How far will house prices fall [volume 5]

[NickCQ]

The only feasible way to tax unearned wealth from primary property appreciation is high inheritance taxes, assuming you can close the common workarounds using trusts (see the Grosvenor family for ideas).

My personal view is that inheritances should be taxed as ordinary income for the recipient (i.e. at 20-45% depending on their earnings). Perhaps you could allow the amount to be recognised over 10-15 years to avoid pushing people up into higher tax bands on a one-off basis.

If higher inheritance taxes are unpalatable for Daily Mail reasons, a close substitute is more aggressive means testing of benefits provided to elderly people, so that the property gains pay the care home fees rather than the government doing so to preserve kids' inheritances.

[menousername]

How does it reconcile with the recent stamp duty changes?

Do they cancel out? Do they target different people / different price points?

[menousername]

wisbech said:

1950-1990. High tax, high growth

1990-2020?

[Bathroom_Security]

Ive had my eye on Surrey based houses over the last month or 2 and anything remotely nice seems get snapped up very quickly indeed. In fact the market doesn't appear to have slowed down one bit, rather its become aggressive and overpriced.

[Sheepshanks]

kingston12 said:

How would it even work? Would it be based on increase in value from the date of introduction or backdated?

Backdating would be a disaster in a lot of ways. There are a lot of people who would have bought houses for next to nothing in the 80s that are now worth a fortune. Why would move, even with generous indexing?

Timing is another issue. It would seem totally crazy to put it in anytime soon given the recent stamp duty cut, but as you say introducing it near the end of the Parliament wouldn’t work either.

It could be assessed and paid on an annual basis - like exceeding the pension pot limit is. That'd be fun.

[okgo]

Bathroom_Security said:

rather its become aggressive and overpriced.

Something selling at a price generally dictates that it was not overpriced. Price is what someone will pay.

[wisbech]

menousername said:

wisbech said:

1950-1990. High tax, high growth

1990-2020?

High tax, Low growth. IE the tax rates weren’t the issue in the change of growth rates. Basically working population growth plateaued (including women entering the workforce) and past a certain point, adding capital doesn’t make sense vs using the capital elsewhere (such as massive Japanese investment in China)

[kingston12]

Sheepshanks said:

kingston12 said:

How would it even work? Would it be based on increase in value from the date of introduction or backdated?

Backdating would be a disaster in a lot of ways. There are a lot of people who would have bought houses for next to nothing in the 80s that are now worth a fortune. Why would move, even with generous indexing?

Timing is another issue. It would seem totally crazy to put it in anytime soon given the recent stamp duty cut, but as you say introducing it near the end of the Parliament wouldn’t work either.

It could be assessed and paid on an annual basis - like exceeding the pension pot limit is. That'd be fun.

Indeed. It would certainly be a way to stop house prices perpetually rising faster than incomes. You can just imagine the scandal as it is revealed that people have been extending their mortgage each year to pay their CGT bill!

Presumably, there would have to be refunds when/if prices went down. You could actually get into a situation where more people welcome drops in houses prices as it would mean cash in their pocket.

That would be nuts, just the administration costs alone.

[p1stonhead]

kingston12 said:

Sheepshanks said:

kingston12 said:

How would it even work? Would it be based on increase in value from the date of introduction or backdated?

Backdating would be a disaster in a lot of ways. There are a lot of people who would have bought houses for next to nothing in the 80s that are now worth a fortune. Why would move, even with generous indexing?

Timing is another issue. It would seem totally crazy to put it in anytime soon given the recent stamp duty cut, but as you say introducing it near the end of the Parliament wouldn’t work either.

It could be assessed and paid on an annual basis - like exceeding the pension pot limit is. That'd be fun.

Indeed. It would certainly be a way to stop house prices perpetually rising faster than incomes. You can just imagine the scandal as it is revealed that people have been extending their mortgage each year to pay their CGT bill!

Presumably, there would have to be refunds when/if prices went down. You could actually get into a situation where more people welcome drops in houses prices as it would mean cash in their pocket.

That would be nuts, just the administration costs alone.

Impossible.

Mortgage companies would have to try and judge affordability based on future requirements for CGT payments.

That’s ignoring the fact people would be financially hit for things outside of their control.

Will never happen. Ludicrous notion.

[soxboy]

It does sound bonkers, especially as we are potentially entering a situation where house prices are going to plateau/ fall whilst the price rises that could make the scheme viable and which people grumble have already taken place. Any attempt to backdate would be political suicide from a vote winning scenario, albeit would potentially welcomed by the professionally jealous.

If there are to be any additional residential property taxes then either:

1. revised/ additional council tax bandings (with revised values from 1st April 2020, only been 30 years after the last bandings), or

2. a land tax based on % of house value.

If anyone complains 'what about poor old Mrs Miggins who's lived there for 120 years and just has a state pension?!', then LAs can stick a charge on the house and reclaim anything that hasn't been paid upon the sale.

[kingston12]

p1stonhead said:

Impossible.

Mortgage companies would have to try and judge affordability based on future requirements for CGT payments.

That’s ignoring the fact people would be financially hit for things outside of their control.

Will never happen. Ludicrous notion.

It was a bit tongue-in-cheek about the annual payments. It couldn't ever happen if only because there'd be no proof of the rise in value until a sale happened, so any CGT bill would just be constantly appealed.

[kingston12]

soxboy said:

It does sound bonkers, especially as we are potentially entering a situation where house prices are going to plateau/ fall whilst the price rises that could make the scheme viable and which people grumble have already taken place. Any attempt to backdate would be political suicide from a vote winning scenario, albeit would potentially welcomed by the professionally jealous.

If there are to be any additional residential property taxes then either:

1. revised/ additional council tax bandings (with revised values from 1st April 2020, only been 30 years after the last bandings), or

2. a land tax based on % of house value.

If anyone complains 'what about poor old Mrs Miggins who's lived there for 120 years and just has a state pension?!', then LAs can stick a charge on the house and reclaim anything that hasn't been paid upon the sale.

CGT on main residence is a crazy idea at the best of times, but doing it shortly after reducing stamp duty to try and stimulate the market would be completely perverse. Plus, as you say, there aren't likely to be many gains to tax for a while unless they did look retrospectively.

If this recession turns out half as bad as it looks, housing won't necessarily be a very good measure of wealth anyway as there is likely to be a increase in people with high value houses but also high value mortgages with no jobs to support it.

[soupdragon1]

anonymous said:

[redacted]

Not sure if you've thought this through? The gains could be enormous if its backdated.

[soupdragon1]

Now might be a good time to move. Take advantage of stamp duty reduction and lock in your previous house capital gains

[soxboy]

C4ME said:

If they are going to do any thing around property it will be an annual property tax perhaps adding additional bands at the top end of Council Tax. They really ought to do a comprehensive revaluation of properties whilst they are at it. How old are the values still used today?

Just as I suggested above. It's been 30 years since the last revaluation (1st April 1990).

[98elise]

soxboy said:

C4ME said:

If they are going to do any thing around property it will be an annual property tax perhaps adding additional bands at the top end of Council Tax. They really ought to do a comprehensive revaluation of properties whilst they are at it. How old are the values still used today?

Just as I suggested above. It's been 30 years since the last revaluation (1st April 1990).

The valuations were done to put you into a band. Current taxes are based on the band you're in, not the actual valuations at the time (otherwise council tax would very cheap). Revaluation would be a pointless exercise unless you were looking to change the bandings.

If a house is extended it automatically gets re-evaluated when it's sold. Again this just puts you into an equivalent band. The current value doesn't put you at a disadvantage because other houses were valued 30 years ago

[marky911]

Bathroom_Security said:

Ive had my eye on Surrey based houses over the last month or 2 and anything remotely nice seems get snapped up very quickly indeed. In fact the market doesn't appear to have slowed down one bit, rather its become aggressive and overpriced.

Yes it’s happening everywhere I think. Up here in Northumberland decent stuff is selling quickly.
It’s just the spike after the initial event. A correction is coming. See where we are in a years time.

Our BTL remortgage completed yesterday thankfully and the sale of our home completed today.
Yippee! Money in the bank and we are in our little rental place for a while.

The crap hasn’t even begun to unfold yet. Everyone’s happy sat outside the pubs in the sunshine. That’s not gonna happen when winter sets in.
Theatres, nightclubs, stadium events, they’re all screwed.

How anyone thinks a dip isn’t coming is beyond me but we all have our own point of view.

I’m looking at buying more BTLs and have a load to view on Monday. I’ll be making cheeky bids though as I’m in no rush. Plenty of time to weed out the forced sales.

I’m a cash buyer. Will buy, freshen up then mortgage it for full value, rinse repeat.

No rush though. Noooooo rush.

[soxboy]

98elise said:

soxboy said:

C4ME said:

If they are going to do any thing around property it will be an annual property tax perhaps adding additional bands at the top end of Council Tax. They really ought to do a comprehensive revaluation of properties whilst they are at it. How old are the values still used today?

Just as I suggested above. It's been 30 years since the last revaluation (1st April 1990).

The valuations were done to put you into a band. Current taxes are based on the band you're in, not the actual valuations at the time (otherwise council tax would very cheap). Revaluation would be a pointless exercise unless you were looking to change the bandings.

If a house is extended it automatically gets re-evaluated when it's sold. Again this just puts you into an equivalent band. The current value doesn't put you at a disadvantage because other houses were valued 30 years ago

I do know how it works and I don't have an issue with it in its current form too much. I do however think that if the government are thinking of new residential property taxes then a revamp of CT could be in order.

Don't forget that when those bandings were set there was far less difference between the regions and the numbers of properties that have increased in value way above the top band has been substantial.

[brickwall]

C4ME said:

If they are going to do any thing around property it will be an annual property tax perhaps adding additional bands at the top end of Council Tax. They really ought to do a comprehensive revaluation of properties whilst they are at it. How old are the values still used today?

The other way to do it (which I wouldn’t exclude from Treasury thinking) would be to scrap council tax bands altogether and move to an annual % of property value.

Say you pay somewhere between 0.5-1% of house value per year, which would set the ‘crossover’ point at about £230k - the average U.K. property value.

Annual property tax on:
- £100k home in Bishop Auckland decreases from £1,600 pa today to £750 pa (Tory marginal seat)
- £1m home in Southwark increases from £1,800 pa today to £7,500pa (Labour safe seats)

House price data makes it relatively easy to value each property and target enforcement.

It’d give an effective tax cut to lots of the new (marginal) Tory seats outside the SE where house prices are lower, whilst raising huge amounts from high value properties in London and surrounding regions.

Places that lose out are generally safe seats either way (Labour city centre or Tory cotswolds) so not of huge concern to govt.

[Magog]

loafer123 said:

z4RRSchris said:

anyone live in bounds green / Bowes Park..

whats it like?

Given it's just north of Wood Green, I should imagine it has a better class of mid-ranking Albanian gangster drug dealer than it's near neighbour.

From a friend who lives round there, I am led to believe that the major local issue is Neil Morrissey and his fawning band of acolytes in the local pub being a constant irritant.