Is there an award for economically illiterate ideas?

westernpromise

SouthLondonUser wrote: »

:rotfl::rotfl::rotfl::rotfl::rotfl:
No, of course there isn't.

Correct, there isn't. You are confusing the desire to own the property you occupy with there being no property for you to occupy. The latter would be a housing crisis because there would be people sleeping on the street. The former is a shortage of houses for sale, but you can rent somewhere.

GreatApe

There is no housing crisis, as I have posted about before in much of the country it costs less to buy the local starter terrace than it does to rent the local social stock.

SouthLondonUser

westernpromise wrote: »

How about it? Where's the evidence that any particular risk, as opposed to actual transaction cost, reduced transactions in 2015?

I don't have any hard evidence - that's the whole point - and neither do you! You said it was down to transaction costs. I merely pointed out that the factors are many, and that it is practically impossible to estimate and quantify the importance of all these factors with any degree of accuracy!

westernpromise wrote: »

In PCL, or indeed much of the adjacent area,

You mean prime central London?

westernpromise wrote: »

you won't find anything for £930k. W9 isn't PCL, for example, but the average property sale over the last year was £853k on 245-odd sales versus £804k on 1,896 sales in the previous 4 years. This represents a halving of transactions in the last 12 months versus the prior average, and probably is more than a halving from 5 years ago.

You have made many implicit assumptions here. You have assumed that the properties of which you took the average are in some way comparable. If in a given year a large number of, say, one-bed flats was sold, and in another year a much larger number of 4-bed houses, this alone would skew the results.
You have also compared the 12-month average number of transactions vs the average over a longer period. Assuming the properties sold were roughly comparable, did the average number and average value stay roughly the same over the previous years? Did they go up Did they go down? I have no idea.
The last 12 months have been a very peculiar time; as I said before, there are a number of factors driving property purchases. Brexit and the harsher tax treatment of buy-to-let are two very recent and very relevant examples. As I said before, it is impossible to quantify how much is down to which factor.

westernpromise wrote: »

Those figures are from Zoopla for W9 and they are interesting in another way. They say the average sale price 5 years ago was £804k, that prices have risen 44% and that the average value today is £929k.

Sorry, you lost me. 929 = 804 x 115%. What is 44%?

westernpromise wrote: »

Furthermore, the 3% penalty is turning to be applicable to far more people than envisaged. If you buy a fixer-upper and live in the old house till the new one can be occupied, you pay the 3% and then you have to try to get it back. If you have a main home in one name and one in your spouse's, and you want to sell and replace either, you pay.

You don't try to get it back; you do get it back - it's different! Sure, it's a substantial cash outlay, but you get it back.

westernpromise wrote: »

My mother is on about £30k a year and lives in a house that she paid £19k for in 1971. She cannot afford to sell it and downsize to somewhere smaller - which has to be nearby because of grandchildren, friends, family, etc. - because she'd pay well over a hundred grand in stamp duty just to do so.

What property would she downsize to? £ 100k of stamp duty means a purchase value of > £ 1.5 MM, if it's your only home, or ca. £ 1.2MM if it's a second home.

westernpromise wrote: »

So what was all the stuff about money launderers and speculators?

I was simply trying to make the point that the additional 3% stamp duty does not affect those who buy their first property, or those who move from their main property to another.
I said I am against abolishing it altogether; I never said stamp duty in itself is low.

westernpromise wrote: »

If you want to kid yourself that a tax of hundreds of percent on a transaction will not disincentivise transactions,

It is not a tax of a hundreds of percent. Others on the forum and I have already explained it; it's an extremely basic concept. If you want to kid yourself that the tax is hundreds of percent on the transaction, by all means, please continue to do so, but let's not waste each other's time.
As others pointed out, if I buy an object, be it a hammer or a car, on which I pay VAT but for which there are no transaction costs (unless you want to factor it the wear and tear of my shoes for walking a few yards to the hardware store...), how do you consider VAT? An infinite tax rate because transaction costs = 0? Come on...
Of course taxes are a disincentive. This is self-evident.

SouthLondonUser

westernpromise wrote: »

Correct, there isn't. You are confusing the desire to own the property you occupy with there being no property for you to occupy. The latter would be a housing crisis because there would be people sleeping on the street. The former is a shortage of houses for sale, but you can rent somewhere.

I'll rephrase that and be more specific. In Greater London and in much of the South East, property prices are so high that an increasing number of people cannot afford to buy, and most likely never will. This would not be much of a problem if renting was a viable option; unfortunately, a number of factors contribute to a situation whereby tenants spend an increasing proportion of their salary on rents, rents have tended to rise way above inflation, and the legal framework provides little to no protection against abusive behaviour by landlords: finding a contract for more than 12 months is practically impossible, tenants have no recourse if landlords increase the rent by, say, 15% every year, etc. etc. etc.

Of course whether you call this a crisis or not is pure semantics.

GreatApe wrote: »

There is no housing crisis, as I have posted about before in much of the country it costs less to buy the local starter terrace than it does to rent the local social stock.

The key words being in much of the country. I should have been more specific and made it clearer I was referring to London and most of the South East.

GreatApe

Stamp duty is a transaction tax because you buy the property and you will sell it at some point and it only applies at the point of transaction.

VAT on a hamburger is a sales tax or consumption tax, although you buy the hamburger you do not then sell it some years down the line

---

Stamp duty should be changed to a flat £500 per property per year and administered regionally.

So London with 3.5 million homes should charge Londoners £1.75 billion per year in stamp duty using the bands and %-ages that would hit £1.75 billion

If house prices double in a short space of time then the bands or %-ages should be changed such that the total take in a given year is still £1.75 billion

GreatApe

SouthLondonUser wrote: »

The key words being in much of the country. I should have been more specific and made it clearer I was referring to London and most of the South East.

If London were as affordable as the rest of the uk then you would need London to become a city of 15 million people almost overnight.

Zxcv_Bnm

Stamp duty definition - investopedia

stamp duty is the tax placed on legal documents usually in the transfer of assets or property.
http://www.investopedia.com/terms/s/stampduty.asp#ixzz4b3Alvrgn

Stamp duty definition - HMRC
You must pay Stamp Duty Land Tax (SDLT) if you buy a property or land over a certain price in England, Wales and Northern Ireland.

You pay the tax when you:

buy a freehold property
buy a new or existing leasehold
buy a property through a shared ownership scheme
are transferred land or property in exchange for payment

The total value you pay SDLT on (sometimes called the ‘consideration’) is usually the price you pay for the property or land.

https://www.gov.uk/stamp-duty-land-tax/overview


VAT on the other hand:
A value-added tax (VAT) is a type of consumption tax that is placed on a product whenever value is added at a stage of production and at final sale.

http://www.investopedia.com/terms/v/valueaddedtax.asp#ixzz4b3BbEl66
VAT is on the good, SDLT is on the transfer of the good. You pay it for transacting and all the value is used for is working out how much to rip you off.

Sure sounds like a transaction tax to me.