Budget: Hammond mulling tax cuts for young paid for by slashing pension tax reliefs

peterg1965

Think I am right in saying that house price inflation has been relatively modest since 2010, the Blair/Brown period, 1997-2010, saw huge increases in house prices and that has been the cause of the affordability problem.


It is also fair to say that the housing crisis is predominantly a South East/London issue, and maybe the big cities. More needs to be done to incentivise business to relocate to the North East/West to spread the wealth around. More infrastructure investment such as HS2/3 cross pennine links / Northern Powerhouse type stuff is the way forward.

mgdavid

zagfles wrote: »

...... However the main issue which screws the young is housing, which is massively more expensive than it was for the boomers, especially in the south-east.
......

is it?
In 1973 my starter house cost around 10 x average earnings.
Much the same as today.
Obv not in Weybridge or Islington, but on average...

Terron

Silvertabby wrote: »

House prices started to soar in the 1980s because, up until then, mortgages were capped at 3.5 times the husband's salary and (at the most) 1 x the wife's salary. This was because the wife was expected to give up work once the kiddies came along.

Then came the 1980s, when a combination of the new sex equality laws and the fact that more and more mums returned to work meant that a wife's salary could be taken into account when determining the affordability of a mortgage. Couples borrowed more money because they could, leading to higher offers etc etc.

There's no going back from this.

Huh? I seem to remember house prices doing exactly that in the early 90s. First home purchased for £64.5k in 1989, sold for £39.5k in 1992

zagfles

mgdavid wrote: »

is it?
In 1973 my starter house cost around 10 x average earnings.
Much the same as today.
Obv not in Weybridge or Islington, but on average...

Oh really? In 1973 average male wage was £2126, average house price was £8396. It must have been a hell of a "starter home" if it cost £21,260 in 1973. 2.5 times the average house price, equivalent of about £525,000 now.

Malthusian

AlanP wrote: »

Don't really follow the logic of this. Are you suggesting that the employee should pay tax on the employer's pension contribution over and above a flat rate of say BR tax @ 20%?

No, Pennywise suggested it, I was just explaining how it would have to work, and therefore why it wouldn't be politically possible.

As you said, at the moment employer contributions typically come out of gross pay and get 20/40/45% relief. If everyone is only allowed 20% relief, then the difference between 20/40/45 has to be paid by the employee.

You can't take it out of the pension contribution because for public sector workers the pension contribution has to stay at the same level to fund the defined benefits scheme.

Instead of the employee paying the tax charge, the employer could deduct it directly, but that would be just as bad as it would mean a dramatic cut to take-home pay.

Whatdoiknow

Malthusian wrote: »

No, Pennywise suggested it, I was just explaining how it would have to work, and therefore why it wouldn't be politically possible.

As you said, at the moment employer contributions typically come out of gross pay and get 20/40/45% relief. If everyone is only allowed 20% relief, then the difference between 20/40/45 has to be paid by the employee.

You can't take it out of the pension contribution because for public sector workers the pension contribution has to stay at the same level to fund the defined benefits scheme.

Instead of the employee paying the tax charge, the employer could deduct it directly, but that would be just as bad as it would mean a dramatic cut to take-home pay.

Is that a typo? Should it be employee contributions?

k6chris

zagfles wrote: »

Except a rising market means even more of these loans required, meaning even more taxpayers' money tied up in housing, and making housing even less affordable for young people negating the whole point of the scheme.

Out of interest I looked back to when I bought my first house in 1986 for £27,000. It was a 3 bed terrace in a Nottingham suburb, which was 3 x my salary, plus a deposit (5%) which I borrowed from my parents. Interest rates in 1986 were 11% :eek: although MIRAS did give some respite. I rented out two rooms to help pay the mortgage.

Allowing for inflation, the same numbers would translate to a similar house costing £73,000.
http://www.bankofengland.co.uk/education/Pages/resources/inflationtools/calculator/default.aspx

Today's 'average' graduate salary is around £23,000 https://www.savethestudent.org/student-jobs/whats-the-expected-salary-for-your-degree.html so a similar equation gives 3 x £23,000 = £69,000 mortgage plus deposit gets you to a very similar figure of £73,000. Can you get a terrace house for this in Nottingham? (I have used £80,000 as a lower limit as there is not a great choice for £70k).

http://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=REGION%5E1019&maxPrice=80000&propertyTypes=terraced&secondaryDisplayPropertyType=terracedhouses

The advantage I had was a lower deposit (only 5%) and easier access to mortgages. I was willing to rent out spare rooms and people were happy to rent a room. Yes some things have changed and prices have risen slowly in real terms (£80k vs £72k). I TOTALLY accept the argument about prices in the South East, but not sure the picture has changed that much elsewhere in the UK??

bigadaj

k6chris wrote: »

Out of interest I looked back to when I bought my first house in 1986 for £27,000. It was a 3 bed terrace in a Nottingham suburb, which was 3 x my salary, plus a deposit (5%) which I borrowed from my parents. Interest rates in 1986 were 11% :eek: although MIRAS did give some respite. I rented out two rooms to help pay the mortgage.

Allowing for inflation, the same numbers would translate to a similar house costing £73,000.
http://www.bankofengland.co.uk/education/Pages/resources/inflationtools/calculator/default.aspx

Today's 'average' graduate salary is around £23,000 https://www.savethestudent.org/student-jobs/whats-the-expected-salary-for-your-degree.html so a similar equation gives 3 x £23,000 = £69,000 mortgage plus deposit gets you to a very similar figure of £73,000. Can you get a terrace house for this in Nottingham? (I have used £80,000 as a lower limit as there is not a great choice for £70k).

http://www.rightmove.co.uk/property-for-sale/find.html?locationIdentifier=REGION%5E1019&maxPrice=80000&propertyTypes=terraced&secondaryDisplayPropertyType=terracedhouses

The advantage I had was a lower deposit (only 5%) and easier access to mortgages. I was willing to rent out spare rooms and people were happy to rent a room. Yes some things have changed and prices have risen slowly in real terms (£80k vs £72k). I TOTALLY accept the argument about prices in the South East, but not sure the picture has changed that much elsewhere in the UK??

Where was your first house, you can get houses for £80k around Nottingham but not in anything like a decent area.

chucknorris

k6chris wrote: »

I rented out two rooms to help pay the mortgage.

I was willing to rent out spare rooms and people were happy to rent a room.

That most have been before the 'rent a room' tax concession was introduced, how much income tax did you have to pay back then, was it simply added to your income total? Or was it taxed differently?

I assume that it also affected your capital gains tax when you sold the property too?

Lokolo

bigadaj wrote: »

Where was your first house, you can get houses for £80k around Nottingham but not in anything like a decent area.

As well as this. If you know about your first property then link it to us in Zoopla and Rightmove and tell us the last sold price for it.