Bank's Posen calls for housing bubble taxes

Generali

lostinrates wrote: »

Lost. I just don't get (as you'll have discovered on reading the thread) exactly why ...as increased house prices didn't so why house prices increased by tax would....


Just like to say your explanation above the bit I say I'm still with you is the best...better than the original even.

As you say, stamp duty take does go up as house prices rise (assuming volumes don't fall).

What I think he means is that stamp duty wouldn't just be a fraction of a percent as in my example but perhaps 6 months worth of HPI so if house prices rise by 30%, stamp duty would be 15%. That would be a big dampener on the market.

I think it's a rubbish idea FWIW. Better just to loosen planning restrictions - let builders build what people want where they want it within reason.

That's the basic reason house prices are so silly high in the UK - British people don't want houses built near where they live.

Aussie house prices are high too but that's because the houses are so massive.

Generali

nightwatchman wrote: »

Why stamp duty?
Would not be simpler if the interest rate was taxed?
Whatever the bank rate is the taxman will have his cut on top of that.
Bank rate 1% + 10% tax on that rate = payable rate 1.1%
Bank rate 2% + 10% tax on that rate = payable rate 2.2%
The tax could apply selectively only to the mortgage rates, or to any kind of other rates necessary.

Could this work?

Again it would take money out of the housing market but doesn't really address the reasons for volatility in the housing market.

Build what people want where they want it and you solve the problem. Look at all those London suburbs with 3 bed semis and a decent garden. They were affordable, reasonably built and, most importantly, people wanted to live in them:

http://www-cdr.stanford.edu/intuition/Slough.html

A house for ninety-seven down
And once a week a half a crown
For twenty years.

nightwatchman

Countries with much more liberal planning regulations than UK (such as US or Spain) have property bubbles of gargantuan proportions.
I would prefer to give my money as tax to the state than hand them over to the spivs.

However I have to admit that our outdated planning regulation has aggravated our bubble.

Emy1501

1) high CGT for people who own more than 2 homes.
2) Interest rate tool which BOE could uses to stop house price inflation rising above inflation. This tool could be just for houseprices rather than linked to the wider economy.
3) Huge fines for lenders who lend money for any kind of loans to people who cannot afford them and these people then get in trouble.

Generali

Emy1501 wrote: »

1) high CGT for people who own more than 2 homes.
2) Interest rate tool which BOE could uses to stop house price inflation rising above inflation. This tool could be just for houseprices rather than linked to the wider economy.
3) Huge fines for lenders who lend money for any kind of loans to people who cannot afford them and these people then get in trouble.

Easier and cheaper for all concerned just to build enough of the right houses in the right places.

Emy1501

Generali wrote: »

Easier and cheaper for all concerned just to build enough of the right houses in the right places.

My understanding is there are 800K empty homes at the moment. Theres even one next door to me! Why council tax is not charged on empty homes I have no idea.

The problem with newbuilds are they are vastly overpriced especially where I live. They built 3 new houses a year ago similar to properties already on the street. 2007 prices for similar properties 250K 2008 price £220-235K. These three came on at 325K! They never sold and I assume are rented.

The other problem is how do you stop investors buying them.

Generali

Emy1501 wrote: »

My understanding is there are 800K empty homes at the moment. Theres even one next door to me! Why council tax is not charged on empty homes I have no idea.

The problem with newbuilds are they are vastly overpriced especially where I live. They built 3 new houses a year ago similar to properties already on the street. 2007 prices for similar properties 250K 2008 price £220-235K. These three came on at 325K! They never sold and I assume are rented.

The other problem is how do you stop investors buying them.

There's no need to stop investors buying them if you build sufficient houses. The only exception to that I would say is in the National Parks were there is (and should be) a deliberate policy of not building. I can see a case for restricting who can own property in the National Parks to certain groups only.

The proportion of empty houses I believe is the lowest in Europe in the UK. Also, the empty houses in my experience are in the towns in Northern England and on the coast where the economy has gone to pot so people don't want to live in them. There aren't many empty houses in London where people do want to live for example.

Eric_Pisch

edgex wrote: »

an alternative, to get rid of speculators:

scrap stamp duty, & apply VAT (standard rate) to all property purchases

vat-registered businesses would just continue as they currently do
primary residences would be exempted, with proper checks that it is indeed that persons primary residence

the btl crowd would then be hit by having to pay standard rate vat on top of the purchase price that a resident would be paying

which would be a great plan since the government rely heavily on private BTL investors to make up the massive short falls in social housing.