House Not Selling

inmypocketnottheirs

Generali wrote: »

Not true. A tax on buyers has an impact on demand. A tax on sellers affects supply.

Absolutely correct.

Another thought occurred to me too. As the brakes appear to have been well and truly put on to the property market, and in most areas sales have slumped. This will now of course affect the amount of money the Treasury will receive from this insidious tax. Therefore in the next budget expect our Darling chancellor to pick our pockets elsewhere........

Generali

inmypocketnottheirs wrote: »

Absolutely correct.

Another thought occurred to me too. As the brakes appear to have been well and truly put on to the property market, and in most areas sales have slumped. This will now of course affect the amount of money the Treasury will receive from this insidious tax. Therefore in the next budget expect our Darling chancellor to pick our pockets elsewhere........

Correct!

The thing is (IMO) that the next thing we have to concern ourselves with is a recession (possible) or staglfation (more likely). If that happens then other tax receipts dry up too - VAT and Corporation tax receipts are the first to go as company profits get squeezed and consumers reduce spending then income tax and NI receipts fall as people lose their jobs.

Ordinarily, Government borrowing and spending rise in an attempt to make up the shortfall in private sector spending. Some of this is a natural part of having a welfare state as welfare payments rise and fall with unemployment (simplistically). Some of it is Govt spending more on 'infrastructure' and training to get people off the dole and into some sort of work, even if it's just digging holes in the ground.

The trouble is, this government has painted itself into something of a fiscal corner. The budget defecit is £20,000,000,000(?) and they've tied themselves into all sorts of expensive promises by raising public sector pay in many areas. So where is the extra money going to come from to fill the gap?

A good recession could easily cost the taxpayer a few tens of billions. We went into the last recession with a budget surplus of a few billion/year. IIRC, the Govt borrowing hit a peak of about £27,000,000,000 at the bottom of the fiscal cycle. Is anyone really going to lend this govt £50,000,000,000 a year for a couple of years? Is it even politically possible to do it? I don't have the answer to that but I think that this Govt has really effed things up and I don't even see it being written about or discussed.

Golden Rule, my Elbow (as Mr Darling might say)!

buglawton

Generali wrote: »

Not true. A tax on buyers has an impact on demand. A tax on sellers affects supply.

Common sense already says to me that a tax that cuts in very sharply (a jump from £2500 to £7500) at just the threshold where most semis are priced at around the Southern suburbs is going to distort and maybe lock up the market.

Whether that tax is applied to seller or buyer is IMHO academic, the actual real world effect would be the same. This point seems to have puzzled others too. I Googled a bit and found an "economic experiment" on just this topic.

http://econport.gsu.edu/content/teaching/modules/Taxes.html

If you look at the section entitled "Treatments 1 and 2 data combined Compared" you will see the conclusion that "The incidence of a tax on buyers and sellers is the same regardless of whether liability to pay the tax is on buyers or sellers". This matches what I for one would intuitively expect,.

kennyboy66_2

firsttimetom wrote: »

No houses are selling at the moment - Mortagage approvals hit a 3 year low with the last available data, so that backs this theory up (http://news.bbc.co.uk/1/hi/business/7118561.stm).

Come may with the new CGT tax rules there is expected to be an influx of houses from failed BTL investments (of which there are many).

Why would a "failed BTL" need to wait to take advantage of new CGT rules?

Mutton_Geoff

Why would a "failed BTL" need to wait to take advantage of new CGT rules?!

In April, the tax liability on CGT gains will more than halve for high rate tax payers (from 40% to 18%).

My own property (2 bed flat in Surrey) was valued at £250k by 3 agents and marketed at that. Six months later, I've finally accepted an offer of £201k. I haven't "lost" anything as this is still substantially more than I paid for it, but the agents "valuations" last summer were just pie in the sky. The reality is in the actual selling price, reducing a £250k place by £500 is not going to excite your potential buyers, mine moved in £20k/£10k steps until an offer could be found.

In April, I think the market will be flooded with properties being sold up by B2L landlords and this will accelerate a further adjustment to prices.

Gorgeous_George

There would be NO CGT on a failed BTL - assuming asset appreciation was the cornerstone of one's BTL business plan. In which case it wasn't pure BTL and more BARSTAD (or Buy And Rent, Sell To A Dummy).



GG

elop_htuos

Well in the new year we are gonna decrease the price by roughly 10k!!!! See what comes of that!

wii_man1

Mutton_Geoff wrote: »

Why would a "failed BTL" need to wait to take advantage of new CGT rules?!

In April, the tax liability on CGT gains will more than halve for high rate tax payers (from 40% to 18%).

My own property (2 bed flat in Surrey) was valued at £250k by 3 agents and marketed at that. Six months later, I've finally accepted an offer of £201k. I haven't "lost" anything as this is still substantially more than I paid for it, but the agents "valuations" last summer were just pie in the sky. The reality is in the actual selling price, reducing a £250k place by £500 is not going to excite your potential buyers, mine moved in £20k/£10k steps until an offer could be found.

In April, I think the market will be flooded with properties being sold up by B2L landlords and this will accelerate a further adjustment to prices.

£500 price drop :rotfl: are you selling a car or a house :rotfl: