Trying to buy a house in this area is near impossible

[Blackcurrant]

lounge lizard Wrote:

-------------------------------------------------------

It is a free market and should be, for

> better and for worse, some people took a risk that

> for one I was 'nt willing to take, and have gained

> quite spectacularly from it.

It isn't really a free market though as the government controls demand via the bank rate and supply via planning laws. House prices are a matter of government policy and people are right to demand that policy is changed to bring prices back down.

As for gaining spectacularly from the risk - it's nothing to congratulate as it's essentially a lottery win that owes nothing to talent, judgement or hard work. The London economy shouldn't revolve around random windfalls from property. People should earn their fortune by using their brains and being innovative and productive, which is what makes an economy vibrant and healthy. What we currently have is an economy that rewards couch potatoes with huge windfalls for doing nothing. All the more galling that those who've won the windfalls are often the ones to complain about benefit scroungers and excessive tax.

[PokerTime]

Hmm Kensington and Westminster aren't really good examples of anything. They have always had large numbers of foreign dwellers and most people in the country could never afford to live there.

The media is not the best source of a sensible overview on this half the time anyway. Blackcurrant is right in that deregulation and other measures designed to keep the market bouyant are more to blame. After all, housing inflation has affected ALL parts of the country over the past 30 years. We've gone from a country where a third of people lived in social housing in the 70s, to one were 70% of people now owns their homes. That's a major shift that can not be related to immigration. It's that shift, I believe, has fuelled the demand and created the unaffordability.

[Loz]

Blackcurrant Wrote:

-------------------------------------------------------

> Your initial point was that assets have no value and are worthless. I think you've realised that

> was nonsensical as you've repositioned and are now saying assets do have value but that value is hard

> to specify exactly until point of sale.

When I say assets have 'no value' I mean that they cannot be correctly given a value, not that that are worthless. What is a painting by, say, Monet worth? We can guess, but we do not know and we could be out by a long, long way. How do you tax that? Shares with a paper 'worth' of ?10k today might have been 'worth' ?20k yesterday. The only time you can know the correct and accurate value is when it is sold. Anything else is a just a guess, nothing more. And it may be a very bad guess.

> Fine. But it can be estimated easily and accurately enough to make taxation practical. Even on eBay I can

> establish market value of any common item by selecting completed sales and looking at

> comparables. Houses are valued the same way. It's even easier to value shares or other financial

> assets including cash (which is also an asset).

You have a strange idea of the word 'practicable'. You want to tax people based on a guess? And a guess of every single major item of every person's wealth? A guess that might be out by a long way (cough, *Foxtons^) or, even if reasonably accurate, might be very wrong within a very short time of it being made (e.g. shares)?

I sold my car last year as I was going away. The Parker's guide told me it was 'worth' ?7500. I ended up selling it for ?6000. Parker's 'valuation' of my car was, therefore, wrong. It wasn't the value at all, was it? It was wrong by 25%. I only knew the value of my car by selling it.

> In any case your point that property, being a worthless asset, can't be taxed is pretty

> obviously untrue as various countries already do collect wealth taxes based on property, including

> the UK, which uses residential property values to calculate council tax. You can justifiably quibble

> about how efficient or fair the valuation process is, but that's very different from arguing that

> the value is nil, which I think you've got muddled about.

Look back at my post - I never said it 'can't be taxed'. It is, however, a stupid idea and can't be done with any accuracy.

Council tax is a great example of the monumental issues of trying to tax assets anywhere near accurately. It works on valuations made 23 years ago and even then only to put properties into rough bands. And 23 years later, people are still putting in appeals on the valuations made. Every time it suggested that a revaluation is made it is quickly thrown into the 'Too Hard' basket by politicians, and for good reason. Can you imagine trying to do it every year?

And yet you want to extend this hard-to-do guesstimate to wealth in general, with tax to be paid on every asset's guessed value at a specific time, re-guessed by the taxman at least every year? That's your idea of a practicable solution? And we've not even got to the issues and problems around taxing illiquid assets.

Taxing wealth is just a bad idea and usually impossible to do accurately. It can sometimes be done in very, very small ways (and usually done badly, like council tax), but it is just not practical on a larger scale.

[Jeremy]

The wealth tax idea is equally hair-brained as the CGT on all sales. Morally wrong to tax somebody for something they've worked hard most of their life for. And whatever ppl say, WOULD force owners out of their homes. The people droving up prices are the buyers, not those who have lived there for ages. You can't tax people out of jealousy.

[worldwiser]

Lounge lizard: curious to ask how you manage to navigate your way through London only shopping at establishments that pay the LLW. There are only 400 or so companies that do and most of them are large employers like KPMG, Barclays and Gt Ormond St hospital. Easy for them to do it as a marketing exercise but small local businesses will be swiftly snuffed out by moving significantly away from the competition. I guess if you have an audit job doing, you're ok, but pretty much no-one is paying the LLW yet.

[StraferJack]

Didn't we hear the same arguments before minimum wage was introduced?

[DuncanW]

Possibly, but they're quite different concepts. Min wage is compulsory, LLW is not. Therefore firms that consider adopting it may well feel they would be making their cost base uncompetitive.

[Blackcurrant]

Loz Wrote:

-------------------------------------------------------

> Blackcurrant Wrote:

> --------------------------------------------------

> -----

>

> > Your initial point was that assets have no value

> and are worthless. I think you've realised that

> > was nonsensical as you've repositioned and are

> now saying assets do have value but that value is

> hard

> > to specify exactly until point of sale.

>

> When I say assets have 'no value' I mean that they

> cannot be correctly given a value, not that that

> are worthless. What is a painting by, say, Monet

> worth? We can guess, but we do not know and we

> could be out by a long, long way. How do you tax

> that? Shares with a paper 'worth' of ?10k today

> might have been 'worth' ?20k yesterday. The only

> time you can know the correct and accurate value

> is when it is sold. Anything else is a just a

> guess, nothing more. And it may be a very bad

> guess.

>

> > Fine. But it can be estimated easily and

> accurately enough to make taxation practical. Even

> on eBay I can

> > establish market value of any common item by

> selecting completed sales and looking at

> > comparables. Houses are valued the same way.

> It's even easier to value shares or other

> financial

> > assets including cash (which is also an asset).

>

> You have a strange idea of the word 'practicable'.

> You want to tax people based on a guess? And a

> guess of every single major item of every person's

> wealth? A guess that might be out by a long way

> (cough, *Foxtons^) or, even if reasonably

> accurate, might be very wrong within a very short

> time of it being made (e.g. shares)?

>

> I sold my car last year as I was going away. The

> Parker's guide told me it was 'worth' ?7500. I

> ended up selling it for ?6000. Parker's

> 'valuation' of my car was, therefore, wrong. It

> wasn't the value at all, was it? It was wrong by

> 25%. I only knew the value of my car by selling

> it.

>

> > In any case your point that property, being a

> worthless asset, can't be taxed is pretty

> > obviously untrue as various countries already do

> collect wealth taxes based on property, including

> > the UK, which uses residential property values

> to calculate council tax. You can justifiably

> quibble

> > about how efficient or fair the valuation

> process is, but that's very different from arguing

> that

> > the value is nil, which I think you've got

> muddled about.

>

> Look back at my post - I never said it 'can't be

> taxed'. It is, however, a stupid idea and can't be

> done with any accuracy.

>

> Council tax is a great example of the monumental

> issues of trying to tax assets anywhere near

> accurately. It works on valuations made 23 years

> ago and even then only to put properties into

> rough bands. And 23 years later, people are still

> putting in appeals on the valuations made. Every

> time it suggested that a revaluation is made it is

> quickly thrown into the 'Too Hard' basket by

> politicians, and for good reason. Can you imagine

> trying to do it every year?

>

> And yet you want to extend this hard-to-do

> guesstimate to wealth in general, with tax to be

> paid on every asset's guessed value at a specific

> time, re-guessed by the taxman at least every

> year? That's your idea of a practicable solution?

> And we've not even got to the issues and problems

> around taxing illiquid assets.

>

> Taxing wealth is just a bad idea and usually

> impossible to do accurately. It can sometimes be

> done in very, very small ways (and usually done

> badly, like council tax), but it is just not

> practical on a larger scale.

Nevertheless, various countries do already tax property, including the US and UK. The most likely route towards increasing wealth tax will be via rebanding council tax, which is already on the cards.

[Blackcurrant]

Jeremy Wrote:

-------------------------------------------------------

> The wealth tax idea is equally hair-brained as the

> CGT on all sales. Morally wrong to tax somebody

> for something they've worked hard most of their

> life for. And whatever ppl say, WOULD force owners

> out of their homes. The people droving up prices

> are the buyers, not those who have lived there for

> ages. You can't tax people out of jealousy.

I don't see any moral problem in taxing unearned windfalls that have happened as a result of government policy. It would be preferable to use policy to drive house prices back down rather than recovering the misallocated wealth through tax, but the current lot are too terrified of triggering another banking crisis to go down that route.

[worldwiser]

It'd be next door to impossible to impose LLW. Where would the boundary be drawn? M25? Zones 1 and 2? Based on place of work or home address? Why should employees in Croydon be on the same wage as someone working in the West End? LLW will only ever happen gradually and without the force of law.

[LadyDeliah]

???? Wrote:

-------------------------------------------------------

> the old SJ 'wot me guv' tactic...sigh.

>

> Anyway, do you think there's been a rapid increase

> in population in the last 20 years which is

> accelerating? Do you think immigration has

> contributed to this? Do you think part of the

> housing crisis is because of this unanticipated

> increase in population (from migration/immigration

> and birth /morbitity rate changes) Or...don't

> mention the war?

We would have to look at the numbers of Brits and others leaving the UK to work this one out, but the govt don't collect that data. We would also need to look at whether the birth and death rates are going up or down and whether more people are living in smaller spaces if we want to look at overall effect on housing.

Plus we need to take into account how many houses are left empty because they are investments, not homes and if this has increased or not.

In addition, I'd be interested in looking at how many families have changed their structures, e.g. Old person living in big house alone cos adult kids have all buggered off to that London and are living in their own individual housing units, or mum & dad break up so another housing unit is required to house the absent parent.

Connecting increasing immigration with housing stress is far too simplistic and probably incorrect.

[LadyDeliah]

As an aside, the Brits are the biggest group of EU migrants moving into other EU states, so the numbers leaving the UK, even if we just count Europe, are huge.

[Jeremy]

Blackcurrant Wrote:

-------------------------------------------------------

> I don't see any moral problem in taxing unearned

> windfalls that have happened as a result of

> government policy.

Please explain this "windfall". How does somebody living in a property - which has significantly gained in value - benefit from that increase? Unless they sell up and downsize.

[Otta]

That's what I don't get too Jeremy.

[XIX]

I genuinely don't understand why one of the solutions being suggested here is to raise taxes and penalise property-owners, by extending CGT to cover primary residences.

How is that going to tackle high property prices?

Has anyone thought of the effect that it would have? It would make people reluctant to move (the combined costs of selling and buying - CGT and stamp duty, let alone solicitors fees etc - would be excessive), and hence supply of houses on the market would drop. Which is exactly counter to what those suggesting this measure want - ie increased supply of houses on the market. Property is one of the ways in which normal people have been able to generate wealth and better their lot in life (and before I'm pounced on by the left-side of the debate, I don't think there is anything wrong with that), and I don't think we should try to prevent people from doing so (within reason of course - I agree that secondary properties, unoccupied homes etc should be taxed accordingly).

Whilst penalising the wealthier may make some people on the left-side of the political divide feel warm and fuzzy for a while, it stops a long way short of actually solving anything. And please lets not fool ourselves into thinking that increased money in the Government's tax-coffers would translate directly into whatever you think it is they will do with the money to solve the problem. We all know it doesn't work like that. The allocation of money will change according to the subject of public interest of the moment, or with changing Governments.

I think increasing a tax like this would be little more than a reactionary knee-jerk measure which re-assures some people that the less fortunate in life are being looked after. But of course it doesn't do anything for them directly at all.

and as for "recovering misallocated wealth" ?????????????????? This sounds utterly orwellian.

its not 'misallocated'. its generally people's hard-earned money, which they have put in to property, which has appreciated over time. contrary to the seeming popular belief for a lot of people on here, I don't think most people were born in to or inherited great wealth. Most people are normal, and work hard for years to buy a home to live in.

The focus should be on the Government ensuring there is enough supply of cheaper housing at the bottom end of the market for people to buy, not just hoiking up taxes for property-owners. Counter-productive nonsense.

[EDLove]

Thank God you joined this thread! Completely agree.

XIX Wrote:

-------------------------------------------------------

> I genuinely don't understand why one of the

> solutions being suggested here is to raise taxes

> and penalise property-owners, by extending CGT to

> cover primary residences.

>

> How is that going to tackle high property prices?

>

>

> Has anyone thought of the effect that it would

> have? It would make people reluctant to move (the

> combined costs of selling and buying - CGT and

> stamp duty, let alone solicitors fees etc - would

> be excessive), and hence supply of houses on the

> market would drop. Which is exactly counter to

> what those suggesting this measure want - ie

> increased supply of houses on the market. Property

> is one of the ways in which normal people have

> been able to generate wealth and better their lot

> in life (and before I'm pounced on by the

> left-side of the debate, I don't think there is

> anything wrong with that), and I don't think we

> should try to prevent people from doing so (within

> reason of course - I agree that secondary

> properties, unoccupied homes etc should be taxed

> accordingly).

>

> Whilst penalising the wealthier may make some

> people on the left-side of the political divide

> feel warm and fuzzy for a while, it stops a long

> way short of actually solving anything. And please

> lets not fool ourselves into thinking that

> increased money in the Government's tax-coffers

> would translate directly into whatever you think

> it is they will do with the money to solve the

> problem. We all know it doesn't work like that.

> The allocation of money will change according to

> the subject of public interest of the moment, or

> with changing Governments.

>

> I think increasing a tax like this would be little

> more than a reactionary knee-jerk measure which

> re-assures some people that the less fortunate in

> life are being looked after. But of course it

> doesn't do anything for them directly at all.

>

> and as for "recovering misallocated wealth"

> ?????????????????? This sounds utterly orwellian.

>

>

> its not 'misallocated'. its generally people's

> hard-earned money, which they have put in to

> property, which has appreciated over time.

> contrary to the seeming popular belief for a lot

> of people on here, I don't think most people were

> born in to or inherited great wealth. Most people

> are normal, and work hard for years to buy a home

> to live in.

>

> The focus should be on the Government ensuring

> there is enough supply of cheaper housing at the

> bottom end of the market for people to buy, not

> just hoiking up taxes for property-owners.

> Counter-productive nonsense.

[mikeb]

Maybe we should lounge this discussion now - I'm not sure it's about ED any longer ...

Most gains from house price appreciation are not down to "hard work" - they are a windfall or an investment gain if you will. By all means, have an allowance for money spent on improvements, just like any other CGT asset.

Yes you don't realise the gain until you sell, which is why it's better than a mansion tax. While we're at it, I'd reduce stamp duty, which is a ridiculous tax - tax the realised profits not the transaction itself. I don't see why CGT would reduce mobility: it comes from a gain i.e. the cash is there. If it means you have less to spend on your next house, then so be it - so will everyone else (and just maybe price rises might be tempered).

And the current "misallocation of wealth" is being driven by government policies already: gains from property are undertaxed compared to other forms of investment, leading to an excess of investment in property.

We need to equalise tax between UK tax residents and non-residents - that just encourages fast foreign capital inflows.

And yes we need more new build houses where people want to live - the Victorians at least had this right, even if the build quality wasn't all that (I'm not advocating more back-to-backs!).

This isn't about penalising homeowners - in fact, they still get to keep the vast majority of market-driven gains they make on their property. It's about a more equitable society, in particular the intergenerational equity that others have noted. By our casual approach to this situation (tax, planning laws, supply), we are entrenching the split between haves and have-nots. This will come back to bite us at some point.

[Jeremy]

mikeb, it's not just that it would be harder to move "up the ladder". Moving like-for-like (for instance for work reasons) would be impossible unless you have large cash savings. It wouldn't be practical or fair. "Then so be it" doesn't really cut it for me, I'm afraid!

[????]

so presumably if you lost money on your home you could claim a rebate then?

[????]

The simple and obvious answer as a gazillion people have said is to:

a) build more homes

b) not stoke up booms for political reasons

the 'state', in one form or another, bears the most responsiblty for a) not happening and is responsible for b)

[Sophron]

Totally agree with XIX and EDlove.

[Too Good To Be True]

I would abolish stamp duty for primary residences. Moving house should be cheap. This helps the labour market.

Make Council Tax much more equitable. In particular more bands at the top.

If a residence is not occupied, owner must pay Council Tax at double rate.

[mikeb]

Jeremy - I have no stats to back this up, but I would have thought moving like-for-like is far less common than downsizing / upsizing or moving to another part of the country entirely. Ideally, house prices would be stable so there would be little tax paid. But if they start rising then this should temper it.

Quids - yes, fine with me to have a capital loss to offset as with other capital losses. I agree with you that we need more houses and fewer booms.

If houses are indeed not an investment but instead somewhere to live (akin to a consumer good) then they must be the only consumer good where price rises are celebrated.

[Too Good To Be True]

Oh and if you are old and can't afford the new Council Tax bands, you get the option of having accrued Council Tax deducted when you sell the house or deducted from your estate when you die.

Like someone else said benefiting from house price rises is pure luck.

[StraferJack]

i have little interest in taxing property

but if we imagine a scenario where "all"* of the homes which supposedly need building are built - who sells them and how much would they be?

I'm not as convinced we have a shortage of property and we need to BUILD a lot more homes as much as I am that property is too expensive. (as I've said before the demand for higher prices isn't just volume driven)

Building a lot of new homes, even discounted to 70% current market is not enough help to enough people

I think there is a lot of housing vacant which, if property were cheaper or not seen by the owner as an investment, would be released back on to the market

* the number can be whatever any given reader thinks would work