BOE told to raise interest rates this year - OECD

Kennyboy66

Graham_Devon wrote: »

Do you think it would add 20% to the house price?

I don't.

I believe it's more to do with materials (to build) being exempt etc. Not a 20% increase on the cost (value) of the actual house. Though if I'm wrong, I'm wrong.

Taxation always ultimately falls on an individual.

New house building is not exempt - it is zero rated.

The principal of VAT is that the end customer pays a tax on "the value added" to turn the resources into an end product. All the intermediaries through the process don't really pay the tax, they just collect it on behalf of the government.

Would it add 20% to new build costs - certainly not 20% no, there would likely have to be a reduction in the land cost (the cost of a house simply being land, labour and materials) - although this would take considerable time.

Would it reduce the supply of new houses ?

without a shadow of a doubt.

New builds are zero rated, because effectively 'old' houses are zero rated.

The logical extension of standard rating new build houses would be make all house sales subject to 20% VAT.

It would be absurd.

FTBFun

Graham_Devon wrote: »

Do you think it would add 20% to the house price?

I don't.

I believe it's more to do with materials (to build) being exempt etc. Not a 20% increase on the cost (value) of the actual house. Though if I'm wrong, I'm wrong.

The builder would just pass that on to the purchaser though. OK maybe not the full 20% but certainly a fair proportion.

For someone who wants house prices to fall i'm surprised you want to throw a spanner in the works in terms of increasing supply (or at least keeping it constant).

Graham_Devon

FTBFun wrote: »

The builder would just pass that on to the purchaser though. OK maybe not the full 20% but certainly a fair proportion.

For someone who wants house prices to fall i'm surprised you want to throw a spanner in the works in terms of increasing supply (or at least keeping it constant).

Who says I want to?

Stop saying "I want", "you want". It's the OECD talking about it and encouraging it, it wasn't even part of my original post. I was just discussing it as it was bought up.

I don't think VAT on building goods for new homes is such a massively bad idea as it goes. It's like removing VAT on food processing units, because they make food. It doesn't make too much sense when the country is in desperate need of money....especially on a product which is well known to be artifically highly priced.

I don't think it would make much difference to supply at all. The reason for low supply is they cannot sell the damn things due to a mixture of high price and low credit avaliability.

doire_2

Sibley wrote: »

Who cares?

If rates went up a % or two. They are still low.

I know you want people to struggle but rates would have to be 7% upwards for that to happen.

You are barking up the wrong tree. Try something else. Interest rates wont cause house prices to drop.

Interest rate rise 'would leave 3m homeowners unable to pay their mortgage'

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/8492764/Interest-rate-rise-would-leave-3m-homeowners-unable-to-pay-their-mortgage.html

HAMISH_MCTAVISH

doire wrote: »

http://www.telegraph.co.uk/finance/personalfinance/borrowing/mortgages/8492764/Interest-rate-rise-would-leave-3m-homeowners-unable-to-pay-their-mortgage.html
[/SIZE]

What a load of absolute crap.

Headline says "unable" to pay mortgage.

Within the first sentence they backtrack to "struggle" to pay mortgage.

And then a bit further in it's revealed that this is based on the FSA's already discredited affordability tests.... The ones where the housing minister of the UK wouldn't get a mortgage. :rotfl:

Meaningless Tripe.

shortchanged_2

Sibley wrote: »

You are barking up the wrong tree. Try something else. Interest rates wont cause house prices to drop.

Don't forget though Sibley that household income is actually less than it was a few years ago, so less household income plus higher mortgage costs due to increased interest rates = lower house prices.

doire_2

HAMISH_MCTAVISH wrote: »

What a load of absolute crap.

Headline says "unable" to pay mortgage.

Within the first sentence they backtrack to "struggle" to pay mortgage.

And then a bit further in it's revealed that this is based on the FSA's already discredited affordability tests.... The ones where the housing minister of the UK wouldn't get a mortgage. :rotfl:

Meaningless Tripe.

Ahh i see...the FSA are crap with their crappy guidelines and so too are the CML but Hamish posting on a forum is 100% correct

Sibley

Originally Posted by Sibley
Who cares?

If rates went up a % or two. They are still low.

I know you want people to struggle but rates would have to be 7% upwards for that to happen.

You are barking up the wrong tree. Try something else. Interest rates wont cause house prices to drop.



Quote:

Interest rate rise 'would leave 3m homeowners unable to pay their mortgage'

Headlines like that are great for bulls.

Mp's will look at the shock horror factor and ensure it never happens.

Can you tell me Doire and Graham.

You want rates to rise. Do you have savings?

If the answer is no then please can you tell me why you want rates to rise?

Jimmy_31

Sibley wrote: »

Who cares?

If rates went up a % or two. They are still low.

I know you want people to struggle but rates would have to be 7% upwards for that to happen.

You are barking up the wrong tree. Try something else. Interest rates wont cause house prices to drop.

6.9%:)
7.1%:(

Really?

Jimmy_31

HAMISH_MCTAVISH wrote: »

What a load of absolute crap.

Headline says "unable" to pay mortgage.

Within the first sentence they backtrack to "struggle" to pay mortgage.

And then a bit further in it's revealed that this is based on the FSA's already discredited affordability tests.... The ones where the housing minister of the UK wouldn't get a mortgage. :rotfl:

Meaningless Tripe.

I see you have added a disclaimer to the end of your post, you should add that to all your posts.