Monday, Jun 14, 2010
More News From Planet Zog
City AM: Hiking capital gains will just hit aspiration
By Mark Field MP (Con): "Similarly, [Vince Cable] seems not to have taken into account the disproportionate impact higher [CGT] rates on property will have on Londoners and those in the Home Counties. Many people who buy a second home outside the capital as an addition to a small London base do so not because they are enormously wealthy but precisely because they are not. It is virtually impossible even for many of those earning multiples of the average national wage to trade up the property ladder in the capital. For those with growing families, the only option is often to buy a house with garden outside London."
Posted by mark wadsworth @ 03:29 PM (1013 views) Add Comment
12 Comments
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1. tenant super said...
I have a small-ish London base and cannot afford to trade up to anything I would consider worth living in. And even if I could, there is no way I would spend £800k on a 3-4 bedrom semi which is what they cost round my way. So we will eventually have a family home (possibly in Ireland) outside London. However, since one will be my home and one is Mr. TS' home, there wouldn't be CGT liability anyway. I would imagine a lot of couples would make a similar arrangement.
I would far sooner they raised interest rates, raised CGT and outlawed nominating BTL properties as main residences and then actually bothered to enforce these rules which they are certainly not at the moment given the blatant evaders I happen to know.
If prices in the South East fell to a sensible level we would at least have the option then of a family home and living apart would be a matter of choice rather than necessity.
2. doomwatch said...
The HMRC rules around what constitutes a second home are to say the least grey. The HMRC staff that haven't left [in droves] bearly
understand them, making it a costly admin nightmare to collect, that's assuming people are honest and declare the "disposal" on their Tax Returns. The Con-Dems should concede this is an ivory tower Liberal ideal, as opposed to a pragmatic solution
to the deficit. More tax could be collected EASILY (& guaranteed) by raising VAT and beer & fags by a penny.
3. mark wadsworth said...
DW, yeah, but that would destroy tens of thousands of jobs. An even better way would be to double council tax.
4. Christina said...
Tenant Super, My understanding was that married couples could only have one PPR between them. Have the rules changed as I'm not up to date on this? It would make sense as the old system was so unfair as it discriminated against married couples.
5. This comment has been removed as it was found to be in breach of our Blog Policies.
6. righttoleech said...
grass up the CGT cheats tenant super.......help close the deficit
7. tenant super said...
I can't for two reasons. Firstly, I only support CGT (in place of prefered LVT) as an instrument to ensure the Lockean proviso of 'leaving enough in common' is satisfied - as an agorist/ minarcho-capitalist/ geolibertarian, generally I support tax resistence and so grassing would not be something I would feel entirely comfortable with.
Secondly, the worst (five properties) offender is a single parent on an average wage, who is hopeless with money and got their fingers burnt on the last purchase which is now in nequity. Grassing could well lead to them to lose all properties plus their own home and whilst they deserve this - the six year old child doesn't.
8. righttoleech said...
With you on your second paragraph. Astounding that someone in that situation could be allowed to borrow enough to buy 5 properties though. The lenders are an absolute disgrace.
9. tenant super said...
Before baby came long they were working for a very decent though not six figure salary. Bought first home (a standard 2 up 2 down) in the mid to late nineties slump for 65K. At the peak, it sold for £600k. Also bought a school conversion flat for £250k in 2000 which they just sold for £475k but it had been mewed to buy several other smaller flats which were quickly done up and flipped for a profit within a year or so. The serious error came from buying a larger main home which was overvalued at the peak and which they cannot afford the mortgage on. Also, because of poor credit rating (due to financial mismanagement) they could only get a sub prime high interest mortgage. The daft thing is, when they were behind payments, they ended up in court where all property assets were divulged but was this passed onto the taxman? Of course not... there's just no joined-up thinking. The smaller flats and the conversion have never had any tax paid on the rental income or CGT.
If managed cleverly, they would have used profit from flipping to reduce mortgage on main home and would be living in a £600k house mortgage free. Instead, blinded by greed, they either lost it as the value of their own home fell or spent it and now overall have practically no equity plus they must owe the Inland Revenue a small fortune.
10. jack c said...
TS many thanks for your input
"Bought first home (a standard 2 up 2 down) in the mid to late nineties slump for 65K. At the peak, it sold for £600k" - this should tell everyone all they need to know regarding the UK's vastly over inflated residential property market
11. tenant super said...
Yes, it never ceases to astonish me how people get used to a cruddy terraced in N16 going for more than half a million pounds, or a tiny one bedroom conversion in Tooting for over a quarter of a million. Barmy!
12. jack c said...
Even more amazing is the fact that Gateshead council promoted the building of Ikea flat pack housing in one of the most deprived and roughest areas of East Gateshead - affordable wooden boxes (I kid you not) @ £149K each
www.boklok.com/UK/Property-Search/Northern-England/Slutsalda/St-James-GatesheadHouses/Price-list2/