Should we tax foreign buyers on property deliberately left empty?

Graham_Devon

vivatifosi wrote: »

Going back to the original question... should we tax buyers of prime property?

As CLAPTON says, we don't know what the numbers are. Whether it is 1%, 5% or 50% of property (realistically it is likely to be towards the lower figures) the issue is shortage of housing, generally at the bottom end of the market: ie people will get on to the housing market at the price point that they can afford. It is unlikely that someone will be unable to get onto the housing ladder due to a shortage of premium properties.

So will this actually address the issue, which is not taxing the rich, but is shortage of properties? It will make people feel better, it will probably raise some money. But unless that money is then directly taken and spent on building new houses and addressing the shortage, it will solve absolutely nothing. Even if it does go directly towards housing it is little more than tokenism.

The mega rich will still buy houses that they don't live in, they will just pay more taxes. That may make a miniscule difference to the deficit as it will increase government income by a small amount, but does nothing whatsoever to get to the root of the problem.

There is the ripple effect to take into consideration though.

Secondly, as the article points out, it's not just prime property anymore either. More and more investors require more and more properties to invest in...which aren't being built, so they buy up what would have been homes in the close suburbs.....those residents get displaced and so on.

If the investors were removed from London, prices would fall through the floor. And along with that, so would the prices in the suburbs.

The properties may sit in isolaiton in terms of bring prime and out of the reach of most. However, they don't sit in isolation when it comes to affecting prices in the local market.

vivatifosi

Here's the issue though Graham. They are buying them as investments. Therefore in simple supply and demand economics, they are on a winning bet unless something is done about the supply side. In other words, they will carry on doing it until there's a risk that the value of their investment will go down, or ceases to rise at a level that is interesting to them.

That can only be done by increasing supply of houses.

CLAPTON

nice to see Shelter's view

Shelter believes the solution to England’s housing crisis lies in building more homes. The government has said that building more homes is a priority and Shelter is campaigning to ensure that the right actions are taken to build the homes we need.

Graham_Devon

vivatifosi wrote: »

Here's the issue though Graham. They are buying them as investments. Therefore in simple supply and demand economics, they are on a winning bet unless something is done about the supply side. In other words, they will carry on doing it until there's a risk that the value of their investment will go down, or ceases to rise at a level that is interesting to them.

That can only be done by increasing supply of houses.

I have to disagree. As you say, they are buying them as investments. So a tax on that investment will make it less worthwhile.....or cause that level to be reached where it ceases to interest them.

Supply has its part, yes, absolutely. But it's not the only thing that can be done.

CLAPTON

net change of (available) housing in London caused by foreigner investors is

number of new properties built using foreign money or demand that wouldn't otherwise have been built

minus those that are kept empty

I don't know either figure

vivatifosi

Graham_Devon wrote: »

I have to disagree. As you say, they are buying them as investments. So a tax on that investment will make it less worthwhile.....or cause that level to be reached where it ceases to interest them.

Supply has its part, yes, absolutely. But it's not the only thing that can be done.

It is a minor irritant. Say that a top end house is worth £1m (for round number purposes). Say also that the price will rise 8-10% this year. That's £80-100k. Nobody is going to tax anyone at that sort of rate therefore the disincentive is absolutely minimal. It's a bit like being bitten by a midge: annoying, but not enough to put you off walking in Scotland. All that will happen is that they'll make a gain of say 7-9% instead. But they will still make a gain because it is worth taking the gamble still.

ETA: before we add a tax we need to close the loopholes that stop people paying the taxes that everyone else has to pay first, namely stamp duty (per Pastures's post) and council tax. ETA ETA... and CGT where appropriate of course.

ukcarper

antrobus wrote: »

I'd hazard a guess that local authorities adopt the statutory definition of homelessness set out in s175 of the Housing Act 1996. That definition means that people can be classed as 'homeless' if it is deemed that it would not be reasonable to expect them to continue occupation of the accomodation that they do have. (Or words to that effect.)

Which isn't necessarily the same thing as the 'common sense' definition of homelessness.

I was asking Clapton to define homelessness not for an official definition .

CLAPTON

ukcarper wrote: »

I was asking Clapton to define homelessness not for an official definition .

your question was misunderstood

however, housing demand in the UK is mainly about people's wishes rather than absolute need.

because the number of people genuinely 'homeless' is very small and generally transitory, it's difficult to see the relationship between genuine homelessness and £10 million investment properties in central London.

There may well be a case for taxing properties differently but I would like to know the actual numbers involved and what sort of 'remedy' is suggested.

ukcarper

CLAPTON wrote: »

your question was misunderstood

however, housing demand in the UK is mainly about people's wishes rather than absolute need.

because the number of people genuinely 'homeless' is very small and generally transitory, it's difficult to see the relationship between genuine homelessness and £10 million investment properties in central London.

There may well be a case for taxing properties differently but I would like to know the actual numbers involved and what sort of 'remedy' is suggested.

I'd agree that there is not much if any relationship between homelessness and £10 million properties in central London. But I would also disagree with your original statement on homelessness and you don't have to be sleeping on the streets to be homeless.

CLAPTON

ukcarper wrote: »

I'd agree that there is not much if any relationship between homelessness and £10 million properties in central London. But I would also disagree with your original statement on homelessness and you don't have to be sleeping on the streets to be homeless.

Indeed so, homelessness can be defined in many ways, but outside the mentally ill and other special cases the levels of homelessness in the UK are very low

it is true however, that sometimes an 16 year old girl has to share a bedroom with their younger sister