property boom and G Brown's eggy face


J

Jim

There's been quite a bit about boom, brown and bust on the property-crash
website and there's unsurprisingly plenty of stuff about Brown's dignity relying
considerably on the property boom sustaining or landing softly. Any thoughts on
Browns competence? Certainly he must be swelling the public coffers from any
(and there must be many!) house sales over £263k now attracting CGT after a
death . Does anyone know what this sort of money represents as a proportion of
public money? Think how well our public services would run if house prices rose
even further in value.

An Indian rope trick?
 
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C

criticaldensity

There's been quite a bit about boom, brown and bust on the
property-crash website and there's unsurprisingly plenty of stuff about
Brown's dignity relying considerably on the property boom sustaining or
landing softly. Any thoughts on Browns competence? Certainly he must
be swelling the public coffers from any (and there must be many!) house
sales over £263k now attracting CGT after a death . Does anyone know
what this sort of money represents as a proportion of public money?
Think how well our public services would run if house prices rose even
further in value.
Yes. Brown is obviously talking down a crash:
http://news.bbc.co.uk/1/hi/business/3656701.stm

However, this bubble isn't doing any one any good besides Brown, unless
you're planning to leave the country or move into rented accommodation.
The economy is pretty screwed up if the majority of 1st-time buyers cannot
buy anything. The housing market /needs/ a crash (apologies to those
who've borrowed to the hilt and have bought a box somewhere).

cd
 
T

Tim

Certainly he must be swelling the public
coffers from any ... house sales over
£263k now attracting CGT after a death ...
(1) CGT is usually not applicable *after* death;
(2) *before* death, CGT is not applicable on PPRs;
(3) The £263K threshold applies to IHT, not CGT.

What was your question??
 
J

Jim

There's been quite a bit about boom, brown and bust on the property-crash
website and there's unsurprisingly plenty of stuff about Brown's dignity relying
considerably on the property boom sustaining or landing softly. Any thoughts on
Browns competence? Certainly he must be swelling the public coffers from any
(and there must be many!) house sales over £263k now attracting CGT after a
death . Does anyone know what this sort of money represents as a proportion of
public money? Think how well our public services would run if house prices rose
even further in value.

An Indian rope trick?
sorry - IHT not CGT.... and not new ...and not exactly "attracting" (if only to
avert a pedantfest)

But there must be a deal more money from this especially with the recent and
retrospective constraints on trusts...

Does anyone know how much?
 
R

Ronald Raygun

Jim said:
But there must be a deal more money from this especially with the recent
and retrospective constraints on trusts...

Does anyone know how much?
Not sure what you're on about. The only benefit to the public purse
from property prices seems to be from the usurious rates of stamp duty.
 
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J

Jim

Not sure what you're on about.
So there is no benefit to the public purse from a barely raised IHT threshold
(250 to 263 and hardly in line with property value increases) and the withdrawal
of trust options to circumvent this tax?.... heeeeeeelp!!
The only benefit to the public purse
from property prices seems to be from the usurious rates of stamp duty.
(stamp duty - absolute peanuts compared to France and probaby the most effective
single anti-boom/bust measure available).
 
R

Ronald Raygun

Jim said:
So there is no benefit to the public purse from a barely raised IHT
threshold (250 to 263
255 to 263 is over 3%. More than inflation. That's more than "barely".
and hardly in line with property value increases)
IHT is a tax on estates, not on property values per se. The fact
that properties have been rising above inflation for some time and
are the single biggest reason for more estates being caught in the
IHT net than ever before is of course undeniable, and unfortunate
for those affected, but nevertheless in the grand scheme of things
IHT is not a major contributor to the public purse.

I wouldn't be surprised if the effect of abolishing IHT altogther
would have less effect than lowering VAT to 17.4%. And it would make
life (not to mention death) so much easier for everyone. Let's get
rid of stamp duty while we're at it.
and the withdrawal of trust options to circumvent this tax?....
Those were obscure loopholes which should never have existed in
the first place. There remain perfectly straightforward options
to avoid IHT.
(stamp duty - absolute peanuts compared to France and probaby the most
effective single anti-boom/bust measure available).
How can you say it's effective? It doesn't seem to have had any effect.
Or are you sure prices would have gone up more/faster without it? If
so, where's the evidence?
 
J

Jim

255 to 263 is over 3%. More than inflation. That's more than "barely".
But if you contrast this with the rise over the last few years in the value of
estates then it's insignificant. Admittedly, I'm thinking here mostly of the SE
where, frankly, we're farting through silk and lighting our Havanas with rolled
tenners (my offspring will be more straitened thanks to Gordon) but there are a
lot of us in the SE.
IHT is a tax on estates, not on property values per se.
of course - but property is far and away the largest component.
The fact
that properties have been rising above inflation for some time and
are the single biggest reason for more estates being caught in the
IHT net than ever before is of course undeniable, and unfortunate
for those affected, but nevertheless in the grand scheme of things
IHT is not a major contributor to the public purse.
It may well not have been but could well be so in the future (and the future was
the nub of my interest). If you've got any figures I'd be interested.
I wouldn't be surprised if the effect of abolishing IHT altogther
would have less effect than lowering VAT to 17.4%.
If we're talking about a tax where, at least up until recently, the threshold
has exceeded the value of most peoples estates then, yes, I'm sure that's about
the order of magnitude. With merely token threshold rises though, the picture
will have changed considerably over the last 3 years.
And it would make
life (not to mention death) so much easier for everyone. Let's get
rid of stamp duty while we're at it.
fat chance - and a very bad idea.
Those were obscure loopholes which should never have existed in
the first place. There remain perfectly straightforward options
to avoid IHT.
I'm surprised to hear that - I have a friend who, with his 2 siblings are
spitting blood about the withdrawal of a trust set up by their mother and at a
non-refundable set-up cost of £7000. And in spite of expensive advice they've
found no useful alternatives.
How can you say it's effective? It doesn't seem to have had any effect.
Or are you sure prices would have gone up more/faster without it? If
so, where's the evidence?
Sadly France has been an unwilling laboratory for any useful controlled
experiment so I don't have 'evidence' but as and when GBrown or his 'successor'
sees the light and takes a leaf out of the French approach - something tells me
he has noticed - I think he knows he will be a double-beneficiary; more tax and
less boom/bust. If he does it early enough in the next parliament and gains
some economic stability he'll probably be forgiven by the time of the following
election.

Property prices in France move more like a gentle swell than a tsunami - the
huge transactional costs alone could easily account for this. What are you
offering in the way of explanation?
 
R

Ronald Raygun

Jim said:
But if you contrast this with the rise over the last few years in the
value of estates then it's insignificant. Admittedly, I'm thinking here
mostly of the SE where, frankly, we're farting through silk and lighting
our Havanas with rolled tenners (my offspring will be more straitened
thanks to Gordon) but there are a lot of us in the SE.
But you're there through choice. You can always move to France :)
of course - but property is far and away the largest component.
Only recently, and perhaps not for much longer.
It may well not have been but could well be so in the future (and the
future was the nub of my interest).
When the boom blows over, there will be much gnashing of teeth in
the treasury as they will have to forego inflow from a deflating
cash-cow.
If you've got any figures I'd be interested.
I'm sure the govt stats sites have plenty.
fat chance - and a very bad idea.
Why? Er, I mean I agree about the fat chance bit, but why would
it be a bad idea?
Property prices in France move more like a gentle swell than a tsunami -
the
huge transactional costs alone could easily account for this. What are
you offering in the way of explanation?
It not the explanation I'm worried about, it's the justification.
AISI, excessive transaction tax just blackens the market. You can
see it here with the stamp duty jumping by £5000 for a price increase
of just £1. It is just asinine to have such discontinuities. It
obviously forces people to pay a proportion of the price as a bribe
rather than as legitimate cost.
 
F

Fred

Jim said:
fat chance - and a very bad idea.
For those that aren't in the South East with subsidised commuting the
prospect of changing job can often mean a move. There is evidence the more
mobile a workforce the stronger the economy. As you gather I not convinced
by your idea.
 
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J

Jim

For those that aren't in the South East with subsidised commuting the
prospect of changing job can often mean a move. There is evidence the more
mobile a workforce the stronger the economy. As you gather I not convinced
by your idea.
No, of course not - I'm pretty sure that 99.999% of us would vote against stamp
duty and probably most other taxes - contentious or otherwise. But a
government with a given hue will get its taxes by hook or crook and it's a
matter of where you put social priorities against personal freedom. More to the
point, I'm firmly of the opinion that stamp-duty is a dampener to a speculative
market and we certainly need something to control our raging housing-market
which is currently the biggest long-term threat of all to our economic
well-being. We were in a mess at the end of the last property bust and it will
be so again at the next crash even if workers are more mobile in the temporary
phase of a market on the rise. We need to be evened out.

In spite of Eurozone's troubles at the moment, I believe (I'm sticking my neck
out and maybe the figure I recently spotted is not current) that France is
actually more productive per capita than the UK....it's only our individual, and
therefore national, greed and very long working hours that give us a higher GDP
overall (once again I'm not absolutely sure, I've not googled it, and in any
case I believe the difference is marginal).
So, I don't see this particular taxation producing a difficulty for France.
 
J

Jim

But you're there through choice. You can always move to France :)
as chance would have it, I'm moving there, lock stock and barrel towards the end
of this month :)
Only recently, and perhaps not for much longer.
I'd be surprised if there wasn't a collapse in the housing market but one never
knows. As long ago as 2002, one of the building society bigwigs was talking
about our being in a new phase - to coincide with the phase of low interest
rates - where the 'historic' past average of house-prices-to-wages (3-ish) would
move to a new 5-ish figure. That doesn't seem out of the question to me now -
at least for the foreseeable future and until we get to the next cycle (when?)
That could provide Gordon with a lot of snouting the IHT trough in the meantime.
And just think, all he's got to do is drag his feet on whatever might potentiate
new house building in order to stick his nose in for longer.
When the boom blows over, there will be much gnashing of teeth in
the treasury as they will have to forego inflow from a deflating
cash-cow.
true, that's probably when they'll be heaving a sigh of relief over increased
stamp-duty rates.
I'm sure the govt stats sites have plenty.


Why? Er, I mean I agree about the fat chance bit, but why would
it be a bad idea?
I do believe that France's calmer market arises from its swinging transaction
costs. We need a steadier property market and I don't see the UK snapping out
of this obsession without some form of additional taxation. I would agree that
it doesn't have to be stamp-duty but eradicating it without some sort of brake
would be hopeless - especially at the moment.
It not the explanation I'm worried about, it's the justification.
AISI, excessive transaction tax just blackens the market. You can
see it here with the stamp duty jumping by £5000 for a price increase
of just £1. It is just asinine to have such discontinuities. It
obviously forces people to pay a proportion of the price as a bribe
rather than as legitimate cost.
Yes this is quite ridiculous. I guess the ruling class has always lived in
houses in the top bandwidth and knows nothing of the frustration of trying to
price a house at the tax break-point...civil servants are either dunces or
there's too much on the books to sort things out.
There is something more approaching a sliding-scale in France where the
break--points are very much closer together. When you ask the agent there to
quote on the notaire's fee (which is mostly stamp duty collected on behalf of
the gov) he pulls out a well-thumbed sheet or two which lists the appropriate
rate for a particular price - I think these are price increments of £5000 or
thereabouts corresponding to a duty increment of 0.1% (a guess - but that's the
ball park and in any case it's not linear) and a final duty range of about 10%
(for the cheapest! - the opposite to us in the UK) down to 6% for the most
expensive properties. There's far less to agonise over at the transitions and
these would always be amounts small enough to easily explain away as fixtures
and fittings - a scam that has become something of a raised-eyebrow joke over
here.
 
J

Jonathan Bryce

Jim said:
Certainly he must be swelling the public coffers from
any (and there must be many!) house sales over £263k now attracting CGT
after a
death . Does anyone know what this sort of money represents as a
proportion of
public money?
It's IHT, but you know that. The amounts involved are pretty negligible in
the overall scheme of things.
 
F

Fred

Jim said:
No, of course not - I'm pretty sure that 99.999% of us would vote against stamp
duty and probably most other taxes - contentious or otherwise. But a
government with a given hue will get its taxes by hook or crook and it's a
matter of where you put social priorities against personal freedom. More to the
point, I'm firmly of the opinion that stamp-duty is a dampener to a speculative
market and we certainly need something to control our raging housing-market
which is currently the biggest long-term threat of all to our economic
well-being. We were in a mess at the end of the last property bust and it will
be so again at the next crash even if workers are more mobile in the temporary
phase of a market on the rise. We need to be evened out.

In spite of Eurozone's troubles at the moment, I believe (I'm sticking my neck
out and maybe the figure I recently spotted is not current) that France is
actually more productive per capita than the UK....it's only our individual, and
therefore national, greed and very long working hours that give us a higher GDP
overall (once again I'm not absolutely sure, I've not googled it, and in any
case I believe the difference is marginal).
So, I don't see this particular taxation producing a difficulty for
France.

My comment was that for most it's a tax on mobility. Taxing job mobility
may actually cost the exchequer more in the long run.
 
T

Terry Harper

Jim said:
I do believe that France's calmer market arises from its swinging transaction
costs. We need a steadier property market and I don't see the UK snapping out
of this obsession without some form of additional taxation. I would agree that
it doesn't have to be stamp-duty but eradicating it without some sort of brake
would be hopeless - especially at the moment.
More likely that supply and demand are in balance in France. In the UK the
problem can be attributed to a sizeable imbalance between demand for housing
land and its availability. It's the planning laws that are largely to blame
for the continuing rise in the price of land for building, and hence of
property.
 
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J

Jim

More likely that supply and demand are in balance in France.
absolutely not - I assure you. There is admittedly not the absurd and
exagerated imbalance here that is created by the stockpiling of BTLers but there
is still a problem.
 
D

Dave Hall

More likely that supply and demand are in balance in France. In the
UK the problem can be attributed to a sizeable imbalance between
demand for housing land and its availability. It's the planning laws
that are largely to blame for the continuing rise in the price of
land for building, and hence of property.
Not entirely true. Try Paris and the Rhone-Alpe region for example.
Here where I live (Grenoble area) house prices have increased 10-15% in
the last year. Not as big as the UK price jumps but big compared to
other regions. Also taxation is around 3% for houses under 3 years old.
Great if you live in an area with lots of land to build on but here in
the mountain regions not so good. Land prices have shot through the
roof in the last 2-3 years. 140,000 euros is not untypical for 1000m2,
whilst a few years ago it was 20-30,000.

Cheers

D
 
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J

Jim

France.

My comment was that for most it's a tax on mobility. Taxing job mobility
may actually cost the exchequer more in the long run.
Yes, I accept that. Hard to know what causes the most damage in the long run
though. As I say, the taxing regime on property in France is far more stringent
than here and yet it is still in many ways a successful economy.
 
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