What steps will gov take if 35%+ HPC?

Crashy_Time

westernpromise wrote: »

The main factor stopping people trading houses in London and the South-East is probably SDLT.

If I wanted to swap my house for one of similar value but slightly further out of town, so as to gain more space, it would cost me £125,000 in stamp duty.

That sum is:

• about four years of principal payments off my mortgage (so to pay it would set me back that long in paying the mortgage off)
• about what I reckon I could live on for three years or so in retirement (so to pay it would postpone my retirement by that long; three more years commuting on the Northern Line in my late 60s)
• five times what I paid for my first house
• six times what my parents paid for their much bigger house
• more than the likely refurbishment cost of anywhere I bought

Everyone I talk to cites a similar list as the reason why they won't consider buying.

London house prices are always taken by governments and envious rentyboys as proxy evidence for high disposable income. Hence they think they can demand £125,000 of transaction cost of people just to move house and those being fleeced won't notice because it's not much compared to the price of the house.

The fact is that it these house prices are the consequences of inflation. Sellers need to hold on to the proceeds of inflation if they are to buy. Take away £125,000 of it and they can't afford to buy. It's notably acute in sideways move instances like mine. SDLT take falls accordingly.

I hope someone intelligent in government is looking at the effects of SDLT on transaction levels and mobility, and drawing the correct inferences from this for the consequences of any attempt to impose CGT on home sales. It's not a "gain" at all, it's inflation, and taxing inflation stops people moving house.

Unfortunately, the idea of there being "someone intelligent in government" is so totally far-fetched, now or in the future, that I doubt it.

Do you seriously think the government doesn`t know how London house price purchases are funded? The charge is a purely political move that attempts to offset years of relying on property bubble for votes that`s all.

mayonnaise

Crashy_Time wrote: »

https://www.news.com.au/finance/economy/australian-economy/let-the-bloodbath-begin-house-prices-in-sydney-and-melbourne-could-halve-in-worst-crash-since-1890s/news-story/5918ea13042d5f819cb13c77629f060a

Aw bless, Australia also has HPC nut jobs.

House prices in Sydney and Melbourne ‘could halve’

50% off...now where have I heard this before? :rotfl:

LF Economics founder Lindsay David, who has been warning of the looming property crash for the past five years..

Sounds familiar also. :rotfl:

phillw

westernpromise wrote: »

If I wanted to swap my house for one of similar value but slightly further out of town, so as to gain more space, it would cost me £125,000 in stamp duty.

If only they would tax on the difference between the house you sell and the house you buy.

chucknorris

Crashy_Time wrote: »

https://www.news.com.au/finance/economy/australian-economy/let-the-bloodbath-begin-house-prices-in-sydney-and-melbourne-could-halve-in-worst-crash-since-1890s/news-story/5918ea13042d5f819cb13c77629f060a

Crashy it only matters if you sell, as long as you carry on paying the mortgage the (negative) equity doesn't significantly impact on most property owners lives, apart from maybe feeling a bit uncomfortable about it. Back in 2008 our equity dropped by about £1m (but we actually bought another house when that happened) then when the market recovered our equity rose by about £2m (from the low point).

Please correct me if I am wrong, but that house that you sold in the late 90's, if you had kept it, instead of selling it, wouldn't you now be approaching the time that the mortgage would have been paid off?

You probably have me down as a property bull, but I am not. Property is not even my largest holding now (it was a few years ago), I have been changing my portfolio, to suit my forthcoming retirement, it currently stands at:

35% Equities (excl. REIT, possibly increase to 45%)
29% Investment property (will drop to about 12% at retirement)
15% Fixed pension (can't buy any more fixed pension than this)
9% Cash (about 4% is temporary)
7% Individual corporate bonds (probably increase to about 18%)
5% REIT (recent investment, this maybe where my property equity ends up)

That may change later this tax year, as I may sell another property, the problem is where to put the equity though. I don't want to be top heavy in shares, and bonds don't pay much. From a strictly financial viewpoint, I would certainly leave it in property, there is absolutely no doubt in my mind about that. But after 28 years, I've had enough of being a landlord, and there are more important things in life than money.

westernpromise

phillw wrote: »

If only they would tax on the difference between the house you sell and the house you buy.

If they did that they would just alter the rate so you paid the same or more.

westernpromise

chucknorris wrote: »

Crashy it only matters if you sell, as long as you carry on paying the mortgage the (negative) equity doesn't significantly impact on most property owners lives, apart from maybe feeling a bit uncomfortable about it. Back in 2008 our equity dropped by about £1m (but we actually bought another house when that happened) then when the market recovered our equity rose by about £2m (from the low point).

Please correct me if I am wrong, but that house that you sold in the late 90's, if you had kept it, instead of selling it, wouldn't you now be approaching the time that the mortgage would have been paid off?

You probably have me down as a property bull, but I am not. Property is not even my largest holding now (it was a few years ago), I have been changing my portfolio, to suit my forthcoming retirement, it currently stands at:

39% Equities (possibly increase to 45%)
29% Investment property (will drop to about 12% at retirement)
14% Fixed pension (can't buy any more fixed pension than this)
14% Cash (about 9% is temporary)
2% Individual corporate bonds (probably increase to about 18%)
1% REIT (just invested this morning, this maybe where my property equity ends up)

That may change later this tax year, as I may sell another property, the problem is where to put the equity though. I don't want to be top heavy in shares, and bonds don't pay much. From a strictly financial viewpoint, I would certainly leave it in property, there is absolutely no doubt in my mind about that. But after 28 years, I've had enough of being a landlord, and there are more important things in life than money.

As a card carrying crash troll, Crashy very probably believes that the mortgage lender owns the property (he cannot understand the difference between a charge against the event of default, and legal title), and also that if property prices fall, the bank's balance sheet takes a hit.

I previously worked out for Crashy that, if he had kept the property he sold in 1996 and had maintained the same monthly payment - i.e. overpaid versus the subsequent 0.5% base rate - he would not only have paid off the mortgage several years ago, he would also be most of the way trough paying off another that he could be letting out.

Instead of this happy situation, he is looking at another 20 or 30 years of paying rent when he could have been mortgage free and receiving rent.