What would encourage you to divest property?

HornetSaver

Getting back to the actual main thread question though, I take the view that any house transaction which is for personal use (main home) should be taxed less than for business use, and that the main home principle should apply to landlords and mere mortals equally.

Unfortunately, MPs have trouble figuring out where their own main homes are, so they can hardly be expected to craft a law spelling it out for the rest of us. Therefore the solution to your problem is to elect an MP that makes a point of saying they live in the constituency, as said MP will know what a home is and should be able to help their peers figure it out too.

wotsthat

HornetSaver wrote: »

Getting back to the actual main thread question though, I take the view that any house transaction which is for personal use (main home) should be taxed less than for business use, and that the main home principle should apply to landlords and mere mortals equally.

Passes my test of whether I support a tax. If someone else pays it I'm all for it.

Yes, let's get landlords and their tenants to fund reduced taxes for owner occupiers.

mwpt

wotsthat wrote: »

Yes, let's get landlords and their tenants to fund reduced taxes for owner occupiers.

Osborne agrees with you. Good times.

Except the tenants bit. Rents will rise in line with historical norms. Higher rises in some years and areas, lower in others.

Graham_Devon

westernpromise wrote: »

I don't think so, no. High house prices ought to incentivise people to downsize, i.e. should stimulate rather than suppress activity. The evidence is that they aren't doing so; downsizers see a big chunk of money wasted on stamp duty and don't bother.

Someone in a million pound house in north London who wants a bigger house elsewhere in north London but also for a million pounds will pay £44k in stamp duty, £20k in agents' fees and at least £5k in other costs just to do the deal. This is before doing anything to the new house that it needs.

For the same £70k they could have an extension, an attic conversion, a new kitchen and bathroom, and probably a garden makeover in the current house. They end up with a more valuable house, they haven't even had to move and every penny spent added value.

So let's see. Spend £1.07 million to end up with a £1 million house fitted out to someone else's taste; or spend £0.07 million and end up with a £1.07 million house fitted out to yours? I know what I'd do.

To be fair, most people don't live in million pound houses.

Secondly, with the recentish changes to stamp duty, it's of little concern to many ordinary people.

I really can't see stamp duty being the biggest barrier to moving when you consider how tiny stamp duty is compared to the price of the house.....

westernpromise

Graham_Devon wrote: »

To be fair, most people don't live in million pound houses.

Um, so? If people in million pound houses don't sell, and in not selling turn them into £1.1 million houses, you have a recipe for a shortage of stock which is resolvable only by higher bids. So high transaction costs make moving unattractive which limits supply which raises prices which raises the cost of ad valorem taxes which causes high transaction costs.

If you look around much of north London these days houses are increasingly being defaced by hideously ugly extensions that have been grafted onto houses to enlarge them because it's more efficient than moving. Look at this horror, for example:
http://www.rightmove.co.uk/property-for-sale/property-56153180.html

How many times has that thing been extended?

Secondly, with the recentish changes to stamp duty, it's of little concern to many ordinary people.

People with a million to spend in London are ordinary.

I really can't see stamp duty being the biggest barrier to moving when you consider how tiny stamp duty is compared to the price of the house.....

The classic fallacy, like I said: someone who pays a million for a house must be so loaded they don;t notice 40 grand here or there. Wrong. When we moved house 4 years ago the stamp duty was the single biggest expense item, was equivalent to a full year's mortgage payments and would have paid for most of what we wanted to do. It was money wholly and completely wasted because we got exactly nothing for it. If we now wanted more space we could waste a six-figure sum on selling and rebuying or we could spend less than that improving the place we're in. It's not a tough call.

cells

HornetSaver wrote: »

In other words, somewhere approaching - or possibly surpassing - a majority of terraced houses (I.e. housing specifically targeted towards families on modest-to-average earnings) is unattainable for median earners? And that because of the geographic differential, in some geographically large areas of the country almost all are unattainable?



Poor choice of phrase (I presume you mean "first home" rather than "homes bought under the government scheme in the last year or so"), but that seems a bit of a stretch. Yes, it's a financially efficient way of doing things, but the typical pattern is:

1. Buy whatever first home you can afford (what you refer to as a starter home)
2. Upsize to appropriate house when able.

Most people with the financial means to do as you suggest would probably have bought the correct sized house in the first place, and subsequently purchase the smaller one to let, I'd have thought?

Getting back to the thread

in half the country a SINGLE person can afford to buy a terrace house on a full time male wage

assuming we dont think the uk needs one house per adult it would be better to look at a COUPLE working full time.

The point is that half the country is between a nit less than 2x wage to a bit more than 4x wage. Those places are cheap, cheap enough a single person on the average wage can buy comfortably

For the rest of the country it is also not too bad, its really only when you go to london that prices are high vs wages and that makes sense as 4 renters working full time will always out bid 2 owners working full time and hence London is now more renters than owners and possibily will end up as 25% owners 75% renters

Conrad

I know and deal with a lot of LL's and honestly not a single one is looking at selling come the tax increases.


As cells eludes to, for many of them property is all they know, it's what they trust, what they can get their head around.


Also it's all very well arguing increased income tax will force LLs to sell, but this ignores the substantial CGT bill a sale would likely generate.


So in terms of this thread I cant see much that will cause LL's to sell up.

cells

iirc you are a mortgage broker?

How is business this time of year vs say last year?

Crashy_Time

cells wrote: »

are you disputing the indisputable fact that about half the country terrace stock is priced at about 4 x full time male income or less?

confirmation bias to the max


As for transaction volumes. Stamp duty as mentioned but also I think one of the reasons transaction levels are lower is that more people are opting to keep their starter homes when they move and rent them out rather than sell them on.

That would explain how the rental sector grew at 440,000 last year but BTL for purchase was closer to 100,000 indicating more than 300,000 cash/equity purchases (or transfers)

Just means the 4x earnings stock needs to drop further then before anyone wants it.

cells

Crashy_Time wrote: »

Just means the 4x earnings stock needs to drop further then before anyone wants it.

people are already buying at those levels hence prices are not falling further.

However my point is that, clearly, you and a lot of crash-wishers will think prices are too high no matter what that price is

you are calling areas with 2 x to 4 x income expensive. That means you think London needs to fall in price by 70% just to get to this 4x wage and then fall another 50%