Monday 26 March 2007

Gordon's impact on your property choices

I like this piece from the propertyfinder blog, It shows a great example of a Labour stealth tax.

You can see so clearly the effect of tax since 1993 to the present day. It is also a great example of the effect Brown has produced by not keeping taxes up with rises in prices; The same will apply to your wage thresholds and a myriad of other things Gordon has tinkered (or not!) with.

Back under a Conservative government, the tax was a small element of the cots of moving. It it had kept its relationship in the same way today it would only cost £5000 to move instead of nearly £10,000.

As I live in London, these numbers are a vast under-estimate anyway for the region, as many properties cost over the £250,000 mark and then the 3% stamp duty kicks in which really bites.

What a deceptive way to raid us for failed NHS projects and subsidies to French farmers....


Newmania said...

Yes CU and I read today that property ownership is actually going down . We also know that class seperation is increasing and with property pushed beyone people that will increase.

What good punchy post as someone trying to move I relate to it immediately as I think will others .

tory boys never grow up said...

And without the property taxes what do you think would have happened to property prices and what impact would that have had on property ownership. If if even more investment had been attracted into the property market what impact would that have had on investment in the rest of the economy.

Don't you remember what problems were created for the economy last time there was a property boom and bust - to which Government constant meddling with property taxation played no small part.

Anonymous said...

And what of the percentage take of estate agents ? The whole property boom is a scam which masks a deterioration in quality of life whilst convincing householders that they're richer.

CityUnslicker said...

N - thank youfor thsi and your post. most kind.

TBNGU - Nice too see you here and commenting.

There was no property boom and bust last time. prices increased by 250% then decreased by 30%. there was a disastrous floatation with teh ERM system that pushed interest rates to 15% and caused a huge recession.

The lesson from that is to not join the Euro.

As for advocating higher taxes to supress demand; this affects poor people the most as they can't afford to get on the ladder? So you want a regressive tax that affects the poor the most?

What kind of socialism is that.What we have is a supply problem, not enough houses being built. Even the big housebuilders are merging and deciding to build less houses. see this weeks newspapers. The answer is to increase supply by reforming planning, as Broon was advised to do by the barker report.

No sign of this in the budget though, as after all they need this tax now to pay ofr failed IT systems.

EK - Nice to see you here. Actually if you look agents don't take too much more money than they used to. it is a very easy business to get into and the agents are rarely rich. The people who have done well are kitchen and bathroom suppliers, who put prices up in line with house prices, not the cost of their inputs.

tory boys never grow up said...

I'm afraid you have got your economic history wrong - the boom and crash in house prices which came long before 1992 (the first signs were there in 87/88) cannot by any means be entirely attributed to the ERM. There was a definite acceleration of house prices before the crash - in no small part fuelled by the manner in which Lawson withdrew dual tax relief - there was an almost direct correlation between subsequent mortgage arreas and the level of new business done in the period running up to the preannounced abolition of dual tax relief. One of the more sensible things Major did when Chancellor was to start to remove tax relief on mortgage interest so as to reduce the impact of such distortions.

You may say that the 30% fall in prices was nothing (it was more in some areas) - but it definitely wasn't for those in negative equity - and it should be rememebred that lenders had never seen it before (and also got very badly burned by going into estate agency and property development in the preceeding boom - something else to thank Tory deregulation for). It is moist definitely not an experience that any who have been through it would want to repeat.

To argue that house price fluctuations do not have a distorting effect on the rest of the UK economy flies in the face of all serious economic analysis - and there has been a lot.

Stamp Duty is not a regressive tax - it hits those with more expensive houses harder. I do admit that its structuring could be improved so as to stop the stupid behaviour which goes on around bank limits and to reduce the burden for first time buyers - but there has been some movement there.

GB in his first budget very clearly identified housing market stability as something that he wanted to preserve (and there are projects re long term housing finance going on within the Treasury at the moment) - having a stamp tax which can be used as a countercyclical balance might be very helpful shoudl house prices start to fall - the cuurent high lending multiples and the buy to let sector are very scary - but fortunately the lower interest rates that we now have are unlikrly to lead to the same problems.

BTW the problem with the Euro may not have been going into the Euro itself (Euro land has fairly low interest rates and inflation like us - or at least we do now!) but that we went in at a stupid exchnage rate - which is something that many Labour supporting economists said at the time (politicians cannot say a currency is overvalued for obvious reasons). How history might have been different if Thatcher had copied Wilson and been brave enough to devalue £ and stayed in the Euro!!!

Newmania said...

T BOY- Bollocks.The reason stamp duty is levied is not to virtuously govern the housing market which it does not do . It is there because the demand for property is endemic and inelastic so the revenue from it goes up every year and it is levied at a point when people are borrowing so heavily . In fact , they simply wouldn`t have the money at any other time making it a fabulous and irreplaceable state theft

Aditionally it punishes aspiration and all those wishing to move for work ( ie the private sector ) .

God you really eat up all that "Market Stabiltiy" crud ...pathetic .Its all about the money and discouraging people from independence. The housing market is self regulating the problem is scarcity not the lack of additional government rake offs.

The more people that own property , the less they will vote Labour . Work it out , its not hard

Anonymous said...

Thanks for enlightening me CU, that is surprising.

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