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Any of you folks play the buy to let game?
I think something is heading your way that might give you a shock if you are not careful.
[url= http://www.telegraph.co.uk/finance/personalfinance/investing/buy-to-let/11816720/Death-of-buy-to-let-landlords-wake-up-to-Osbornes-150pc-tax.html ]From Telegraph here.[/url]
At the bottom of the page.
"[b]NOW[/b]Your buy-to-let earns £20,000 a year and the interest-only mortgage costs £13,000 a year. Tax is due on the difference or profit. So you pay tax on £7,000, meaning £2,800 for HMRC and £4,200 for you.
[b]2020[/b]
Tax is now due on your full rental income of £20,000, less a tax credit equivalent to basic-rate tax on the interest. So you pay 40pc tax on £20,000 (ie £8,000), less the 20pc credit (20pc of £13,000 = £2,600), meaning £5,400 for HMRC and £1,600 for you. Your tax bill has therefore gone up by 93pc.
Now, say Bank Rate – and in turn your mortgage rate – rises by a small fraction, lifting your mortgage cost to £15,000, while your rent remains at £20,000.
You will have to pay £5,000 tax in this scenario, so you make no profit at all."
Looks like the housing market might cool down after that and time to invest in something else ... 😯
Good should be easier for me to buy my first place.
Read how Connie Cheuk (pictured above), a landlord with five properties, will see her tax bill rise by almost 40pc. She is even contemplating giving up her 18-year career as a teacher as a means of reducing the tax impact
my heart bleeds.
Good. Buy to let has decimated the market for first time buyers.
Cheuk / chewkw?
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jam bo - Member
Read how Connie Cheuk (pictured above), a landlord with five properties, will see her tax bill rise by almost 40pc. She is even contemplating giving up her 18-year career as a teacher as a means of reducing the tax impact
my heart bleeds.
Several years ago while searching for room to rent for a friend I met a landlady with 40 houses all buy-to-let ... 😯
scotroutes - Member
Cheuk / chewkw?
Is that's Jimmy, the chin, Hill? Me mates called him that ... 😛
loddrik - Member
Good. Buy to let has decimated the market for first time buyers.
I don't mind buy-to-let for one house but if you have more than one then that might put pressure on the property market - rent or buy. If everyone does that ...
Good. Sick of buy to flip/buy to let driving up prices etc.
I wonder how this will affect rental price? 😛
Any of you PhD in Rent care to explain?
In both Chester and Liverpool huge student appartment complexes are being built by both the unis and private developers, and the existing shared houses or HMOs Houses of multiple occupancy,are becoming empty, they need a lot of work doing to make them proper family homes again, due to landlords not investing in them, so are going on the market, also lots of small starter flats where built and got snapped up by the buy to let rabble, infalting the prices, these are now for sale wholesle its not unusual to see 6 or more for sale board outside each complex, as landlords suddenly cant get tennants to pay the mortgage they flood the market with sometimes poorly maintained low cost flats to try and recoup some money before theyre repoed.
Fantastic news, buy to let has decimated communities and warped the housing market.
In that scenario above the landlord may not be making profit but they are paying off their mortgage, therefore gaining a nice capital asset to cash in in the future.
good news in principle..but how will affect house prices of home owners who are mortgaged up to the hilt. Lots in negative equuaty i imagine?
In that scenario above the landlord may not be making profit but they are paying off their mortgage, therefore gaining a nice capital asset to cash in in the future.
you missed the bit about an interest only mortgage.
I wonder what will happen to those foreign inward investors that buy up all the houses before they were even build? They can stay here but have some sort of representative buying for them ... 😛
This could be good, but it could push rents up.... And if it results in lots of properties going on the market, the people in those houses will be turfed out and not necessarily able to buy...
I don't know where the figures quoted came from - I suspect a property that was bought some time ago.
For a recent buy, the interest payments + overheads would probably balance the income as things stand. With the new tax regime, the landlord will be making a loss.
[Ballpark thoughts, £200k property, interest payments £8k, rental income £12k, overheads & void periods probably £3k. So current profit, excluding tax, £1k. Future losses - considerable)
rents are already high, so it will be hard to put them up. Results - fewer landlords wanting to buy, therefore lower house prices
molgrips - Member
This could be good, but it could push rents up....
Ya, that could be a possibility but I can foresee more intervention from the govt when people start to scream high rent.
😛
Moses - Member
For a recent buy, the interest payments + overheads would probably balance the income as things stand. [b]With the new tax regime, the landlord will be making a loss. [/b]
😯 Which means there will be extra houses to deal with the housing shortage, yes? ... I guess some will have to sell off quick.
Good news, nice to see the balance tipping slightly away from the baby boomers for once.
However - surely setting up some nice deflation if people rush to drop houses now?
No bother. Wonder where all the people who cant afford/dont want to /need to be easily mobile people will go to rent houses.
Interesting plan - not a long term solution imo though.
I also wonder what will happen to the rental market.
Fewer properties to rent.
More difficult and costly to be in rental for landlords, that cost will go onto rents.
Still as difficult to get a mortgage - especially if you are young or low income.
I am a landlord. All but two of my tenants in the last decade have been first time away from home crowd - students or young adults. The other two - she was 55 year old in midst of separation. None of these had a deposit to buy, or would have one within a few years, or indeed could afford to buy even the modest flat we have.
The last lot a family who could not hold down a job or keep up regular payments - rent, bills, anything. They cost me £4.5k in unpaid rent, damage and court costs.
Lots of landlords selling up means prices drop - for ours and everyone's houses, let or occupied. Could be good, but could be difficult for many that would be in negative equity, and really difficult for banks who would not lend enough to those who want to buy, and would have landlords like me handing back the keys to the bank to try and then sell on.
This could be a bumpy ride.
trail_rat - Member
Interesting plan - not a long term solution imo though.
Ya, I think it's better to cool down the property market to avoid unnecessary bubble for at least one generation ...
Hopefully, I shall have the ability to build my palace soon. 
Which means there will be extra houses to deal with the housing shortage, yes? ...
No.
They are lived in already.
And lower prices mean fewer new houses are built.
Tipping the balance away from baby boomers, into the hands of the super rich, who don't need mortgages to buy all these houses at a reduced rate to bulk out their already huge portfolios.
So all Gideons mates then...
A genuine question to those who went prices to fall. How far would they need to fall for you to buy? (Percentage/current value)
and would have landlords like me handing back the keys to them to y and sell on.
By handing back the keys your debt doesnt stop,the house will be sold and any amount below the value and amount sold for wioll be your debt, the bank has up to 6 years to chase you for intrest and 12 years to chase a debtand they do , a huge amount after a few years of all being quiet from the bank and you think its all over with.
Got to agree with the sentiment in this thread. It's a national disgrace that the cheapest housing (the most needed) that the private sector will never ever build has become a pension fund for one generation at the expense of the next.
Terrible vicious circle with those that benefit in typical snide English style keeping their mouths shut deflecting blame, while watching the chaos and acting all innocent/indifferent.
Has the government thought this through? Without private landlords, banks unwilling to lend and no 'council housing' being built where will everyone live? Governments have been relying on private landlords for years to do their job for them.
So the options for landlords will be to sell up or raise rent...
If you sell up who will buy? When I was a renter it was because I either could not afford to buy or because I was mobile. If the rents were higher due to supply and demand I would not have been able to afford to get a job anywhere where I couldn't live with my parents.
I would imagine many people could end up in the same situation which is a bad situation for social mobility.
If you have enough money to buy up these places mortgage free then you are not impacted by these rules. I guess they are planning on creating a bunch of new people like Nicholas van Hoogstraten to control the slums....
If it goes wrong then there could be a lot of misery for the most vulnerable people at the bottom of the rent ladder.
[quote=mitsumonkey ]Has the government thought this through?
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The whole housing issue in the country is a farce IMO.
Due to market forces, there is no incentive for the big housing developers to increase output, which is so desperately needed, because if they do start building more houses, supply increases and even with my basic understanding of economics, the affect on pricing means they will turn a lower profit. Unless of course, they reduce their cost to build, which is often in terms of lower material costs and quality of product.
Result being, it is in the developers and lenders interests to ensure that demand remains higher than availability. The lenders especially as they can lend more money per applicant and increase their interest income. Which is where the 'right to buy' is fundamentally floored and was/is one of the biggest cons to the masses in recent times. The only winners in this sorry scam are the lenders.
Indeed, there is always the predictable answer of: 'ah! But when you pay off your loan, you have a capital asset!' Which of course is true, however, because it has been in the lenders interests to push up purchase prices, to increase their yields, the actual amount paid by the many home owners far exceeds what the true cost of putting a roof over ones head really is. There are a few, very few in the great scheme of things, who have been savvy enough to pay off their house debt early and these are the few who stand to make the small gain in the 'right to buy' scam.
Well, given that the problem is that we don't have sufficient affordable housing in this country, crapping on those who were greedy enough to jump on the dangled carrot of buy to let, isn't really the answer to reducing prices, as demand still outstrips supply, even if all the BTL's suddenly came onto the open market. The lenders wouldn't be too keen anyway, as their potential interest income would also be hit.
Solution? Relatively easy as we have masses of empty commercial office blocks all round the country that will never be filled, despite our economy being driven by the new service style economy of everyone charging 10% for shuffling bits of paper about. These buildings already have services laid into them. So, here's a plan. With the recent reports of there being not enough people in the trades ( because they all left in 2008 following the big hoo-ha where we realised that all the lenders were borrowing from each other and the money never existed anyway), how about we start to train up the youngsters and redevelop these empty office blocks into residential units that they can then live in?
They get training, sets of relevant skills, a place to live and more importantly, ownership of the community that they have been part of to create. And by ownership, I'm talking in the 'we made this' as being much more important than the 'I bought this' which is a far stronger version.
We've been taken for a ride in this whole sorry saga, where the only winners have been and will continue to be, the lenders.
QED
Do we actually need more houses or do we really need to create jobs and industry in places that have spare capacity? I suspect that other than the job creation dude of things this might be a big con.
1/3 rd of of MPs are buy to let landlords
I strongly suspect the sector will be protected
I would've thought that folk would convert their private BTL into a 'business', or the like. And when they want/need the cash close it taking advantage of the closing-business rules.
Also where are all these people who currently rent going to get a mortgage from, the eligibility is seriously tight now for anyone not in a perm salary job. We recently looked for finance for a granny annex and despite us netting nearly 6 figures haven't yet got a mortgage 'cos we're not either perm or have a full 3 years books.
I ask again for those who want house prices to fall - how much do they need to fall by for you to buy the place you rent? (% / current value)
I'm a landlord, but only because I couldn't sell my flat when I needed to move. First lease I put it up for about a fiver more than the mortgage and. I had tenants in within 36 hours. Thought I might have let it go a bit cheap so added £50 when it next came up and this time it went within 24 hours. So I've got a little bit of a buffer if/when rates rise, which is good because I know what my tenants earn and I wouldn't like to charge any more. As long as the mortgage is being paid off, or even close to it, I'm happy.
Looks like the housing market might cool down after that and time to invest in something else ...
My heart bleeds...
Thanks to buy to let, I'm forty one and a home of my own is "just" out of reach, unless I quit my job and move north. I'm on a decent salary too.
Actually, I can't lay the blame solely at buy to let. There's a lack of affordable housing everywhere, ever since the government confused the price of a home with a valid measure of the health of our economy.
Thanks to buy to let, I'm forty one and a home of my own is "just" out of reach, unless I quit my job and move north. I'm on a decent salary too.
This is an issue.
We continue to support the focus of business and employment on the South East. At what point can we help lots of the housing shortages, affordability etc by providing more jobs around the country?
may well be classic "nudge" economics much loved in government circles
the change in the tax rules "nudges" out some buy to let owners with high mortgage costs - they make a decision to exit now (nudged by the tax rule) rather than a sudden exit when interest rates force them to and a potential property crash - win win win for government - no property crash, more property available to purchase for those with capital and less chance that it will plummet in value plus a steady economy
zero impact for those wanting to buy a home - maybe there will be a "trickle down effect"
Due to market forces, there is no incentive for the big housing developers to increase output, which is so desperately needed, because if they do start building more houses, supply increases and even with my basic understanding of economics, the affect on pricing means they will turn a lower profit. Unless of course, they reduce their cost to build, which is often in terms of lower material costs and quality of product.
you're ignoring the fact that developers are individual actors, not as a cartel.
equally, it would have to be a GIGANTIC construction project from a single developer to depress housing prices in the market. you don't chill an ocean by dumping a bucket of ice in it.
Moving jobs out of the SE appears to be a stayed aim of every government with no GENUINE effort to do so, including the civil service.
Property prices should have been controlled in the 90s but too many people were in the I'm alright Jack bracket. Thatcher selling council houses at ie discounts always seemed a highly questionable long term strategy.
In short build more and close the North South divide.
you're ignoring the fact that developers are individual actors, not as a cartel.
I'm assuming that they are operating individually. My point remains that there is little incentive for the developers to increase productivity, even at a local level, because it would increase availability and choice, which if profits and dividends are to be maximised, doesn't help.
deepreddave - Member
Moving jobs out of the SE appears to be a stayed aim of every government with no GENUINE effort to do so, including the civil service.
If they only have the will there will always be a way. Some sort of incentives in the form of lower regional tax regime would easily change that, but as usual you get plenty of shouting unfair or uneven playing field.
House prices are starting to hurt buisnesses in the south as well as they cant gind people willing to live nearish to work. Oxford seems to be suffering a shortage on unskilled and semi skilled workers because of coats....how long before industry starts being hit really hard?
Me andy wife can put 10k to 12k a year away by living like students....seriously conaidering doing this and buying a nice property in Manilla with no mortgage.
Oxford seems to be suffering a shortage on unskilled and semi skilled workers because of coats....how long before industry starts being hit really hard?
There was an economist article comparing Oxford with Cambridge wrt houses. In one year Oxford has built only a few 10s of houses whereas Cambridge had added over 1000.
My point remains that there is little incentive for the developers to increase productivity, even at a local level, because it would increase availability and choice, which if profits and dividends are to be maximised, doesn't help.
But... but.... 'The Market' sorts out everything doesn't it? Thats what I've always been told. Oh.... I forgot... buy-to-let is effectively subsidised by the rest of us. As is the housing market generally through the idiocy of selling off housing association properties, and the utterly bonkers lunacy of Help to Buy.
Repeat after me.... house price rises are not an economic recovery, house price rises are not an economic recovery, house price rises are not an economic recovery... house price rises are not an economic recovery.
I hope the whole house of cards comes falling in, and houses revert to being places where you live rather than investment opportunities. The housing 'market' in this country is utterly and completely dysfunctional. It prioritises making profits for the few, or allowing people to use their homes as cash machines to prop up a failing economy, rather than actually supplying places where the population - all of them - can actually live. Its perverse and needs sorting.
matt_outandabout - Member
I ask again for those who want house prices to fall - how much do they need to fall by for you to buy the place you rent? (% / current value)
By more than 30%.
😮
Lack of affordable housing is a national problem. Buy to let grew precisely because of it. Deal with that, other issues calm down.
I gave up my career to move north to have the house and lifestyle we wanted. Appreciate others may not want to do that.
There will always be a rental market. Large amounts of cheap rentals are beneficial if you want a mobile population.
If you have to purchase property in order to go to university or to move jobs you restrict everyone.
The way this is handled in many other countries is that housing developments are built by companies just for renting. The unique thing about the UK at the moment is that the money generated by the rental market is (for at least part) fed back to the general populace rather to a massive corporation with google style tax payment policies...
This is not to say the system is working well. Construction companies build shitbox style properties aiming at the buy to let market as people will rent places they wouldn't consider buying...
A lot needs to change but no political party is going to try to put in place a transformation plan that needs to last for generations. So tax hikes, credits and U-turns just before the election are what e can expect.
Thanks Chekw.
matt_outandabout - MemberThanks Chekw.
To be more specific 30% or more as I live in the city centre other locations may vary. 😀
here was an economist article comparing Oxford with Cambridge wrt houses. In one year Oxford has built only a few 10s of houses whereas Cambridge had added over 1000.
Thanks footflaps....that article made me cross eyed with rage.
[i]But Cambridge built 1,020 homes in 2014—three times as many as in 2009. Oxford built just 60 last year.[/i]
60 is almost a rounding error...
We've also got to accept that building on 'green belt' is just something we'll have to do - no different to the past when the houses most of us live in were built on 'green belt' land. It's just that this was before the 'green belt' was created.
The housebuilders own large tracts of land with outline planning permission, but they have a disincentive to build becuase that land is appreciating in value, whilst rates are not levied on it. There are also disincentives to bilding on brownfield sites, as they are more expensive to develop.
Small changes in tax law could remedy both of these, and increase the supplyo of houses. In the 30 or so years that we have been selling off public housing to private individuals, the population of the UK has increased by several million. So demand has increased tremendously.
I also seem to remember that there are 200000 empty properties in London alone. If they were compulsorilty purchased, at their original cost + inflation, then many people could be housed.
Green belt bollix!
There are enough empty properties and brown field sites to meet the majority of our needs. Especially as we need more smaller properties for smaller households.
Plus brownfield sites are usually already close to employment and transport links, reducing commuting issues. And usually closer to schools, medical and shopping facilities.
Some rural/greenfield building is required. But it should be prioritised for affordable rental housing for locals, who are otherwise forced out by rich city folk living the dream and then complaining about church bells and chickens 👿
A house price drop would penalise and trap many people like myself who have saved for a long time and just managed to buy a house. Better to have a stagnation of prices. This stops housing becoming an investment opertunity but allows people who have bought a house still the possibility to move about when needed.
There is no shortage of homes in this country. If there were there'd be hundreds, thousands of families on the street - there ain't. The people perpetrating this story are the same ones who'll be queuing to snap up newly built houses for buy to let. There is a shortage of homes to buy at the price that enables first time buyers to get on the ladder however, but that is not solved by building more. The competition faced by first time buyers is predominantly not from other first time buyers.
And those concerned about the effect these initiatives have on your own house value. Consider your house may have been over valued for the last 15 years precisely because of an out of control market for starter homes.
Not everyone bought 15 years ago!
There is no shortage of homes in this country
That is incorrect and correct. (But mainly wrong)
Many, many people are in homes too small, or shared, or living with parents.
There are many others living in homes too big for them.
There are enough empty properties and brown field sites to meet the majority of our needs. Especially as we need more smaller properties for smaller households.
Yep, Cambridge is having a huge building frenzy at present, all on brownfield, many old industrial plots that have been moved out of the City and replaced by huge flat complexes. Lived here 40+ years and never seen so many building sites. However, house prices are still rising, demand far outstrips supply.
All for lots of brownfield building but saddened by the lack of sustainable housing/social housing. Lots of cheap technology and district-wide schemes that could be installed (Scotland seems to do well at this), but profit margins = stack em high, build em cheap.
It surely makes sense for those on lower incomes to have small heating / electric bills, not to mention climate targets - would be great to see it in law.
A question for someone who understands things better than me.
Can you set up as a company providing a rented house? Then use that revenue to rent elsewhere and as such showing zero profit (or even a loss). Would you have to pay tax on anything?
Building houses isn't (I don't think) going to reduce prices.
Mr Developer isn't going to sell his new housing estate for anything less then the maximum he can get, and as you only get a few hundred new homes a year in any town/village, this isn't enough to swamp the market and cause a price drop.
Too many people have an interest in keeping prices high.
Too many people have an interest in keeping prices high.
The Chancellor being No. 1. So far he's done everything in his power to inflate house prices to keep the housing boom going. So much for rebalancing the economy...
no, the house you live in would be seen as a benefit in kind so you would have to pay the tax on it.Can you set up as a company providing a rented house? Then use that revenue to rent elsewhere and as such showing zero profit (or even a loss). Would you have to pay tax on anything?
All I know is that unless something happens to massively devalue the current housing stock I have very little hope of buying my own place unaided. I've tried for years to get a decent deposit together but the costs of having to rent in the meantime and being single means that I've never been able to keep up with the price increases. I was very close to achieving it but the mortgage rules changed putting me a lot further back, the new 'stress test' really limits how much mortgage I can borrow with just my income.
The added problem is that if I was to buy further away from work in the cheaper areas up in the Valleys the extra costs of commuting (currently ride 4 miles to work across town) would push my finances to breaking point.
My only option close to work are one of the flats so loved by buy-to-let landlords similar to what I currently rent. A poorly built place with no garden and management fees to pay on top of a mortgage does not appeal at all.
I earn a good wage but the only feasible way I can see myself buying is if my parents snuff it and I get a lump sum from the sale of their house, which ironically would enable me to buy something just with cash!! My parents aren't rich by any measure but my dad bought a house in a scummy backstreet for £7k back in '76 which has now become a very desirable town, the fact it has a decent garden and off-street parking for 4 cars means it's recently been valued at just under £300k!
Flats and houses available to buy around here from about £55k, new build flats from about £75k, houses £90k ish. They don't exactly sell quick. Housing market at the cheap end is on it's arse. Go higher up, beyond £150k and the market is fairly keen. If you can raise finance to buy, you can probably raise enough to bypass the cheap areas and they are being left behind. Cheap fixer upper terrace houses can be had from £40k here. 97 minutes on the train to Kings Cross.
Wow, bunch of unhappy people here. The thing is if this tax indeed hits the baby boomers most won't then have a pension provision. That is why many invested in property cos pensions went to the wall. So they sell the house and pay the tax and then have no pension or a much smaller pension which in turn means the state then has to provide more support. You might think, great more tax means better services but that just never happens. Personally however you look at this issue I fail to truly see an answer, somebody always will end up pretty miserable. No win. We now pay the price of the old mantra that home ownership is some sort of right. Historically it never was. Ownership was a privilege and it looks like we are heading back to that.
Cheap fixer upper terrace houses can be had from £40k here. 97 minutes on the train to Kings Cross.
Where dat?
Doncaster.
I rent at £550 a month for a 2 bed house (just me and the cat,) on a nice quiet estate in Nottingham. Rent as I move around for work but the next move will see me settling down. Can easily afford to buy the house I'm in but when I move (probably Birmingham,) I won't be able to afford anything near as nice.
I may have grown up in Walsall but my tastes have improved somewhat with age
Hmm, as I understand it, the more capital you have tied up in the property, the less this would effect you. So it would be a great investment move with, for example, a pension lump sum (rather than buying an annuity) but will weed all the 'easy money' buy to let merchants, who took out 95 and 100% BTL mortgages that effectivley get paid by the tenant.
Is that right? Sounds like a good thing in that case, no?
"I'm assuming that they are operating individually. My point remains that there is little incentive for the developers to increase productivity, even at a local level, because it would increase availability and choice, which if profits and dividends are to be maximised, doesn't help."
cobblers. I could build 1000 flats across the street tomorrow and it wouldn't have an observable effect on supply in the market. if I could do it 10% cheaper than anyone else, I'd be rolling in cash.
This won't make houses affordable for first time buyers overnight. In the interim landlords will raise their rent to cover costs whilst selling off their higher value low yield properties in order to own the low value high yield (first time buyer territory!) outright. The first time buyer end of the market will end up saturated with landlord ownership, therefore contributing to the lack of low cost housing. Meanwhile those renting in order to save for a deposit will no longer be able to save for said deposit due to the increase in rent to cover the landlords costs......where now....
I'm no expert, just initial thoughts.
Add in "mansion tax" and you're forcing the wealthy into a ever narrowing price bracket. This affects us all, as I'd suggest most us live or want to live within this (low to mid end) bracket.
cobblers. I could build 1000 flats across the street tomorrow and it wouldn't have an observable effect on supply in the market. if I could do it 10% cheaper than anyone else, I'd be rolling in cash.
🙄 By your own statement, you've increased supply and choice and lowered the average price by discounting. The object of business is to maximise profits. Fill yer boots then KB!
You will need to try much harder to draw me into a pointless internet argument, which you do seem intent on doing on more than one occasion 😉
So tell me again how removing the incetive to havea large number of the cheapest form of housing (rental) removed from the market ? - that will push rents up and leave more people living at home....
Not everyone wants to own , not everyone can own , not everyone is diciplined enough to get a deposit together.
Somefolk dont want to deal with maintainance of their own house.
Yes rents are going up .... But so are mortgages.....the whole system needs a shake up but i dont think destroying the rental market is the way - although if as above it weeds out the skin of their teeth land lords who cant afford to maintain to a reasonable standard then thats great
By your own statement, you've increased supply and choice and lowered the average price by discounting. The object of business is to maximise profits. Fill yer boots then KB!
what you are failing to comprehend is that the housing market consists of so many buyers and sellers that a single buyer or seller is not going to have an appreciable effect on the market.
You will need to try much harder to draw me into a pointless internet argument, which you do seem intent on doing on more than one occasion
I have to admit I don't remember ever having replied to you before on anything so I think you're just getting the same argumentative bollocks as everyone else!
Nah, it's probably my multiple personality order coming to the fore with Mr paranoia 😀
A house price drop would penalise and trap many people like myself who have saved for a long time and just managed to buy a house. Better to have a stagnation of prices. This stops housing becoming an investment opertunity but allows people who have bought a house still the possibility to move about when needed.
This^. I've made a lot of sacrifices to buy my place (which I live in), bikes not bought, holidays not gone on etc. Do I deserve to be punished for that because I have the temerity to earn over 40k?
For those of you who like a bit of free market economics Tim Worstall has a relevant piece in the reg.
[url= http://www.theregister.co.uk/2015/08/23/the_good_burghers_of_palo_alto_are_entirely_insane/ ]http://www.theregister.co.uk/2015/08/23/the_good_burghers_of_palo_alto_are_entirely_insane/[/url]
In summary, taxation isn't the answer, as value is created artificially through how areas are allocated by use (ie its all about the planning permission). Conclusion, allow building on surreys golf courses if you want cheaper housing!
British economic policy IS housing. It has been so for the last 25 years. We have a housing bubble, particularly in the South East.
But government policy is now changing because voter demographics are changing, i.e. as a voting bloc the young eternal renters/living with parents folks (this now extends to people in their 30s) are becoming increasingly important.
Government's are now going to have to appeal to this voting bloc to get elected and a surefire why of doing that is taxing homeowners to the hilt.
So in other words housing is becoming less of a sacred cow; Osbourne's move against buy-to-let is part of a wider campaign against homeowners which is only going to escalate.