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Condems To Take 3 Times As Much In Stamp Duty

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http://www.thisismoney.co.uk/mortgages-and-homes/stamp-duty/article.html?in_article_id=507525&in_page_id=80

Tories to take 3 times more in stamp duty

By Tony Hazell

30 June 2010

Homebuyers could be paying a record £13.5bn a year in stamp duty by 2015 as the Government launches a three-pronged tax raid on aspiration.

The huge sum the exchequer expects to take is almost three times the £4.9bn it raised last year.

Experts suggest this means the Government has already decided to end the stamp duty holiday for first-time buyers paying less than £250,000.

This concession, announced in March, is due to end in March 2012. There are also plans for a new 5% rate from next April which was announced by former Chancellor Alistair Darling in March.

This will add at least £10,000 to the cost of buying a home for some families.

A massive bill just for buying a home

Maths teacher Sonia Trivedi, 24, has just bought her first home with her boyfriend James Owen, 24, a business analyst.

The maisonette, in Stanmore, Middlesex, on the outskirts of London, cost them £270,000, which means they've had to pay a staggering £8,100 in stamp duty.

Had the stamp duty threshold been increased in line with inflation in recent years, they would have qualified for the first-time buyer exemption.

The young couple had struggled to save nearly £67,000 for their deposit. 'It's very difficult to find anything under £250,000 in the South,' says Sonia. 'James comes from Manchester, where you'd easily buy a place for that.

'It's so unfair. We're two young professionals, working hard to get on the property ladder and there's £8,000 down the drain out of our taxed income. James's parents gave us some money to help, because we did not have enough to pay stamp duty and the deposit. We could have used that £8,000 to carry out work on our new home and furnish it.'

Because they want security, they took a five-year, fixed-rate mortgage at 5.45% with Accord arranged by broker London & Country.

Austerity Britain or taxing aspiration?

A Money Mail analysis of official figures in last week's Budget reveals that those with the ambition and drive to improve the financial well-being of their family are prime targets of the economic crackdown.

In addition to the planned haul from homebuyers, the starting threshold for paying higher-rate tax will be frozen, hitting hundreds of thousands who receive a pay rise or gain promotion. And those who bought a second home for a pension or family holidays will be taxed at up to 28% on any profit when they sell it.

But it is the huge increase in stamp duty receipts that has surprised many. This tax currently raises less than £5bn a year.

The near-tripling of income far outstrips the expected increase from any other form of revenue. Income from VAT, for instance, even after the hike from 17.5% to 20%, is expected to increase by around only 27% over the next five years, the take from stamp duty is expected to overtake that from tobacco, vehicle excise duty and alcohol.

The Government is predicting an explosion in house sales of 22.6% next year and 17% the year after from the current low levels of just over 600,000 a year.

House prices are expected to rise annually by 2.3% and 4.5% in the same period, mainly because large mortgages will be hard to come by.

But the thresholds for charging stamp duty have been frozen since 2000, forcing thousands more to pay tax at a higher rate as house prices have risen.

Stamp duty is a particularly punitive tax because, once a property trips through a threshold, the homebuyer is charged at the higher rate on the total sale price.

Under the current regime, a first-time buyer who can find a home for less than £250,000 pays nothing, but one who pays more than this is charged 3% on the full value.

While most first-time buyers in the North pay no stamp duty, many in southern towns and cities pay upwards of £7,500 from savings they have scraped together out of already taxed income.

If stamp duty thresholds had risen with retail prices inflation, the 3% rate would not cut in until £330,000 and the 4% rate at £660,000, while raising them with house price inflation would have doubled them.

This long-term freeze in thresholds means that thousands of homebuyers who have struggled to buy a better property are forced to pay at least £5,000 extra tax.

Bill Dodwell, head of tax policy at accountant Deloitte, says: 'People need to move, so it seems the office for Budget responsibility is assuming sales will take off next year. At the same time, lenders are demanding big deposits, which will keep a cap on prices.'

But the squeeze on aspiration does not stop there. Mike Warburton, of accountant Grant Thornton, estimates an extra 700,000 could be hauled into the higher rate tax net by next April as a direct result of the coalition Government's decision to cut the threshold rather than increasing it with inflation.

An increase in line with the retail prices index would have pushed the threshold to £44,970. Instead it is being cut to £42,875. This will pluck £419 from the pockets of all higher-rate taxpayers.

Some estimates suggest the freeze until at least 2014 could mean a record five million will be paying 40% tax because they have received a promotion or pay rise once in the higher-rate tax band, all their savings interest will be taxed at 40% and share dividends at 32.5%.

Going forward, if tax thresholds rise with the consumer prices index, still more people will be dragged into the higher rate band.

The final attack on the ambitious will see second-home owners paying up to 28% on profits when they sell. A Government spokesman claimed basic-rate taxpayers will be charged just 18%. But he failed to say any profits will be added to their salary.

If the two combined push the person into the higher-rate tax band - and in most cases it will - he or she will pay 28% tax on the top slice of their profits.

Ambitious, hard-working people own 2 or more properties, apparently.

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"Maths teacher Sonia Trivedi, 24, has just bought her first home with her boyfriend James Owen, 24, a business analyst.

The maisonette, in Stanmore, Middlesex, on the outskirts of London, cost them £270,000, which means they've had to pay a staggering £8,100 in stamp duty.

Had the stamp duty threshold been increased in line with inflation in recent years, they would have qualified for the first-time buyer exemption."

Firstly, don't buy property for £270k you fools!

Secondly, if you're going to link duty to inflation, surely you should link it to house price inflation rather than general price inflation?

I'm not fussed about the level of duty, its just the whole concept of paying over a quarter of a million pounds for a maisonette in Stanmore that blows my mind.

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"Maths teacher Sonia Trivedi, 24, has just bought her first home with her boyfriend James Owen, 24, a business analyst.

The maisonette, in Stanmore, Middlesex, on the outskirts of London, cost them £270,000, which means they've had to pay a staggering £8,100 in stamp duty.

Had the stamp duty threshold been increased in line with inflation in recent years, they would have qualified for the first-time buyer exemption."

Firstly, don't buy property for £270k you fools!

Secondly, if you're going to link duty to inflation, surely you should link it to house price inflation rather than general price inflation?

I'm not fussed about the level of duty, its just the whole concept of paying over a quarter of a million pounds for a maisonette in Stanmore that blows my mind.

What blows my mind is "Maths teacher Sonia Trivedi" this is a woman who is teaching children to add up.

:rolleyes:

Edited by TheCountOfNowhere

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:)

"Now then class, here's today's question. If you take out a mortgage of £200k and your mortgage rate is 5.45%, if mortgage rates increase to 8%, how much extra interest will you pay over the course of a 25-year mortgage? And does this extra also go down the drain out of our taxed income like the stamp duty did?"

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Geezus aitch (that's aitch, not haytch) Holy Guacomoley Batman that's a helluva lot of money. 24!! What the..! Stanmore!

Sing after me children:

I owe, I owe it's off to work I go!

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Bill Dodwell, head of tax policy at accountant Deloitte, says: 'People need to move, so it seems the office for Budget responsibility is assuming sales will take off next year. At the same time, lenders are demanding big deposits, which will keep a cap on prices.'

There's a pernicious incentive here -- govt assumes that "people need to move" -> "they can be made to pay more into our coffers." But that's only true because our rental laws mean tenure isn't suitable for those seeking stability (eg families). So if they were to fix rental laws, it would kill their golden goose (which is dying anyway, but they still need the eggs so can't admit it, even to themselves).

What will happen instead is that people who "need" to move will be deterred from doing so -- there's almost always a choice, with pros and cons to be weighed up. Not only will that deny the govt some of the expected revenue, it will reduce UK labour mobility to the detriment of the economy.

During the boom, buyers could (1) add SD to the mortgage and (2) see it "paid back" by subsequent HPI. Neither of those apply any more, so I would guess that SD now feels a lot more "real" to many, than it used to; I don't think people will be prepared to pay it. That's good for lower HPs, not so good for the government's revenue projections. How can they possibly believe those transaction and price increases in any case?

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"The Government is predicting an explosion in house sales of 22.6% next year and 17% the year after from the current low levels of just over 600,000 a year

House prices are expected to rise annually by 2.3% and 4.5% in the same period, mainly because large mortgages will be hard to come by"

I don't get how there is going to be an "explosion" in house sales as well as an increase in prices? Just where will that come from?

:blink:

Edited by welsh1

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The young couple had struggled to save nearly £67,000 for their deposit. 'It's very difficult to find anything under £250,000 in the South,' says Sonia. 'James comes from Manchester, where you'd easily buy a place for that.

Hang on, they're both 24 and they've saved £67,000 + £8,100 for stamp duty + ~£1000 mortgage application fee + solicitor etc. Surely this is Bank of Mum & Dad?!? If she's a teacher then she's only a year or two into the job so I can't see how she could have saved much at all.

Also, they couldn't even manage to negotiate below £250,000 on a £270,000 property?!? I'm tempted to say they deserve to be taken for every penny they've got they've yet to earn.

Edited by efdemin

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Maths teacher Sonia Trivedi, 24, has just bought her first home with her boyfriend James Owen, 24, a business analyst.

The maisonette, in Stanmore, Middlesex, on the outskirts of London, cost them £270,000, which means they've had to pay a staggering £8,100 in stamp duty

Getting fed up with these boo hoo stories now. No-one's forcing you to buy, you stupid fuckwits!!!

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House prices are expected to rise annually by 2.3% and 4.5% in the same period, mainly because large mortgages will be hard to come by.

Why would house prices being going up because mortgages are hard to come by? :blink:

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Why would house prices being going up because mortgages are hard to come by?  :blink:

I know it beggars belief this country. The lemmings are so besotted with bricks and morter and ignoring the fact the world is going to hell in a hand cart. This is one ******ed up country.Read the title as "Condoms to be taking 3 times a day" for some reason :P

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"Maths teacher Sonia Trivedi, 24, has just bought her first home with her boyfriend James Owen, 24, a business analyst.

The maisonette, in Stanmore, Middlesex, on the outskirts of London, cost them £270,000, which means they've had to pay a staggering £8,100 in stamp duty.

Had the stamp duty threshold been increased in line with inflation in recent years, they would have qualified for the first-time buyer exemption."

Firstly, don't buy property for £270k you fools!

Secondly, if you're going to link duty to inflation, surely you should link it to house price inflation rather than general price inflation?

I'm not fussed about the level of duty, its just the whole concept of paying over a quarter of a million pounds for a maisonette in Stanmore that blows my mind.

The figures projected for stamp duty are rubbish. As for the buyers mentioned - It's only a flamin' maisonette for Gods sake! They will be in negative equity within 18 months to 2 years. It should be a 3 or 4 bed detached for the price. To think that 2 earners who together earn ( I calculate ) about £60-70k pa between them, borrow all they can, are given some of the staggering £67k deposit AND STILL it's only a maisonette!!!!!!!!!!! People have been brainwashed into these prices. They really are stark raving mad and they will fall very significantly, starting over the coming months. 1-4% falls per month should do it. After 2 years of that you'll see a big change.

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I don't get how there is going to be an "explosion" in house sales as well as an increase in prices? Just where will that come from?

:blink:

It just shows how ridiculous the OBR and budget forecasts are. Everything is based on predictions plucked from the air. No-one knows what will happen in 12 months time. Its like watching Labour and the Conlibs bickering over how many job losses there will be - neither side has an effing clue, just like no-one has a clue what the deficit will be next year.

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Is this 13+bn factored into the defecit reduction by 2015? if it is then talk about false accounting....though I'm sure a suitable excuse can be found by then if it fails to materialise.

22.6% and 17% explosion in house sales??? - is there a new 'House Scrappage Scheme' to be announced or something? :lol:

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Why would house prices being going up because mortgages are hard to come by? :blink:

I think they are saying prices will ONLY rise by 4% because mortgages are hard to come by (the implication being it is below the 'normal' rise) :rolleyes:

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"The Government is predicting an explosion in house sales of 22.6% next year and 17% the year after from the current low levels of just over 600,000 a year

House prices are expected to rise annually by 2.3% and 4.5% in the same period, mainly because large mortgages will be hard to come by"

I don't get how there is going to be an "explosion" in house sales as well as an increase in prices? Just where will that come from?

:blink:

...there won't be! They know housing market is going to hit rock bottom b4 the next budget. Think about it. That's why they want to increase these taxes now. Even when properties are worth less in couple of months, government can still secure a decent income for himself. Otherwise rising those taxes would be a nail in the coffin for the housing market which is already dead . Government knows what is going on, sheeple don't - statistics are being rigged, and some information simply delayed. All recently released policies point to fact that government is preparing the right ground for HPC - right for them, not for us anyway. B)

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http://www.thisismoney.co.uk/mortgages-and-homes/stamp-duty/article.html?in_article_id=507525&in_page_id=80

Tories to take 3 times more in stamp duty

By Tony Hazell

30 June 2010

Ambitious, hard-working people own 2 or more properties, apparently.

...erm,so an additional £60000 over and above long term average asking price ISN'T a tax on aspiration?

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Again the story fails to point out the blatantly obvious. Stamp duty is a %. Therefore if prices were not so high then stamp duty would not be so high.

Exactly the same when you read stories about the large deposits required to buy a house these days. Rarely, if ever, does this simple logic get mentioned.

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Again the story fails to point out the blatantly obvious. Stamp duty is a %. Therefore if prices were not so high then stamp duty would not be so high.

Exactly the same when you read stories about the large deposits required to buy a house these days. Rarely, if ever, does this simple logic get mentioned.

..like I said :D:rolleyes:

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Is this 13+bn factored into the defecit reduction by 2015? if it is then talk about false accounting....though I'm sure a suitable excuse can be found by then if it fails to materialise.

22.6% and 17% explosion in house sales??? - is there a new 'House Scrappage Scheme' to be announced or something? :lol:

Think of all the building jobs that will be created.

Oh dear, will the private sector be able to hold down inflationary wage claims?

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The figures projected for stamp duty are rubbish. As for the buyers mentioned - It's only a flamin' maisonette for Gods sake! They will be in negative equity within 18 months to 2 years. It should be a 3 or 4 bed detached for the price. To think that 2 earners who together earn ( I calculate ) about £60-70k pa between them, borrow all they can, are given some of the staggering £67k deposit AND STILL it's only a maisonette!!!!!!!!!!! People have been brainwashed into these prices. They really are stark raving mad and they will fall very significantly, starting over the coming months. 1-4% falls per month should do it. After 2 years of that you'll see a big change.

Thats half of the problem, people are brainwashed and untill that changes people will pay over the top prices for property.

As long as the bank lends the money people will borrow it regardless of value for money

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bad thread title, was trying to figure out where condoms came into it for a good 2 mins...

Perhaps that is because so many people raced off after the red herring of the silly individuals quoted in the article. All good fun but essentially a side show.

I assume the condems element comes from this bit .

The Government is predicting an explosion in house sales of 22.6% next year and 17% the year after from the current low levels of just over 600,000 a year.

House prices are expected to rise annually by 2.3% and 4.5% in the same period, mainly because large mortgages will be hard to come by.

Of course they could (should) predict an increase in sales (and thus income from stamp duty) with falling prices. But I've seen that statement that the govt is predicting price rices a number of times now, although not any link to an explicit govt statement to that effect.

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  • 140 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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