homebuyers are increasingly choosing to refurbish their own homes instead of moving

westernpromise

http://www.telegraph.co.uk/property/buy/planning-applications-soar-quarter-five-years-stamp-duty-leads/

"Planning applications have risen by a quarter in the last five years as prospective homebuyers are increasingly choosing to refurbish their own homes instead of moving.

This has been exacerbated by changes to the stamp duty system, making moving more expensive for those with homes worth more than £1m."

So that went well, then. People who'd like to move, but who unaccountably don't fancy completely destroying a six-figure sum of their cash on stamp duty, extend and improve their existing home instead. This prevents it from being sold, and means it will more expensive when eventually it is. So there are fewer houses to buy, and those there are will be more expensive.

Great job there.

michaels

I don't understand, that nice man Jeremy has assured me that the only thing you need to do to increase tax take is to put rates up and yet it seems that higher rates can actually lead to less tax being collected (and economic activity declining).

GreatApe

Stamp duty should be a flat 1% with second homes on maybe a flat 3%

I doubt the government would do that, so the next best thing I can think of is that stamp duty should be refunded on a 1/20th scale per year. So if you want to sell your house which you bought 5 years ago, you would get 15/20th of the old stamp duty you paid back.

That way it goes from a transaction tax towards more of an annual property tax (but paid upfront)

economic

GreatApe wrote: »

Stamp duty should be a flat 1% with second homes on maybe a flat 3%

I doubt the government would do that, so the next best thing I can think of is that stamp duty should be refunded on a 1/20th scale per year. So if you want to sell your house which you bought 5 years ago, you would get 15/20th of the old stamp duty you paid back.

That way it goes from a transaction tax towards more of an annual property tax (but paid upfront)

yeh this would be a good idea actually.

GreatApe

economic wrote: »

yeh this would be a good idea actually.

It would take it from a moving tax to a annualized property tax which is better in most ways.

Or best of all a 1.2% flat tax (3% for second properties) rebated at 1/20th per year.

Should bring in the same £5 billion annually as the current system

Effectively each £1000 a property is worth they would be paying 60p per year.
A £100,000 property would be paying £60 per year
A £1,000,000 property would be paying £600 per year

michaels

Personally I don't see why there should be any tax on the transaction.

What should be taxed are increases in value above inflation as these are caused by we as a society deciding to limit housebuilding land. However the removal of the ppr would act to stop transactions dead so my solution would be to make it chargeable on equity withdrwal from housing, deferrable until death.

steampowered

Stamp duty does seem a bonkers way of taxing property.

Why should someone who wants to move house be taxed more for their property than someone who stays put?

Surely an annual property tax (i.e. higher rates of council tax) would be a better way of taxing property.

GreatApe

michaels wrote: »

What should be taxed are increases in value above inflation as these are caused by we as a society deciding to limit housebuilding land..

No that is not what causes it. For instance you could have prices forced up by regulatory inflation and you could have prices go up as people invest in their homes like extensions or replacing a basic kitchen with a great one

Also what would you do for the opposite? People who buy houses in an area that loses value, do you refund them? What about during a recession if people buy at a high and sell at a low at 50% of the price does the government have to hand the person a huge capital loss rebate?

However the removal of the ppr would act to stop transactions dead so my solution would be to make it chargeable on equity withdrawal from housing, deferrable until death.

Too complicated, and what do you do about people who just spend it
You correctly identify you cant tax them while they are alive else they cant buy housing
You then have to trust them to keep aside a certain amount for a tax that is payable on death...how many people with 6 months to live are going to keep £200k in their bank account to sort out the governments cut why not spend it and when your dead they can send hell an invoice

Thrugelmir

steampowered wrote: »

Stamp duty does seem a bonkers way of taxing property.

Stamp duty is simply a way of collecting tax from those that can afford to pay it. Just as VAT is.

steampowered

Thrugelmir wrote: »

Stamp duty is simply a way of collecting tax from those that can afford to pay it. Just as VAT is.

You could say that about any tax anywhere in the world. A tax on beards would fit the bill too.

That doesn't mean it isn't a bonkers way of taxing property!

Thrugelmir

steampowered wrote: »

That doesn't mean it isn't a bonkers way of taxing property!

If you think of another cost efficient way then you should be working for the Treasury.