The dissapearing property ladder

TickersPlaysPop

It is beyond me why and how our government got away with allowing the residential house market to inflate so much.

It's proof to me that our political system does not represent us, or work in our favour. There should be a policy to keep housing very affordable, not inflate so much that it only benefits the banks, leaving us to work ourselves to the bone to keep a roof over our heads.

Loughton_Monkey

TickersPlaysPop wrote: »

It is beyond me why and how our government got away with allowing the residential house market to inflate so much.....

To which are you referring?

The 8.5% average annual rise under 13 years of Labour?

Or the 2.3% average annual rise under 5 years of Conservatives?

System

TickersPlaysPop wrote: »

. There should be a policy to keep housing very affordable,

What exactly would you like the government to do?

Nationalise all housing and then allocate it on the basis of need alone?
Pass a law limiting the maximum legal price of a house? What do you think would be the consequence for the supply of housing?
Force people with excess bedrooms to take in anyone who is homeless?
Mint billions of new pounds and hand them out to people who need houses?
Increase the national minimum wage to £50 an hour so that everyone can afford a house?

MFW_ASAP

Clifford_Pope wrote: »

What exactly would you like the government to do?

Nationalise all housing and then allocate it on the basis of need alone?
Pass a law limiting the maximum legal price of a house? What do you think would be the consequence for the supply of housing?
Force people with excess bedrooms to take in anyone who is homeless?
Mint billions of new pounds and hand them out to people who need houses?
Increase the national minimum wage to £50 an hour so that everyone can afford a house?

They should scrap stamp duty, which has always been an unfair tax and instead introduce Capital Gains tax on the sales of houses. Houses should be no different to any other financial gain (i.e. shares, bonds, interest from savings, investment property), profits should be taxed.

That would reduce the amount of money people could take out of their properties to finance BTL purchases and would reduce the amount of capital for buying over inflated houses further up the ladder.

System

MFW_ASAP wrote: »

That would reduce the amount of money people could take out of their properties .

Yes, of course it would. That would mean people would be disinclined to move to new jobs, or to move up market and free up a cheaper house for first time buyers.
It would encourage boomers sitting in large valuable houses to stay put until they died (no CGT on death).

Why do you think freezing the housing market would help young people get up the ladder?

MFW_ASAP

Clifford_Pope wrote: »

Yes, of course it would. That would mean people would be disinclined to move to new jobs, or to move up market and free up a cheaper house for first time buyers.
It would encourage boomers sitting in large valuable houses to stay put until they died (no CGT on death).

Why do you think freezing the housing market would help young people get up the ladder?

Bit of a strawman you've built there, so naturally I don't think it'd freeze the housing market and so it wouldn't hinder young people getting up the ladder.

What it might do is remove the feeling of desperation that people have to get on the ladder in the first place. Instead peoiple would be happy to rent while they are in the mobility part of their careers without seeing the housing train disappear off into the distance. People who rent have much more mobility than people who buy. Besides, someone at the start of their careers (and their at their most mobile) will not have built up tens of thousands of pounds of equity and so wouldn't lose out.

Boomers are staying put anyway, so no change there. When they die they remove the problem and their house is back on the market.

Loughton_Monkey

MFW_ASAP wrote: »

They should scrap stamp duty, which has always been an unfair tax and instead introduce Capital Gains tax on the sales of houses.......

Brilliant idea!

The vast, vast, vast, majority of older people with houses are owner occupiers. The house will pass to children and (as now) IHT will apply.

Who are the people who move? They tend to be the young up-and-comers who move with their career, or upsize as their family grows....

Owners of 2nd properties are already liable for CGT if they sell.

All in all, therefore, what I see is a scheme that will transfer loads of money from the generations below boomers into the state coffers.

I would boldly suggest that this money be used to triple the heating allowance, introduce "Granny Bond 2" [an instant access savings account for pensioners giving 8% tax free interest], and extend the bus pass to taxis, and limousines [the 1st class return fair to St Lucia is high enough without paying £60 each way from Loughton to Gatwick!]

System

MFW_ASAP wrote: »

Boomers are staying put anyway, so no change there. .

But your measure would encourage them to stay. Isn't that at cross purposes with recent urgings to move?

MFW_ASAP

Loughton_Monkey wrote: »

Brilliant idea!

The vast, vast, vast, majority of older people with houses are owner occupiers. The house will pass to children and (as now) IHT will apply.

So no change there. Any inheritance over £325,000 is subject to 40% taxation.

Loughton_Monkey wrote: »

Who are the people who move? They tend to be the young up-and-comers who move with their career, or upsize as their family grows....

When I was a 'young up-and-comer' back in the late 80s and early 90s, we didn't have crazy HPI so I rented while I moved about from different jobs and within different regions (and countries) and when I decided to settle down, I bought a house (in 1995). There was no sense of panic in renting because house prices were not increasing by double digits month on month, so I could concentrate on my career and settle down when I wanted. A workforce that rents is far more mobile than one who owns.

Loughton_Monkey wrote: »

Owners of 2nd properties are already liable for CGT if they sell.

Exactly, and it works well and no one moans, so why shouldn't owners of 1st properties have the same tax treatment?

Loughton_Monkey wrote: »

All in all, therefore, what I see is a scheme that will transfer loads of money from the generations below boomers into the state coffers.

Make your mind up, in your first statement you've argued that it's the older generation who have all the equity, now you're saying it'll hit younger people. How can younger people be liable for CGT if they haven't made any substantial Capital Gains?

Loughton_Monkey wrote: »

I would boldly suggest that this money be used to triple the heating allowance, introduce "Granny Bond 2" [an instant access savings account for pensioners giving 8% tax free interest], and extend the bus pass to taxis, and limousines [the 1st class return fair to St Lucia is high enough without paying £60 each way from Loughton to Gatwick!]

Thsi money could be used for a lot of things, not least to help build affordable housing....

MFW_ASAP

Clifford_Pope wrote: »

But your measure would encourage them to stay. Isn't that at cross purposes with recent urgings to move?

Hmnn, you seem to have cut out all of my post and just quoted this bit. Am I therefore to assume you agree with what I posted and therefore have no argument with it?

I'm not sure what 'recent urgings to move', you're talking about? Certainly, if the boomers (now in their mid/60s and 70s?) have not moved by now, then they never will. To be fair, why should they have to? I wouldn't want to move away from family and friends in an area I'd lived in for decades either.

Besides, where would they get their equity from? They couldn't sell their existing homes at current bloated prices, because their buyers would also be hit with CGT and would not have the same buying power. The Boomers would have to sell their house cheaper (and pay less CGT) and they would buy a much cheaper retirement home.