Discussion
(mods, please move into NPE if you wish?)
Whilst I have been here years, I cannot post/reply to the Rachel Reeves topic... more recently discussing SDLT but it is related to 'homes gardens and DIY.
So, I have been thinking, is there a better way to raise tax income than the current SDLT?
Currently there are 26.3m houses that are liable for Council Tax (using that as a basis solely for the numbers) and the total average income for SDLT (21/22 and 23/24 residential only) is £10,145b.
As has been 'discussed' the alternative is a property tax, which on the face of it doesn't seem unreasonable when compared to SDLT. However, how could it work?
Based on the current number of houses in each band and the updated Nationwide Index (to up the values used in 1991), it gives the following with a 'proposed property tax figure';
Band A - 6m houses - £200k value - no property charge
Band B - 4.9m houses - £255k - £75/yr
Band C - 5.4m houses - £335k - £250/yr
Band D - 3.9m houses - £435k - £500/yr
Band E - 2.4m houses - £590k - £1000/yr
Band F - 1.3m houses - £785k - £1750/yr
Band G - 900k houses - £1.575m - £6.5k/yr
Band H - 100k houses - £<1.575m - £10k/yr
So, those with limited shoulders... pay nothing and those with the broadest pay more...
However, what is perhaps more important is the 'payback period' (in years) where you would break even on the current SDLT charge;
A - no charge, no payback
B - 36 yrs
C - 27yrs
D - 23.5yrs
E - 19.5yrs
F - 16.71yrs
G - 15.81yrs
H - 10.28yrs
Observations/comments;
- the above excludes commercial SDLT
- yes, powerful directors in London are going to be paying £6.5k/yr in a house worth £1.6m BUT if they move within ~15 years it is cheaper than SDLT
- yes, your granny in a 'big house' will pay 'a fortune'... they could downsize, keeping the 'housing cycle' going and... no system can make everyone happy...
- the 'average' house price is ~£275k they would pay £250/yr with a payback of 27 years
- lets say the more south you are, 'average' goes up a band (or two) so this person would pay £500-1000/yr but providing they move within ~20years they are better off than SDLT... younger families, moving jobs, etc.
- if you have a second home... you pay twice (quite separate to any Council Tax rules set by the Local Authority...)
- annual rates would be tied to CPI/inflation/etc. certainty of income for HMRC
- currently, with minimal house sales, HMRC income is... minimal... so the black hole gets bigger then less that the housing market moves
Summary;
- Current SDLT (resi) income over past 2 years - £10.145B (22/23 = £11,750B and 23/24 = £8.570B)
- Proposed property tax income - £15.190B
- get the (currently) stagnant housing market moving, with obvious knock on effects to the economy, new houses built as people can/will move without being penalised... agents, solicitors, etc., etc. all produce income, which goes into the 'economy'...
- move into new house, you haven't been hammered for £5,10,30k in SDLT, so you can get the builders in to make some modifications, new carpets, painting, landscaping, etc. all of which help to grease the cogs of the economy
So, a 50% increase in tax take and the government are happy and (in most cases) cheaper than SDLT, so the house buyer is happy...?
Yes, someone who doesn't move for 25 years is going to be worse off... but not everyone can win...
Discuss..!
(I have checked and double checked the figures/spreadsheet... until someone comes along and says 'you didn't move the decimal point'... at which time I delete the topic
)
Whilst I have been here years, I cannot post/reply to the Rachel Reeves topic... more recently discussing SDLT but it is related to 'homes gardens and DIY.
So, I have been thinking, is there a better way to raise tax income than the current SDLT?
Currently there are 26.3m houses that are liable for Council Tax (using that as a basis solely for the numbers) and the total average income for SDLT (21/22 and 23/24 residential only) is £10,145b.
As has been 'discussed' the alternative is a property tax, which on the face of it doesn't seem unreasonable when compared to SDLT. However, how could it work?
Based on the current number of houses in each band and the updated Nationwide Index (to up the values used in 1991), it gives the following with a 'proposed property tax figure';
Band A - 6m houses - £200k value - no property charge
Band B - 4.9m houses - £255k - £75/yr
Band C - 5.4m houses - £335k - £250/yr
Band D - 3.9m houses - £435k - £500/yr
Band E - 2.4m houses - £590k - £1000/yr
Band F - 1.3m houses - £785k - £1750/yr
Band G - 900k houses - £1.575m - £6.5k/yr
Band H - 100k houses - £<1.575m - £10k/yr
So, those with limited shoulders... pay nothing and those with the broadest pay more...
However, what is perhaps more important is the 'payback period' (in years) where you would break even on the current SDLT charge;
A - no charge, no payback
B - 36 yrs
C - 27yrs
D - 23.5yrs
E - 19.5yrs
F - 16.71yrs
G - 15.81yrs
H - 10.28yrs
Observations/comments;
- the above excludes commercial SDLT
- yes, powerful directors in London are going to be paying £6.5k/yr in a house worth £1.6m BUT if they move within ~15 years it is cheaper than SDLT
- yes, your granny in a 'big house' will pay 'a fortune'... they could downsize, keeping the 'housing cycle' going and... no system can make everyone happy...
- the 'average' house price is ~£275k they would pay £250/yr with a payback of 27 years
- lets say the more south you are, 'average' goes up a band (or two) so this person would pay £500-1000/yr but providing they move within ~20years they are better off than SDLT... younger families, moving jobs, etc.
- if you have a second home... you pay twice (quite separate to any Council Tax rules set by the Local Authority...)
- annual rates would be tied to CPI/inflation/etc. certainty of income for HMRC
- currently, with minimal house sales, HMRC income is... minimal... so the black hole gets bigger then less that the housing market moves
Summary;
- Current SDLT (resi) income over past 2 years - £10.145B (22/23 = £11,750B and 23/24 = £8.570B)
- Proposed property tax income - £15.190B
- get the (currently) stagnant housing market moving, with obvious knock on effects to the economy, new houses built as people can/will move without being penalised... agents, solicitors, etc., etc. all produce income, which goes into the 'economy'...
- move into new house, you haven't been hammered for £5,10,30k in SDLT, so you can get the builders in to make some modifications, new carpets, painting, landscaping, etc. all of which help to grease the cogs of the economy
So, a 50% increase in tax take and the government are happy and (in most cases) cheaper than SDLT, so the house buyer is happy...?
Yes, someone who doesn't move for 25 years is going to be worse off... but not everyone can win...
Discuss..!
(I have checked and double checked the figures/spreadsheet... until someone comes along and says 'you didn't move the decimal point'... at which time I delete the topic
)I like the idea, it seems much more just than SDLT and makes it easier to move for work etc. Like you say you’ll never please everyone.
My personal view is that we should be finding a mechanism to reduce our debt and its cost, so a stimulus such as this rather than the elusive growth seems sensible.
If it does happen it’ll be interesting to see whether the media’s inevitable criticism prevents the potential being reached. An argument for media controls perhaps.
My personal view is that we should be finding a mechanism to reduce our debt and its cost, so a stimulus such as this rather than the elusive growth seems sensible.
If it does happen it’ll be interesting to see whether the media’s inevitable criticism prevents the potential being reached. An argument for media controls perhaps.
I'm about to incur a large SLDT bill and would much rather just go onto this proposed system. Whilst it would cost more long term if you didn't move it would be a tiny price to pay for the flexibility to up and move if needed without facing a big SDLT bill on an onward purchase. Also take the person paying £6.5k/yr in a house worth £1.6m, IF house prices stayed the same they could invest the money they would have paid on SDLT which would generate income so the real cost would be much less than 6.5k.
I'd have loved to pay £10k/pa instead of writing the SDLT cheque I did on my last purchase.
Run the figures on "property porn" level houses and it'd be a change that those at the very top end would favour. Would make it much easier to find buyers too as the SDLT on high end is eyewatering... and needs ready cash that dissuades buyers.
Run the figures on "property porn" level houses and it'd be a change that those at the very top end would favour. Would make it much easier to find buyers too as the SDLT on high end is eyewatering... and needs ready cash that dissuades buyers.
Yes. The bands don t go high enough in OP, I think the layman doesn t realise the sheer number of houses in the SE above that figure that transact every year making up the majority of the current take.
I do not believe there’s only 100k houses that are worth more than that figure. There’s probably 5000 within 2 miles of me.
I do not believe there’s only 100k houses that are worth more than that figure. There’s probably 5000 within 2 miles of me.
SDLT is a pretty horrible tax in many ways. I'd be in favour of a system like this, addresses quite a few of the issues.
Not sure I agree with the proposed levels and bandings though. Sure, have a nil rate on lower vlaue properties. £75 pa is almost more trouble than it's worth though, cost of administration vs return. Maybe bump ithe nil rate threshold a bit higher and have a more meaningful starting level of perhaps £200, with some small bumps up on the next couple of bands.
It also needs at least a couple more bands at the higher end. Though not in favour of constantly taxing the rich, £10k pa probably has no marginal utility to someone in a £10m property yet pay the same as someone in a £2m place.
Not sure I agree with the proposed levels and bandings though. Sure, have a nil rate on lower vlaue properties. £75 pa is almost more trouble than it's worth though, cost of administration vs return. Maybe bump ithe nil rate threshold a bit higher and have a more meaningful starting level of perhaps £200, with some small bumps up on the next couple of bands.
It also needs at least a couple more bands at the higher end. Though not in favour of constantly taxing the rich, £10k pa probably has no marginal utility to someone in a £10m property yet pay the same as someone in a £2m place.
LTT is even higher in Wales, it cost us £15k more than the equivalent house in England.
Don t plan on moving again, I assume this is a tax that would only apply to future moves or do they plan on having two bites at the cherry I.e. you pay SLDT / LTT and this new tax going forward?
I think it’s actually a good idea.
Don t plan on moving again, I assume this is a tax that would only apply to future moves or do they plan on having two bites at the cherry I.e. you pay SLDT / LTT and this new tax going forward?
I think it’s actually a good idea.
Maybe the solution lies in the question as to what the actual problem is with stamp in terms of how it impacts the liquidity of the housing market?
With deposit requirement being so high then surely the primary issue is that the extra lump sum of SDLT at purchase is causing a percentage of the market to not be able to transact?
If so then the simple solution is to allow the tax to be paid in two different ways. Leave the ability to pay in full within 14 days but for those purchasing as a conventional home transaction via a mortgage, give them the option to pay monthly, collected by the lender and arrears treated as mortgage arrears?
A monthly culture with no savings needs monthly solutions.
For example, someone buying a £600k home would face a £20k tax bill which they could pay in full or choose to pay monthly. £67/month over 300 months. Collected by the lender. Balance paid in full on default or sale.
The problem with the current thinking of charging more on larger purchases is that it wouldn't benefit the smaller buyers. The additional taxation of the wealthy doesn't deliver a better result to the less affluent home buyer. Same with levying premiums on council taxes. The few people paying more doesn't benefit those paying less. These taxes benefit those already not paying anything.
It's similar with any wealth tax. Those taxes don't benefit middle England, those starting out, those grafting to keep going in the middle.
If wanting a tax raid rather than to help younger people and those in the middle to progress or be protected then the most logical assault on property wealth would be to apply a probate tax in order to encourage older people in family sized homes where their family has fledged to downsize to avoid the probate tax. Taxes don't have to be collected to be positive and prudent taxes. Some of the best taxes are those that stimulate avoidance and where little tax is ever collected.
With deposit requirement being so high then surely the primary issue is that the extra lump sum of SDLT at purchase is causing a percentage of the market to not be able to transact?
If so then the simple solution is to allow the tax to be paid in two different ways. Leave the ability to pay in full within 14 days but for those purchasing as a conventional home transaction via a mortgage, give them the option to pay monthly, collected by the lender and arrears treated as mortgage arrears?
A monthly culture with no savings needs monthly solutions.
For example, someone buying a £600k home would face a £20k tax bill which they could pay in full or choose to pay monthly. £67/month over 300 months. Collected by the lender. Balance paid in full on default or sale.
The problem with the current thinking of charging more on larger purchases is that it wouldn't benefit the smaller buyers. The additional taxation of the wealthy doesn't deliver a better result to the less affluent home buyer. Same with levying premiums on council taxes. The few people paying more doesn't benefit those paying less. These taxes benefit those already not paying anything.
It's similar with any wealth tax. Those taxes don't benefit middle England, those starting out, those grafting to keep going in the middle.
If wanting a tax raid rather than to help younger people and those in the middle to progress or be protected then the most logical assault on property wealth would be to apply a probate tax in order to encourage older people in family sized homes where their family has fledged to downsize to avoid the probate tax. Taxes don't have to be collected to be positive and prudent taxes. Some of the best taxes are those that stimulate avoidance and where little tax is ever collected.
DonkeyApple said:
Maybe the solution lies in the question as to what the actual problem is with stamp in terms of how it impacts the liquidity of the housing market?
The rate. In my life time it's gone from 0.25% to goodness knows what now. In the last twenty years it's gone up enourmously with the result that instead of being a bit of a grumble it's now affecting the decision of whether to move thus not freeing up the homes for the most suitable people for them and limiting labour market movement.andya7 said:
So, those with limited shoulders... pay nothing and those with the broadest pay more...
- yes, your granny in a 'big house' will pay 'a fortune'... they could downsize, keeping the 'housing cycle' going and... no system can make everyone happy...
This shouldn't be dismissed out of hand. And it's not just grannies that you want to force to move, perhaps out of their area and away from friends etc. but many others, perhaps self builders/restorers and many others who now live in a house where they could not buy it on a value to earning ratio but have achved that home over their life "sorry pal, you have to move now" is not a just society.- yes, your granny in a 'big house' will pay 'a fortune'... they could downsize, keeping the 'housing cycle' going and... no system can make everyone happy...
TA14 said:
DonkeyApple said:
Maybe the solution lies in the question as to what the actual problem is with stamp in terms of how it impacts the liquidity of the housing market?
The rate. In my life time it's gone from 0.25% to goodness knows what now. In the last twenty years it's gone up enourmously with the result that instead of being a bit of a grumble it's now affecting the decision of whether to move thus not freeing up the homes for the most suitable people for them and limiting labour market movement.If the problem is that modern consumers don't like, don't want or aren't able to pay a large upfront price then the modern solution is to make the number tiny.
You're not going to get a situation where the tax is binned or even reduced. Property is theft and people who can buy property are rich and have to pay more tax to support those who can't. Taxing even richer people is great for votes but doesn't actually achieve anything positive. Going mumfly as an option simply fits the 21st century. And frankly, it simply makes sense as it levels the playing field between buyers who can pay the full amount up front and those for whom the extra charge of the tax is preventing them from acting.
DonkeyApple said:
If so then the simple solution is to allow the tax to be paid in two different ways. Leave the ability to pay in full within 14 days but for those purchasing as a conventional home transaction via a mortgage, give them the option to pay monthly, collected by the lender and arrears treated as mortgage arrears?
A monthly culture with no savings needs monthly solutions.
For example, someone buying a £600k home would face a £20k tax bill which they could pay in full or choose to pay monthly. £67/month over 300 months. Collected by the lender. Balance paid in full on default or sale.
This is probably the basis of a good solution, esp. for the 'lower' (most) end transactions. Higher value buyers may wish to pay upfront so it may not benefit them and chains may not progress as much as a rate reduction. perhaps a combination of the two thoughts?A monthly culture with no savings needs monthly solutions.
For example, someone buying a £600k home would face a £20k tax bill which they could pay in full or choose to pay monthly. £67/month over 300 months. Collected by the lender. Balance paid in full on default or sale.
TA14 said:
This is probably the basis of a good solution, esp. for the 'lower' (most) end transactions. Higher value buyers may wish to pay upfront so it may not benefit them and chains may not progress as much as a rate reduction. perhaps a combination of the two thoughts?
I think the core issue is that we had a decade of tax, borrow and spend under the Tories and we are absolutely going to have even more under Labour so as much as we may wish for any tax reductions it's just not going to happen. In reality, I suspect any change will be driven by the same motives as the tax attack in the last budget, primarily aimed at punishing groups deemed to be bad for their society. I can even see them trying to apply a new tax upon people who have already paid SDLT on their purchase.
usn90 said:
I d be pretty sour considering 5 years ago I paid stamp duty on my current house, which as far as I m aware is our forever one.
If I then have to pay extra considering I already paid the SD then I d be wanting the money back, which won t happen
I think the suggestion was that these potential changes would only kick in immediately on new purchases. People who recently paid SDLT wouldn't be hit at least for a while. I imagine everyone would get moved over at some point of courseIf I then have to pay extra considering I already paid the SD then I d be wanting the money back, which won t happen
TA14 said:
andya7 said:
So, those with limited shoulders... pay nothing and those with the broadest pay more...
- yes, your granny in a 'big house' will pay 'a fortune'... they could downsize, keeping the 'housing cycle' going and... no system can make everyone happy...
This shouldn't be dismissed out of hand. And it's not just grannies that you want to force to move, perhaps out of their area and away from friends etc. but many others, perhaps self builders/restorers and many others who now live in a house where they could not buy it on a value to earning ratio but have achved that home over their life "sorry pal, you have to move now" is not a just society.- yes, your granny in a 'big house' will pay 'a fortune'... they could downsize, keeping the 'housing cycle' going and... no system can make everyone happy...
In fact it doesn’t have to be the southeast, most retirement developments in the Midlands have small flats over £500k
SDLT has the benefit of coming into play when money is being realised rather than someone having to find extra whether they are moving or not.
I can see the arguments, however it should only apply to people that move from the date of implementation, else you'll be double-charging those that already paid the SDLT and took the one-off hit.
Issue then is nobody would move, alternative is refunding the SDLT paid. However, assume this would do away with council tax, £10k a year to live in my (relatively modest) home is ridiculous
Issue then is nobody would move, alternative is refunding the SDLT paid. However, assume this would do away with council tax, £10k a year to live in my (relatively modest) home is ridiculous
Edited by kiethton on Thursday 18th September 07:59
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