Should Stamp Duty Be Abolished ?

[Pork]

IroningMan said:

'There needs to be a house price correction/we must burst the bubble' = 'I want to ride the next wave.'

I can only speak for myself, but you couldnt be more wrong. I can see no positive to homes going up in value as quickly as they have over the last 15 or so years and don't ever want to see rises of the like again in my lifetime.

[Zod]

Derek Chevalier said:

Zod said:

Derek Chevalier said:

It is indeed a lot of nonsense the Government keeping rates at record lows in an attempt to stop the bubble deflating. Short term thinking, but will have long term implications.

It is doing nothing of the sort. It is keeping rates low because markets remain ready to lend at low rates to the UK and inflation is not running rampant. When rates do start to increase, they will increae gradually, most likely in 25 basis point steps. An immediate increase to the 5% suggested earlier would bring about a collapse in the whole economy.

How are you able to predict that rates will increase slowly? Does the UK not have any external influences?

So long as there is no massive shock to the economy, the BoE will increase rates slowly, seeking to move in step with the market or even to anticipate it. If you look at the delta of rates in the last decade compared with previous decades, it is reasonable to expect increases to be in 25 or 50 bp steps, rather than the 100 bp steps we used to see. 100 bp on an 8% base rate probably represents a less than 10% ncrease in interest payments for mortgage borrowers (assuming lending rates are base + 3%. 100 bp on a 0.5% base rate represents a 28.5% increase in payments.

[Ozzie Osmond]

Zod said:

Precisely. Why should I have to pay a massive slug of tax (out of income on whcih I have already paid tax) to move to an equivalent house elsewhere?

Here are some other taxes you pay out of income which has already been taxed, so there's nothing special about stamp duty.

• VAT
• Fuel duty
• Booze, fags & gambling duty
• Airport tax
• Council tax

You almost certainly pay much more in these taxes than you will ever be charged for moving house.

In some ways stamp duty can be seen as the quid pro quo for no CGT on main residence.

[sugerbear]

Zod said:

Derek Chevalier said:

Zod said:

Derek Chevalier said:

It is indeed a lot of nonsense the Government keeping rates at record lows in an attempt to stop the bubble deflating. Short term thinking, but will have long term implications.

It is doing nothing of the sort. It is keeping rates low because markets remain ready to lend at low rates to the UK and inflation is not running rampant. When rates do start to increase, they will increae gradually, most likely in 25 basis point steps. An immediate increase to the 5% suggested earlier would bring about a collapse in the whole economy.

How are you able to predict that rates will increase slowly? Does the UK not have any external influences?

So long as there is no massive shock to the economy, the BoE will increase rates slowly, seeking to move in step with the market or even to anticipate it. If you look at the delta of rates in the last decade compared with previous decades, it is reasonable to expect increases to be in 25 or 50 bp steps, rather than the 100 bp steps we used to see. 100 bp on an 8% base rate probably represents a less than 10% ncrease in interest payments for mortgage borrowers (assuming lending rates are base + 3%. 100 bp on a 0.5% base rate represents a 28.5% increase in payments.

Keep your fingers crossed. Across the pond there wont be any more QE and interest rates are going to rise.

QE has devalued the pound. Great for exports, but our imports cost more, this could lead to a rise in inflation. Which in turn is controlled by interest rates. A fairly quick runaway with inflation would force the Bank of England to do something drastic to get it back to their target. or just let it run away.

The IMF warned quite recently about low interest rates.

[Jules360]

Derek Chevalier said:

Jules360 said:

Derek Chevalier said:

Jules360 said:

they are more confident and start accumulating more debt

EFA

Which is collateralised, so in effect you are just spending your own profit. So where is the problem ? Velocity of money is the key to an economic revival.

How are you defining profit? Also, how can the debt be collateralized when in the vaat majority of cases, the asset belongs to the bank? [/

Whilst the debt is real, it is backed up by actual money rather than people borrow money they have no way of repaying.

[Diderot]

oyster said:

Diderot said:

oyster said:

As I said previously, removing stamp duty is only really going to benefit estate agents and conveyancers.

How did you work that one out? Does the 4% that the govt will pilfer from me not count then?

But you have that money already. If you choose not to move then you don't pay it.
It's not like income tax where it's taken at source.

If people have to move for work, they could rent, which avoids the tax.

Most people bung the stamp duty on the new mortgage when they have the audacity and bare faced cheek to want to move house. The only winners are banks and the govt. A compact of theft between thieves.

[JonRB]

Diderot said:

Most people bung the stamp duty on the new mortgage when they have the audacity and bare faced cheek to want to move house. The only winners are banks and the govt. A compact of theft between thieves.

A few years ago a "government think tank" observed that Stamp Duty was discouraging people from moving (well, duh) and that tax revenues were falling. They proposed some kind of house value tax for people who didn't move.

Fortunately that proposal was not accepted.

[Pulse]

Surely if you get more people moving with lower taxes, you'll still earn the same but also help the economy?

[Zod]

Ozzie Osmond said:

Zod said:

Precisely. Why should I have to pay a massive slug of tax (out of income on whcih I have already paid tax) to move to an equivalent house elsewhere?

Here are some other taxes you pay out of income which has already been taxed, so there's nothing special about stamp duty.

• VAT
• Fuel duty
• Booze, fags & gambling duty
• Airport tax
• Council tax

You almost certainly pay much more in these taxes than you will ever be charged for moving house.

In some ways stamp duty can be seen as the quid pro quo for no CGT on main residence.

Yes, yes, I know that. I've never been asked to pay a five or six figure sum for nay of those though.

It is not the quid pro quo for no CGT. It was always an administrative duty at a low level until Brown spotted it as a revenue raiser and method of penalising the rich. What infuriates me is that a Tory Chancellor has made it even worse.

[arfur sleep]

Looking at buying a house which is £265k so I'll pay £8k in stamp duty making the house £273k to buy.

Talking to agents and vendors it would seem that the band of houses worth between £250k and £300k is being hardest hit by this tax at the moment as its hard to swallow an extra £5k in tax cost (the difference between the 1% rate and 3% rate when applied to an ncreases in value by £0.01p (£249,999.99 to £250k).

Why there isn't a graduated system between £250k and £500k of say 0.25% per £50k I don't know.

[JonRB]

arfur sleep said:

Why there isn't a graduated system between £250k and £500k of say 0.25% per £50k I don't know.

Or the same as PAYE where you pay the higher rate only on the amount above the threshold.

[Prawnboy]

a good system i once read about was the idea of only paying on the way up.

ie. you pay the percentage on your first property and when it comes time to move up to your second or third you just pay a percentage on the difference in price.

this way money will still be coming in, but it would help keep things moving in a market with falling prices, and of course help those downsizing to save money.