What's the betting that stamp durty will rise significantly, or that the chancellor will introduce some new kind of tax, e.g. capital gains tax on first properties?
With the latest Relocation Relocation programme with Kirstie and Phil extolling the virtues of selling up and affording TWO properties elsewhere, surely the chancellor and his advisers must see home ownership as a nice little earner - for him!
Predictions? Fears?
MM
Hopefully he'll be intelligent enough to see that a tax on employment mobility reduces economic competitiveness. At the same time he could notice that the ridiculous manner that tax duty bands apply to the whole value over a certain figure, rather than just the excess, seriously distorts the market around those price points.
Christian.
A rationalization of stamp duty would seem in order, the current system being highly inflationary wrt house prices: flat rate on all purchases? Changes to capital gains tax that would hit quick-profit property developers and serial-movers seem to be an excellent idea.
Home *ownership* shouldn't / need not attract taxation: speculative property buying/selling should, given the overall benefits of taking some of the heat out of the property market.
Julian
Unlikely. He appears to be driven entirely by short-termism, greed and spite, and the standard socialist motivation that everything should belong to the State, to which everyone should be beholden.
I imagine the midnight oil is being burned to work out how to confiscate the proceeds of house price inflation without being booted so far out of office that he'll be standing for the job of Mayor of Tblisi.
I mean, Ghod forbid that the Little People should become (gasp) capitalists.
I disagree entirely. House price inflation is caused by having too few houses for too many people. Hitting property developers just prevents houses being built or renovated and is a simple populist and utterly erroneous course of action that will make things worse.
It's a bit like hundreds of years ago when speculators would stockpile food before harvest and make a bomb if the harvest was bad (but usually made some losses in most years). People tried to tax them to extinction too. The result was that no-one risked stockpiling, so if the harvest really was bad, then there was no food at all and everyone died.
Christian.
Gordon Brown ... a socialist????
RAOTFL ...
A neighbour has a very nice well located right in front of the woods, 3 bed house. It was fine with one kiddie then another comes. Being an accountant he calculated it would be cheaper to extend on the back than go for a bigger house because of stamp duty ect. They would also find it difficult to get a house in such a good location too. The extension is to "!their" design too. Apart from the building mess, it appears a win, win situation.
... in the current, debased, interpretation of the word "capitalist".
Contrary to the belief of the (post) Thatcher generation, capitalism is *not* about watching the value of your house grow while you scratch your arse, nor is it about making quick, obscene profits by buying and selling shares, currencies, or commodities on the London markets.
Hopefully he'll have the sense to introduce transitional bands so that (say) you pay the same at £200K and £300K but there is no sudden step change at £250K instead of the current 1%-3% jump so the transitional rate would be 7% on the £200-300K band. The problem with this is that the press would have a field day pointing out that the stamp duty on a £240K house had gone up from £2,400 to £4,800 whilst ignoring the fact that houses that were priced at £249,999 could now be sold for £260K leaving the seller considerably better off. And at £275K you'd pay £7,250 instead of the current £8,250.
But it would be easier just to charge everyone 5%
Just release lots of land in the country in order to build on, preferable to individual self builders, and prices will stop rising.
Oh, yes. There's a perception problem in this country caused by a general move to the left. New Labour are still a socialist organisation
- they are utterly convinced they can run your life better than you can, and in particular that they can spend your money better than you can. And anyone who dares suggest otherwise is immediately castigated as an "extreme right winger" or "Thatcherite".
Hardly. All I am talking about is the private ownership of capital. Neither debased nor current.
Profits are not and cannot be "obscene". Your bigotry is showing.
I'm afraid I see nothing wrong with any of that.
I agree. The job of local and central gummint these days seems to be dedicated to squeezing more and more money out of the proles..... either as a hidden under- tax, or by a method that can be spun to look politically acceptible (and if a pollie stands up on his hind legs and utters the phrase "User Pays" one more time, I'll bloody well throttle him.... the Users have already paid, and paid, and paid.... all their working lives).
Note that there is no corresponding improvement in services. The extra money is required to keep them all in the style to which they have become accustomed, and to fund all those index-linked pensions.
Rant over.
Another bit of sense:-)
How would releasing land in East Anglia (say) affect house prices in Docklands?
But arguably there is a problem here. When there were rumours of CGT on houses the economics editor of 'The Business' wrote a piece about how hundreds of thousands of homeowners would risk being left destitute by such a tax. I wrote to him berating him for his Daily Mail shock-horror style and pointing out that if your property hadn't gained in value you wouldn't have any tax to pay, and if it had you still kept most of the gain, and got the very reasoned reply back that the real problem was that loads of people had taken out further borrowings against the perceived equity in their properties which they would not be able to repay if their gains were taxed.
Most commentators seem to agree that it is all this borrowing against house price increases that has kept the economy buoyant, but one cannot but help feel that at some point we will have to pay the price. And of course all those who borrowed to the hilt rather than taking advantage of low interest rates to clear their debts will be demanding that the government does something whilst arguably it should have acted while we were all having a good time - but who wants to spoil a party with warnings about hangovers?
My understanding of "capitalism", as used in classical economics, is that it is about the *use* of capital to support business and industry: not the accrual of value in bricks and mortar.
They can: is it not obscene that "designer" clothes are sold at immense profit to their designers/marketers while they are made by workers in third world countries for poverty-level wages? Is it not obscene that city traders can take 6- or 7- figure bonuses while the rest of us are told that "the value of shares can go up or down" as our pensions, endowments, and savings take yet another hit? Is it not obscene that capital is often available only to businesses that can convince the bankers controlling the capital (controlling, note, its never *their* money) that the company to be invested in can be sold on at a profit in 36 months -- sod ideas like investing in a *product* or in *people* for a slow but long term return.
Julian
Christian McArdle wrote
Yes, but the main factor is availability of finance - prices would not go up if buyers could not borrow so easily. Being able to borrow more funds at low interest rates, as at present, allows people to make higher offers to get the place they want. If the interest rate goes up, down will come the amount they can borrow and down will come prices. This was the cause of the negative equity problems in the early 90's.
But simply using interest rates to control house prices depends on all lenders sticking to the rules about factoring salaries. Of course they don't, and nobody polices them, with the result that house prices (and agents' commissions along with them) are spiralling.
Peter
Spot on - and it's a very carefully engineered shift in perception, which has taken several years to mature.
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