Taxing the rich to pay for the poor

So far people have given reasons why house prices have risen but not mentioned the increase in prices in relation to average income. In the 70s average house cost 4 times average wage, now it's 9 times. why is that a good thing rather than something we should try to change?

There is a reason why criminal defence lawyers don’t earn much - they are paid by legal aid.

Germanshepherdsmum

We have somewhat larger numbers of people coming here on boats don’t we?

Do we have figures for the numbers of each historical wave of past incomers proportionately to the population at the time?

Doodledog Thank you, you made me laugh!
I've had two emergency admissions to hospital this year, both life threatening, leaving me for a while completely dependent on the care of others. IME it was the health care assistants that did the bulk of the caring that is so essential when you cannot do any of the personal things that keep you comfortable and feeling human. I could at least feed myself but I watched others being fed. Toileting and bathing was done with kindness and humour and a minimum loss of dignity. I was very nauseous due to the meds but they did their best to find things that I could eat. I totally relied on them to help me get comfortable in bed and to help me with the most basic things like recharging my phone etc. To dismiss the role of the healthcare assistant as a dead end job is appalling. They are the backbone of an NHS hospital, deserve better pay and should be recognised and respected for the role they have. It is not an easy one and my experience has taught me a great deal about what it might be like to be in a Care Home! To value people by the amount of money they earn is pretty shallow IMO

GSM fwiw my friend is a criminal defence lawyer, she's not paid the huge salary of lawyers in other fields, she works hard and she provides an essential service, mediocre she is not! Generous, kind and with a strong social conscience is a good description of her. She earns enough money to satisfy her needs.

We have somewhat larger numbers of people coming here on boats don’t we?

Same places as all the Irish labourers who came here to build roads and canals in the 19th century, or the Poles after WW2, or the Huguenots before that, or the people from Eastern Europe twenty years or so ago - live wherever they can. They will rent houses or rooms in other people's homes, or get onto the waiting lists of Local Authorities and wait for an empty property.

They may have a long wait if LAs can't afford to keep building housing.

And the rise of house prices compared to income has been going on for decades prior to the immigrants.

BTW, if an immigrant is illegal, he/she is unlikely to be putting his/her head above the parapet by dealing with all the legalities involved in housebuying.

Where will they all live? Just where?

Primrose53

Elegran no mention of the millions of illegal migrants then?

Not many of those are buying expensive houses.

"To him that has shall be given, and from him that has not shall be taken away even that which he has"

Gospel of Matthew, chapter 13, verse 12. Jesus was referring to faith and the knowledge of God, but taken out of context it can also be a comment on tax policies.

Elegran no mention of the millions of illegal migrants then?

It is supply and demand, Vintagewhine. Everyone needs a home, and the poulation has expanded exponentially since many common diseases have been tamed, and young marrieds are no longer content to live in "digs" in someone else's house, as my parents did for two years.

The pill made it possible for families to be delayed, so couples could take on a mortgage on their joint salaries fairly confident that a baby wouldn't arrive to cut short one salary (then as now, fulltime childcare took almost all of a mother's earnings)

Lenders also felt confident to lend on the the double salary, so more mortgage debt was available, which inevitably meant that borrowers could pay more for their house - and did. That put the average house price up.

Then the "right-to-buy" your council house, without the concomittant replacement of those council houses, lessened the supply of secure rentals at moderate prices, sending more people into borrowing to buy privately and while lenders were vying with each other to sign their up prices kept on rising. No-one wants to get back less than they spent for such an expensive buy - and everyone needs somewhere to live to replace what they sell.

Now it is considered "normal" that house prices will rise annually, and that a house can be bought as a way of investing your savings profitably, or to "flip" and sell on at a profit. That is no help to those who just want a home.

How would elderly people existing on the SP afford to pay tax on their home of many years? I expect you will say that it will be rolled up and collected when the house is sold when they die or go into care - meaning that they would live in the knowledge that, maybe for the first time in their lives, they were in debt. Why on earth should anyone’s personal assets be taxed ‘to benefit society’? Don’t we already pay enough tax?

Vintagewhine

I can't see how it benefits our society by having so much money tied up in our homes. Great for the banks and estate agents though. Surely it's possible to bring changes to taxation in phases so it doesn't crash the housing market? I bought my first house in the mid 70s, house prices were rocketing then so I couldn't save enough in a month to cover the increase in prices but once I bought, despite the odd blip my home has consistently earned more than me. That's crazy. We need homes not investments.

Tax changes have to be carefully calculated because if they are too high property values do fall, the same with private rental home too much tax and legislation deters landlords.

I can't see how it benefits our society by having so much money tied up in our homes. Great for the banks and estate agents though. Surely it's possible to bring changes to taxation in phases so it doesn't crash the housing market? I bought my first house in the mid 70s, house prices were rocketing then so I couldn't save enough in a month to cover the increase in prices but once I bought, despite the odd blip my home has consistently earned more than me. That's crazy. We need homes not investments.

I have watched this thread with interest.

The word hyperbole springs to mind.

And where was all the panic as the Tories raised the level of taxation to the highest level since before many on here were born?

And more to the point what have they done with it all? Because they sure as hell haven’t been looking after the country.

It’s not notional money for IHT purposes, nor when you need it to buy another house or to pay for care.

Calendargirl

Just thinking about the increase in the value of homes. Yes, all gone up in value, but don’t forget that owners have probably spent quite a bit of money on their property over the years.

Some of these homes would be unrecognisable to what they were years ago.

Homes have increase in value far more than inflation wether they have been improved or not, we don’t know what taxation changes are going to be made, although a sales tax on homes in addition to stamp duty has been bandied about.

If a sales tax of say 5% were levied on a £500k house that would take £25k away from any purchase of another property, tending to reduce house prices. That would disadvantage those that move homes several times paying sales tax several times.
So maybe a tax on the increase in value, CGT on homes by any other name, take your pick on thresholds and tax rates but it would clearly hit high value homes.

Just thinking about the increase in the value of homes. Yes, all gone up in value, but don’t forget that owners have probably spent quite a bit of money on their property over the years.

Some of these homes would be unrecognisable to what they were years ago.

Just who will fund the people that don’t or can’t work if you make it undesirable to achieve, earn a good salary and improve
your life. What’s the point. If Labour get in I know of several people who will retire early. If anyone believes they will not tax everything to the hilt they are deluded, it will come in the guise of stealth tax. Lowering Inheritance tax for example, to avoid anyone leaving anything to their family. That’s if there's anything after care home fees if you should need them. Taxing parents who send children to private school making classrooms ever bigger in the state system as a result what a daft idea that is, no doubt multimillionaire Keir has already safety sorted his assets. Peopke actually believe them, you couldn't make it up.

That would surely make the housing market stagnate even more.

If the profit on your house is taxed when you sell, that means you have less money to pay towards a new property.

Would it be proportionate to the number of years you have owned the property? After all, someone who has owned their house for 40 years is going to see a huge "profit" on paper but that money would mostly go towards the new house. If older people are downsizing and have money left to invest, they may need that for care costs.
In fact properties suitable for older people ie bungalows, are often more, not less, expensive than houses.

If younger people have to move frequently for work that means the amount they have available to spend on another property would be eroded each time. What could be the ultimate consequence of a move eg every 3 or 4 years?

maddyone

But seriously, if any government decides to tax people on the increased value of their houses when they’re sold, it will simply push prices up further. Sellers will want to recoup the money that’s to be paid in extra taxation. And that won’t help anyone, least of all first time buyers.
In any case, house purchases are already taxed, it’s called stamp duty. You just pay it at the beginning rather than the end.

I see what you’re saying about prices going up to cover the tax, although the tax would rise too, and house prices do have natural limits. Stamp duty would still be payable on purchase, I’m afraid. I’m not a fan of stamp duty, but it’s a separate issue really. This would be a tax on profit, which, as you point out, is not real money, but notional. FTBs would benefit as they don’t pay stamp duty under a certain amount (not sure what) and that amount could be raised, plus they wouldn’t be subject to the new tax unless they accrued unearned profits enough to qualify them for payment.

I’m standing for the ‘Make It Up As You Go Along’ party in the Inmyhead constituency. We don’t claim to be politicians, but look for ways to make life fairer for everyone, and write them on the back of fag packets . Our USP is that we promise to change our minds if someone persuades us we are wrong. Have you got a better idea to level out the discrepancies between areas? Or don’t you think it matters?

GSM nobody would be taking a slice of your cake. The tax would be only on the difference between what you paid for the house and what you sold it for. Notional money. It would be adjusted for inflation, refurbishment etc.

Germanshepherdsmum

*Dinahmo*, lawyers who earn between £28k and £60k, as you suggest, are not up to much. I chose to work in a provincial firm many years ago when my son was young, but even then earned far more than that. A qualified lawyer earning that sort of salary is pretty mediocre.

My son’s a barrister. I know what he thinks, and it’s that there are indeed some pretty mediocre lawyers. He has in the past, much to his annoyance, received a large bundle from the appointing solicitors, on the Friday before court/action on the Monday, giving him only the weekend to read huge amounts of information. He hasn’t complained about it recently, so now he’s doing bigger cases it maybe doesn’t happen like it used to.

But seriously, if any government decides to tax people on the increased value of their houses when they’re sold, it will simply push prices up further. Sellers will want to recoup the money that’s to be paid in extra taxation. And that won’t help anyone, least of all first time buyers.
In any case, house purchases are already taxed, it’s called stamp duty. You just pay it at the beginning rather than the end.

Feel free not to vote for me

I didn’t know you were standing for parliament Doodledog.
Which constituency?