House Prices?

ToneControl

thomasross20 said:

It's so weird that one person can buy a home to rent to another. It's a bit like a class system. I agree that folk need to rent but should it be from some random person who's scooped up a few houses to line his/her pockets more? 

Agree that it's a policy that would be disastrous for a political party - and I think you're not far off @VimFuego  with your description. Many times I've seen home loaners go quiet because of conflict of interest - they want high prices for themselves (for what purpose other than retirement cash-in, I don't know) but low prices for their kids (until they buy, then they want high prices again). 

Rents are silly, agreed!

so if people can't get a mortgage (unemployed, disabled, too poor), you think they should be made homeless then?

ToneControl

TheBigDipper said:

I'd be interested in peoples thoughts about some friends of mine and their recent purchase. Both are in their 50s and neither has ever had a job that delivers a pension - so the state pension is what they've got to look forward to.  He is a freelance photographer (and a good one). She is an alternative therapist (Reiki and similar). They have never earned enough money to put into a pension scheme. They have lived in their main home for 25+ years, have no children and have paid the mortgage off. Her mother died recently and she shared the proceeds from the house sale with her sister. Using that money, they've bought a small flat to rent out and provide an income to supplement their pension. 

Is this OK or unacceptable? Anyone got a view? 

it's a very good idea, and perfectly possible to do it ethically

rlw

Evilmags said:

Most second homes are in places (like the countryside) that hardly have a shortage you might get a few areas (Cornwall, Perthshire) that have posh enclaves, but that is about it. If it was easier to actually build houses (Councils don´t want you to) there would be more houses. Try getting planning for one, even if you are doing up what was an original house. It is a nightmare. a three flat conversion and bob´s your uncle though. The cost makes small projects less economical so big anodyne flats get built instead.  

Cornwall is full of empty space where houses could be built but the council is not very keen most of the time.. Also, low wages mean that houses need to be cheap so not much profit for the builder.   Another council has just passed legislation to prohibit incomers buying new properties - St Minver - so I suspect that no new homes will be built because the locals can't afford them and no-one else can buy them.

ToneControl

TheBigDipper said:

olafgarten said:

<snip>

I don't think that more tax is the answer to anything. Taxation is theft. 

That's your view. Tax revenues pay for public services and infrastructure. I happen to think using public services and not paying tax when your earnings mean you could contribute is theft. I'd apply that view to both companies and people who work the system - and I don't think too highly of the politicians that don't try and stop it, either. 

that would be mostly cash-in-hand tradesmen then? 
Taxi drivers, plumbers, etc
I know a taxi driver who never pays tax, a builder who never paid tax his whole working life, and whose wife pretended had moved out years ago when asked by HMRC visitors
The black economy is large
https://www.theguardian.com/business/2013/jun/04/uk-shadow-economy

Garthy

rlw said:

Evilmags said:

Most second homes are in places (like the countryside) that hardly have a shortage you might get a few areas (Cornwall, Perthshire) that have posh enclaves, but that is about it. If it was easier to actually build houses (Councils don´t want you to) there would be more houses. Try getting planning for one, even if you are doing up what was an original house. It is a nightmare. a three flat conversion and bob´s your uncle though. The cost makes small projects less economical so big anodyne flats get built instead.  

Cornwall is full of empty space where houses could be built but the council is not very keen most of the time.. Also, low wages mean that houses need to be cheap so not much profit for the builder.   Another council has just passed legislation to prohibit incomers buying new properties - St Minver - so I suspect that no new homes will be built because the locals can't afford them and no-one else can buy them.

Like I said earlier, the law of untended consequences. St Ives did the same thing, which meant that new houses aren't getting built, and the rich out of towners are now buying from a smaller pool of stock in St Ives, or moving to outlying areas, forcing up the prices for the surrounding areas and pricing out first time buyers of the entire area instead of just the fishing port.

Another South Western council tabled an idea to restrict the sale of new builds to locals for 5 years, thereafter they go on the open market. So, will these new builds be built in the first place, and if so will they be affordable once they are on the open market in 5 years time? The first is possibly not, the former is definitely not.

mellowsun

The market will correct itself as people come to their senses and slowly realise that paying 800k for a bedsit  in central London with a negative rental yield makes no sense.

Slumlords buying up HMOs in areas of high unemployment and renting them back to the council will continue to rake it in however.

Stevepage

stickyfiddle said:

Stevepage said:

Got my flat on the market at the moment. Not getting a lot of viewings and neither is any one else I know who's currently selling. In short, no one is fucking buying 

Which could arguably be described as "seller speak" for "my price is too high"



For the area we're in and the condition of the flat, ours is priced under all others in similar area and condition. 

ToneControl

ESBlonde said:

London I suspect, is begining to see the effects of people/jobs moving on to/back to the continent and as such the demand has fallen from the levels previously expected. If thousands of jobs go to Frankfurt then correspondingly so do the housing needs. Those jobs may not have moved yet but people are less likely to commit to a mortgage and moving costs in the uncertainty.

Ahh, I thought all those 3m EU people came over here because we had better jobs, paying them more. Why would they possibly want to stay here? Probably the same reason they came

ToneControl

Sambostar said:

Agree it starts and ends with the banks and the moneymen.  Wankers. The risk isn't the sam as remortgaging to put into a business startup though and is entirely selfishly motivated.

Is it more selfish than investing your money in pension funds for multinationals?

ToneControl

ICBM said:

ToneControl said:

ICBM would class the increase in value as an unearned windfall, to be taxed at 40%, so I assume if you wanted to buy a bungalow in your old age, you'd find that you only had 2/3 of the sale price of your house available to buy the next one. Clearly no-one would ever do this, it's unworkable

Why? Plenty of people sell up and buy a house worth much less when they get old. Why should they get to keep all the unearned windfall they made simply by sitting in a house for thirty or forty years, tax free?

What would actually happen is that very quickly it would dampen the housing market, so in fact prices didn't rise to anything like the same extent, and once you've deducted general inflation and any improvements, there would be little or no tax to pay.

The real point would not be to tax everyone, it would be to dissuade them from the extremely damaging economics of continually pushing house prices up in the first place. Tax is an extremely effective disincentive, more than any other type of cost because people resent paying it so much and will do almost anything to avoid it.

But it will never happen because it's politically unacceptable to deny people what they now think is their right to make a huge profit from simply owning a house for a while. So it will go on until no-one can afford any decent house, most of earning capacity goes to paying mortgage interest and the economy totally stagnates. And no-one dares pull the plug because that would cause negative equity…

It's an economic cancer, basically.

Have you been getting maths lessons from Abbot? ;-)

 So: if I have a 4 bed house worth £300k, and want to sell up and buy a bungalow, to aid mobility in old age
I have a look round, notice that bungalows the size of my house cost 40% more
see: http://www.telegraph.co.uk/news/2016/07/19/britains-bungalow-crisis-chronic-shortage-means-buyers-pay-up-to/

so I think, OK, we really don't want stairs, so we'll take the hit and buy a 2 bed bungalow for £300k

But hold on, I find I'm deemed to have a £200k "windfall" because my house went up in value faster than inflation, so on selling it I owe 28%, so that's £56k
So now I'm looking for a bungalow for £244k, so we're down to a one-bed bungalow

I decide to stay put, and buy a stairlift: depriving a family of a 4 bed house that would have been up for sale. No tax is collected,  no inheritance tax is due either, so what good did that rule do?

ToneControl

ThePrettyDamned said:

rlw said:

robgilmo said:

I think second homes, buy to lets etc should have the shot taxed out of them until its just not worth it anymore, this way hard working people like myself might actually be able to afford to put a roof over my families heads and no longer be subject to a ruthless renting market run by greedy landlords and despicable estate agents, seems only fair, there is a housing crisis and you are either part of the problem or it's victim.

Hard working people buy second homes too you know..............

Yes. And this contributes to the destruction of local economy. See ghost towns in the lake district, Dorset coast etc. 

It's not as simple as "I can afford a second house". There is a direct economic impact to the local area, which costs money. More than a bit of council tax. 

I'm not so convinced:
take some seaside village in Anglesey like the one I visited, everyone skint, plenty of Dads collecting their kids from school

So the theory is that people with jobs living in Manchester (like my Welsh mate) buying a house in that village, and paying council tax without claiming it back from the council as benefits, are in fact taking something away from the area?
What is that then? They aren't using the schools or GPs, they are paying council tax (for real), but don't buy groceries quite as often. What is the negative economic impact to the area?

ToneControl

ewal said:

olafgarten said:

ICBM said:

ToneControl said:

ICBM would class the increase in value as an unearned windfall, to be taxed at 40%, so I assume if you wanted to buy a bungalow in your old age, you'd find that you only had 2/3 of the sale price of your house available to buy the next one. Clearly no-one would ever do this, it's unworkable

Why? Plenty of people sell up and buy a house worth much less when they get old. Why should they get to keep all the unearned windfall they made simply by sitting in a house for thirty or forty years, tax free?

What would actually happen is that very quickly it would dampen the housing market, so in fact prices didn't rise to anything like the same extent, and once you've deducted general inflation and any improvements, there would be little or no tax to pay.

The real point would not be to tax everyone, it would be to dissuade them from the extremely damaging economics of continually pushing house prices up in the first place. Tax is an extremely effective disincentive, more than any other type of cost because people resent paying it so much and will do almost anything to avoid it.

But it will never happen because it's politically unacceptable to deny people what they now think is their right to make a huge profit from simply owning a house for a while. So it will go on until no-one can afford any decent house, most of earning capacity goes to paying mortgage interest and the economy totally stagnates. And no-one dares pull the plug because that would cause negative equity…

It's an economic cancer, basically.

I don't think that more tax is the answer to anything. Taxation is theft. 

Why is taxation theft? How else can governments invest?

also:

Edward Troup, a senior official in HM Revenue and Customs, ..... once wrote that “taxation is legalised extortion”. The Today programme’s Justin Webb said this morning that “it will worry people, won’t it, that the boss of HMRC has that view of tax when he’s the person looking into the Panama Papers?”

But like Graham Aaronson QC, Mr Troup himself has stressed that those four words should be seen in the context of the article it appeared in.

That’s not necessarily easy to do. Newspaper articles from before the age of online editions don’t come up on Google.

The full piece doesn’t seem to be available on some of the industry-standard media monitoring services that we tried, and when we eventually tracked it down it seemed to be dated 1997 rather than 1999.

Helpfully, the House of Commons Library has republished a lengthy extract from the article in question, which helps to set the phrase “legalised extortion” in the context demanded. It appears in the following paragraph:

“Tax law does not codify some Platonic set of tax-raising principles. Taxation is legalised extortion and is valid only to the extent of the law. Tax avoidance is not paying less tax than you ‘should’. Tax avoidance is paying less tax than Parliament would have wanted. Avoidance is where Parliament got it wrong, or didn’t foresee all possible combinations of circumstance. The problem of tax avoidance is reduced to the problem of finding an answer to the question of what parliament intended and making sure that this is complied with. I would not pretend this is a simple task. But recognising this as the issue and dealing with it equitably and constitutionally would be a significant step on the way to tackling avoidance effectively.”

Mr Troup was responding to news that then-Chancellor Gordon Brown was looking into a ‘general anti-avoidance provision’.

https://fullfact.org/economy/taxation-legalised-extortion-discuss/

ThePrettyDamned

ToneControl said:

ThePrettyDamned said:

rlw said:

robgilmo said:

I think second homes, buy to lets etc should have the shot taxed out of them until its just not worth it anymore, this way hard working people like myself might actually be able to afford to put a roof over my families heads and no longer be subject to a ruthless renting market run by greedy landlords and despicable estate agents, seems only fair, there is a housing crisis and you are either part of the problem or it's victim.

Hard working people buy second homes too you know..............

Yes. And this contributes to the destruction of local economy. See ghost towns in the lake district, Dorset coast etc. 

It's not as simple as "I can afford a second house". There is a direct economic impact to the local area, which costs money. More than a bit of council tax. 

I'm not so convinced:
take some seaside village in Anglesey like the one I visited, everyone skint, plenty of Dads collecting their kids from school

So the theory is that people with jobs living in Manchester (like my Welsh mate) buying a house in that village, and paying council tax without claiming it back from the council as benefits, are in fact taking something away from the area?
What is that then? They aren't using the schools or GPs, they are paying council tax (for real), but don't buy groceries quite as often. What is the negative economic impact to the area?

They're not using the services. Schools not being used is a *bad* thing - it's a waste of resources. Schools could close because there are not enough students. Which is fine, but for the few local kids who need that resource and now have to travel further. Which also increases the pressure on neighbouring schools. 

Not using gp surgery - part time surgery, or reduced staffing. Both of these are negative impacts on local rural economy. 

Don't buy groceries as often/not at all, bar a few weeks per year. Not a problem if it's a handful of houses, but when it's several handfuls that's a real economic impact. How is the local shop keeper to stay in business if throughout the year, bar a few weeks in summer, only half of his village is populated to buy from them? 

It's not about being convinced - it happens. Holiday home ownership seems more common in rural areas that are more dependent on local economy - although there are impacts felt even in London. 

ToneControl

ThePrettyDamned said:

ToneControl said:

ThePrettyDamned said:

rlw said:

robgilmo said:

I think second homes, buy to lets etc should have the shot taxed out of them until its just not worth it anymore, this way hard working people like myself might actually be able to afford to put a roof over my families heads and no longer be subject to a ruthless renting market run by greedy landlords and despicable estate agents, seems only fair, there is a housing crisis and you are either part of the problem or it's victim.

Hard working people buy second homes too you know..............

Yes. And this contributes to the destruction of local economy. See ghost towns in the lake district, Dorset coast etc. 

It's not as simple as "I can afford a second house". There is a direct economic impact to the local area, which costs money. More than a bit of council tax. 

I'm not so convinced:
take some seaside village in Anglesey like the one I visited, everyone skint, plenty of Dads collecting their kids from school

So the theory is that people with jobs living in Manchester (like my Welsh mate) buying a house in that village, and paying council tax without claiming it back from the council as benefits, are in fact taking something away from the area?
What is that then? They aren't using the schools or GPs, they are paying council tax (for real), but don't buy groceries quite as often. What is the negative economic impact to the area?

They're not using the services. Schools not being used is a *bad* thing - it's a waste of resources. Schools could close because there are not enough students. Which is fine, but for the few local kids who need that resource and now have to travel further. Which also increases the pressure on neighbouring schools. 

Not using gp surgery - part time surgery, or reduced staffing. Both of these are negative impacts on local rural economy. 

Don't buy groceries as often/not at all, bar a few weeks per year. Not a problem if it's a handful of houses, but when it's several handfuls that's a real economic impact. How is the local shop keeper to stay in business if throughout the year, bar a few weeks in summer, only half of his village is populated to buy from them? 

It's not about being convinced - it happens. Holiday home ownership seems more common in rural areas that are more dependent on local economy - although there are impacts felt even in London. 

and when people are on holiday, do they eat out more, and go out for drinks more?
I can't believe that people bringing money into an area, that they have earned elsewhere, would be damaging the local economy overall. I could accept they disrupt the social fabric, but if people are driven out of the area by increasing prices, that's down to crap local councils and planning departments

ICBM

ToneControl said:

ICBM said:

ToneControl said:

ICBM would class the increase in value as an unearned windfall, to be taxed at 40%, so I assume if you wanted to buy a bungalow in your old age, you'd find that you only had 2/3 of the sale price of your house available to buy the next one. Clearly no-one would ever do this, it's unworkable

Why? Plenty of people sell up and buy a house worth much less when they get old. Why should they get to keep all the unearned windfall they made simply by sitting in a house for thirty or forty years, tax free?

What would actually happen is that very quickly it would dampen the housing market, so in fact prices didn't rise to anything like the same extent, and once you've deducted general inflation and any improvements, there would be little or no tax to pay.

The real point would not be to tax everyone, it would be to dissuade them from the extremely damaging economics of continually pushing house prices up in the first place. Tax is an extremely effective disincentive, more than any other type of cost because people resent paying it so much and will do almost anything to avoid it.

But it will never happen because it's politically unacceptable to deny people what they now think is their right to make a huge profit from simply owning a house for a while. So it will go on until no-one can afford any decent house, most of earning capacity goes to paying mortgage interest and the economy totally stagnates. And no-one dares pull the plug because that would cause negative equity…

It's an economic cancer, basically.

Have you been getting maths lessons from Abbot? ;-)

 So: if I have a 4 bed house worth £300k, and want to sell up and buy a bungalow, to aid mobility in old age
I have a look round, notice that bungalows the size of my house cost 40% more
see: http://www.telegraph.co.uk/news/2016/07/19/britains-bungalow-crisis-chronic-shortage-means-buyers-pay-up-to/

so I think, OK, we really don't want stairs, so we'll take the hit and buy a 2 bed bungalow for £300k

But hold on, I find I'm deemed to have a £200k "windfall" because my house went up in value faster than inflation, so on selling it I owe 28%, so that's £56k
So now I'm looking for a bungalow for £244k, so we're down to a one-bed bungalow

I decide to stay put, and buy a stairlift: depriving a family of a 4 bed house that would have been up for sale. No tax is collected,  no inheritance tax is due either, so what good did that rule do?

Well, one good thing it will do is reduce the demand for houses like that bungalow, and more importantly the prices people can ask for them if they actually want to sell.

Everything else is secondary, in fact - it's tackling the unjustified rise in house prices which is the critical step. If house price inflation above general inflation can be permanently stopped - and preferably reversed, at least in the shorter term - that will benefit the whole economy.

For some reason the idea that something can rise in price for ever seems to be accepted as not only inevitable, but some sort of good thing. This has to change.

Axe_meister

The only way to get house prices down is to build more. Not quickly though a rapid deflation of house prices will cause the economy to collapse (thing 2008 type collapse) it needs to happen slowly so people can adjust

ICBM

I would agree with them not coming down too fast. Stabilising at essentially fixed prices and letting general inflation effectively reduce them over time is probably ideal. Building more will only help if the idea that they will go up in value can be broken, or people will still pay too much for them.

ToneControl

ICBM said:

ToneControl said:

ICBM said:

ToneControl said:

ICBM would class the increase in value as an unearned windfall, to be taxed at 40%, so I assume if you wanted to buy a bungalow in your old age, you'd find that you only had 2/3 of the sale price of your house available to buy the next one. Clearly no-one would ever do this, it's unworkable

Why? Plenty of people sell up and buy a house worth much less when they get old. Why should they get to keep all the unearned windfall they made simply by sitting in a house for thirty or forty years, tax free?

What would actually happen is that very quickly it would dampen the housing market, so in fact prices didn't rise to anything like the same extent, and once you've deducted general inflation and any improvements, there would be little or no tax to pay.

The real point would not be to tax everyone, it would be to dissuade them from the extremely damaging economics of continually pushing house prices up in the first place. Tax is an extremely effective disincentive, more than any other type of cost because people resent paying it so much and will do almost anything to avoid it.

But it will never happen because it's politically unacceptable to deny people what they now think is their right to make a huge profit from simply owning a house for a while. So it will go on until no-one can afford any decent house, most of earning capacity goes to paying mortgage interest and the economy totally stagnates. And no-one dares pull the plug because that would cause negative equity…

It's an economic cancer, basically.

Have you been getting maths lessons from Abbot? ;-)

 So: if I have a 4 bed house worth £300k, and want to sell up and buy a bungalow, to aid mobility in old age
I have a look round, notice that bungalows the size of my house cost 40% more
see: http://www.telegraph.co.uk/news/2016/07/19/britains-bungalow-crisis-chronic-shortage-means-buyers-pay-up-to/

so I think, OK, we really don't want stairs, so we'll take the hit and buy a 2 bed bungalow for £300k

But hold on, I find I'm deemed to have a £200k "windfall" because my house went up in value faster than inflation, so on selling it I owe 28%, so that's £56k
So now I'm looking for a bungalow for £244k, so we're down to a one-bed bungalow

I decide to stay put, and buy a stairlift: depriving a family of a 4 bed house that would have been up for sale. No tax is collected,  no inheritance tax is due either, so what good did that rule do?

Well, one good thing it will do is reduce the demand for houses like that bungalow, and more importantly the prices people can ask for them if they actually want to sell.

Everything else is secondary, in fact - it's tackling the unjustified rise in house prices which is the critical step. If house price inflation above general inflation can be permanently stopped - and preferably reversed, at least in the shorter term - that will benefit the whole economy.

For some reason the idea that something can rise in price for ever seems to be accepted as not only inevitable, but some sort of good thing. This has to change.

Taxation won't alter the other reason houses and flats now cost more - there are more people, and not enough houses.
If demand was lower, prices would fall. If more are built, prices would fall. 
Why turn to taxation when real people are waiting for unbuilt homes?

btw, less than 1 in 60 new homes built are bungalows, yet we have an increasing elderly population. Surely you would prefer that those who need to avoid stairs can get a bungalow?

ICBM

ToneControl said:

Taxation won't alter the other reason houses and flats now cost more - there are more people, and not enough houses.

If demand was lower, prices would fall. If more are built, prices would fall. 
Why turn to taxation when real people are waiting for unbuilt homes?

Because until you make it undesirable for prices to rise, people will continue to pay too much in the expectation that they will rise - it's a self-fulfilling characteristic of asset bubbles. Supply and demand won't limit that by itself.

ToneControl

ICBM said:

ToneControl said:

Taxation won't alter the other reason houses and flats now cost more - there are more people, and not enough houses.

If demand was lower, prices would fall. If more are built, prices would fall. 
Why turn to taxation when real people are waiting for unbuilt homes?

Because until you make it undesirable for prices to rise, people will continue to pay too much in the expectation that they will rise - it's a self-fulfilling characteristic of asset bubbles. Supply and demand won't limit that by itself.

what about Oil prices ?