens of thousand on it (we bought in 2016 at the peak) and the only reason we can afford to buy a house is because after nearly 20 years in my career I finally earn enough if we times our combined salaries by 5.5.

Not everyone has made money on housing.

But if you’ve made no money, there’s nothing to tax.
They can’t tax games you haven’t had.
But it is right that they do tax unearnt income before adding the burden to PAYE.

It's still going to be a relatively nice area or a nice pocket of it if a terrace is 1m plus. I mean Hackney has very high levels of child poverty but roads full of wealth Lots of desirable areas of London have high crimes rate.

@kirinm I never said they have but many people have which is part of the problem.

You still need to be a high earner to buy a 1m house if you have no equity

I just think it's silly to pretend that people with 6 figure incomes in 1m houses or people with lower incomes but 500k equity are not wealthy. Relatively compared to the rest of the country they are.

If you do the calculation properly and factor in inflation, most property hasn't actually gained that much in value in real terms.

I think a property tax which raised the same (or a bit more) than council tax and stamp duty, and binning off stamp duty, would bring some much needed fluidity to the property market. I really don’t like all these cliff edges that they put into the tax system though. My house is worth about £350k so not in the remit of the rumours (and I’m more likely to downsize than upsize) but property inflation will drag more and more houses into this, plus create a warp in the market at prices where the border is set, plus affect entire chains, even the first time buyer at £130k who needs the chain to not collapse around the £500k buyers/sellers 3 links up.
If I was paying £60k stamp duty in November would be worried about a double sting tbh.

In recent years that's true. Pre crash which we never recovered from was different.

One of the things they are talking about is a property tax, calculated on the value of the property (payed annually), not on the gain made through owning it. So in this scenario, there would be tax to pay just for owning the asset, even if it's actually gone down in value.

Actually I think this new proposal would be cheaper in a lot of cases, if it’s what was linked from the think tank upthread. We are soon to complete on a £575k house. Stamp duty is £18,750. A 0.54% tax would be £405 a year. We’d have to live in the house for 46 years to pay the same as the stamp duty. The uncertainty isn’t good for the market though.

If the seller gets taxed they will pass it on to the buyer. Or not sell at all if the tax is really high.

Lots of countries have annual property taxes.

We pay annual council tax linked to property value already.

@BadgernTheGarden linked to values from when though? Because all the ones I know are completely outdated!

The point I’m trying to make is that when rents are £1000 for a room in a house share and houses that are far from being mansions require double incomes at many multiples to buy, that some of the people living in them are probably having to stretch themselves. They don’t all have (and we certainly won’t have) an extra £12k a year to pay a property tax.

I agree and I suspect if there are these changes during our purchase that our seller will either pull out or try and get us to increase.

I'm not disagreeing that housing costs don't take up to much of people incomes. They absolutely do and as I said upthread its damaging productivity.

But I don't think the current system is working. I would like to think if they did introduce a property tax they would make anyone who paid stamp duty recently excempt for some time.