RichB Posted July 28, 2011 Share Posted July 28, 2011 I think you'll find that its you who is the greedy *******, why do you need a second property you hardly use? :angry: Whats need got to do with it? Quote Link to comment Share on other sites More sharing options...
mercsl Posted July 28, 2011 Share Posted July 28, 2011 I think it is just about do-able. If property tax was 1% of value instead of a loosely generic £1-2k per year, it would mean those in a £100k house paying £1k per year, and people in a £1,000k house paying £10k per year. That would keep it reasonably affordable for low earners and still stem speculation. It exists ,called property taxes in the USA and in California is 1% of the value or the property so pretty hefty once prices hit a million dollars plus. Did not stop at all property speculation in places like San Diego where I was recently. Also if you purchased your property at a certain date ten years or so ago you got a very reduced rate hence loads of people who are better off not ever moving. Quote Link to comment Share on other sites More sharing options...
libspero Posted July 28, 2011 Share Posted July 28, 2011 It exists ,called property taxes in the USA and in California is 1% of the value or the property so pretty hefty once prices hit a million dollars plus. Did not stop at all property speculation in places like San Diego where I was recently. Also if you purchased your property at a certain date ten years or so ago you got a very reduced rate hence loads of people who are better off not ever moving. In China too.. specifically for second homes. Obviously in an environment where the money supply is allowed to expand at 10% YoY almost exclusively into said asset class, then it would take a massive tax to make it non-attractive as an investment. But in normal circumstances it should work. The ultimate aim of the tax was to prevent hoarding of properties, rather than to rein in prices, according to Michael Klibaner, head of China research for property company Jones Lang LaSalle. "Previously there was very little holding cost for residential property because many people paid 100% cash for these properties. Now the holding cost is no longer zero," Mr Klibaner said. "When the holding cost is zero, it's very easy to let these homes sit idle. It doesn't cost you anything to let them sit there. "Now there's a holding cost - the hope is it will change the way people perceive real estate as an asset class." What's good for the goose... Quote Link to comment Share on other sites More sharing options...
Daft Boy Posted July 28, 2011 Share Posted July 28, 2011 [quote name=Oh Well ' timestamp='1311869782' post='3068371] I have a second property in Cornwall. When the council tax was 50% I didn't mind paying it. We don't use the education or social services, hardly have any rubbish etc etc. The council was on to a good thing. When the greedy bstards put it up to 90% I registered the property as a business. I get small business rate relief so now only pay half again! This is actually less than I paid in the first place! The morons who invent all these complicated rules always **** something But you put nothing in to the community. If you don't live there the post office, village shop, primary school, local bus all cease to function and shut down. If you paid 200% tax on the property it could subsidise these services. You are killing the very thing that attracted you to cornwall in the first place Quote Link to comment Share on other sites More sharing options...
Quicken Posted July 28, 2011 Share Posted July 28, 2011 If people didn't own a holiday home, would they still visit? Of course they would, maybe not as often, but they could stay in hotels giving thier money to theses businesses. This Quote Link to comment Share on other sites More sharing options...
sun n sea Posted July 29, 2011 Share Posted July 29, 2011 [quote name=Oh Well ' timestamp='1311869782' post='3068371] I have a second property in Cornwall. When the council tax was 50% I didn't mind paying it. We don't use the education or social services, hardly have any rubbish etc etc. The council was on to a good thing. When the greedy bstards put it up to 90% I registered the property as a business. I get small business rate relief so now only pay half again! This is actually less than I paid in the first place! The morons who invent all these complicated rules always **** something What happens when you sell? Your holiday home will now be treated as a business by HMRC... this could mean a whopping tax bill if you ever need to get your hands on the proceeds of selling it....business money isn't your money until you've got it out of the business into your personal account...and you can't do that without paying tax. Quote Link to comment Share on other sites More sharing options...
Salcombe Posted August 7, 2011 Share Posted August 7, 2011 This proposal fell at the first hurdle at the recent South Hams Council meeting. It can never be right that a Council demands an arbitrary tax for less service (i.e. second home owners do not use social services or education, the largest council tax beneficiaries) from any sub-group of society especially on the pretext that they have to pay to them for a particular privilege (as the highly dubious, previously suspended Council Brazil put it). The privilege in this case (a second house) was paid for, alongside Stamp Duty, out of post-tax income for most. Councils are not there to layer extra tax as some form of society pay-back on an asset. What next? Super-tax on more that two pairs of shoes. Philosphical musings aside, the main reason this agenda item was a non-starter for the money-grabbing council is that most owners would switch either to commercial, furnished holiday let status (rates are negligible for Small Businesses due to reliefs and what there is goes centrally not to the council), or they would simply switch primary residence allocation (ring a bell). The latter interestingly would get them on the electoral roll - and if there is one thing politicians do not enjoy it is democracy. Local councillors in areas such as South Devon know only too well that the tourism industry, based predominantly around holiday homes, is a huge net contributor to local wealth. They wil not squeeze too hard as the downside risks are way too high in these relatively jobless areas. Quote Link to comment Share on other sites More sharing options...
Harry Sacks Posted August 7, 2011 Share Posted August 7, 2011 This proposal fell at the first hurdle at the recent South Hams Council meeting. It can never be right that a Council demands an arbitrary tax for less service (i.e. second home owners do not use social services or education, the largest council tax beneficiaries) from any sub-group of society especially on the pretext that they have to pay to them for a particular privilege (as the highly dubious, previously suspended Council Brazil put it). The privilege in this case (a second house) was paid for, alongside Stamp Duty, out of post-tax income for most. Councils are not there to layer extra tax as some form of society pay-back on an asset. What next? Super-tax on more that two pairs of shoes. Philosphical musings aside, the main reason this agenda item was a non-starter for the money-grabbing council is that most owners would switch either to commercial, furnished holiday let status (rates are negligible for Small Businesses due to reliefs and what there is goes centrally not to the council), or they would simply switch primary residence allocation (ring a bell). The latter interestingly would get them on the electoral roll - and if there is one thing politicians do not enjoy it is democracy. Local councillors in areas such as South Devon know only too well that the tourism industry, based predominantly around holiday homes, is a huge net contributor to local wealth. They wil not squeeze too hard as the downside risks are way too high in these relatively jobless areas. Yes, it diverts attention away from what should be the council's responsibility to provide affordable housing through planning or otherwise. Quote Link to comment Share on other sites More sharing options...
leicestersq Posted August 7, 2011 Share Posted August 7, 2011 Yes, it diverts attention away from what should be the council's responsibility to provide affordable housing through planning or otherwise. By taxing second home owners out of the market, it does provide more supply for local people, that is the whole point of this. Better still is a national land value tax that is progressive. A discount for couples on one house, if they are Uk citizens. Top rate of tax for non uk nationals on all the value. It would work a treat. Quote Link to comment Share on other sites More sharing options...
libspero Posted August 7, 2011 Share Posted August 7, 2011 This proposal fell at the first hurdle at the recent South Hams Council meeting. It can never be right that a Council demands an arbitrary tax for less service (i.e. second home owners do not use social services or education, the largest council tax beneficiaries) from any sub-group of society especially on the pretext that they have to pay to them for a particular privilege (as the highly dubious, previously suspended Council Brazil put it). The privilege in this case (a second house) was paid for, alongside Stamp Duty, out of post-tax income for most. Councils are not there to layer extra tax as some form of society pay-back on an asset. Welcome.. interesting post (and I expect very accurate insight into the mind set). As you say, a second home taxation policy needs to be UK wide or not at all.. it's not something that can be easily implemented by individual councils. It would either need to be a national response to a housing shortage or not at all. Regarding the tourism issue, you have to see it from the councillors point of view. They see revenues rise in the summer, and a ghost town in the winter. What they don't see is that if homes were cheaper, local people wouldn't be forced out and business would be 365 days a year. There is the issue of local employment, however, while the local cost of living is elevated, so too is the cost of employing people. Bit of a vicious circle. I think one strategy would be to encourage more people to retire by the coast. The obvious incentives would be highly rated hospitals and healthcare in coastal areas, as well as free local facilities for them. They will spend money all year around, they would free up housing in areas of high demand/employment and they have a lot of money to spend. Obviously, the above is only appropriate if you believe the housing shortage in the UK is a bigger issue than the current right/desire of people to own second homes with no financial impediment. Quote Link to comment Share on other sites More sharing options...
Salcombe Posted August 7, 2011 Share Posted August 7, 2011 Welcome.. interesting post (and I expect very accurate insight into the mind set). As you say, a second home taxation policy needs to be UK wide or not at all.. it's not something that can be easily implemented by individual councils. It would either need to be a national response to a housing shortage or not at all. Regarding the tourism issue, you have to see it from the councillors point of view. They see revenues rise in the summer, and a ghost town in the winter. What they don't see is that if homes were cheaper, local people wouldn't be forced out and business would be 365 days a year. There is the issue of local employment, however, while the local cost of living is elevated, so too is the cost of employing people. Bit of a vicious circle. I think one strategy would be to encourage more people to retire by the coast. The obvious incentives would be highly rated hospitals and healthcare in coastal areas, as well as free local facilities for them. They will spend money all year around, they would free up housing in areas of high demand/employment and they have a lot of money to spend. Obviously, the above is only appropriate if you believe the housing shortage in the UK is a bigger issue than the current right/desire of people to own second homes with no financial impediment. Quote Link to comment Share on other sites More sharing options...
Salcombe Posted August 7, 2011 Share Posted August 7, 2011 Sorry got the last reply wrong. Social Engineering mediated by local or national property taxation will be a step to far for the UK population. The principle of a free market in residential property (and an expectation of a rise in this asset) is enshrined in our pschye, with a knowledge that there will be a generational transfer of the assets to families at death. In other words, people want to personally enjoy and then control that transfer of wealth rather than entrust it to government (council or Parliament) through increased taxation. Land value taxation may well be progressive (i.e. fairer in terms of redistribution of wealth), but it could well diminish the total wealth of a country in a global market. It could act as major disincentive for relocation to the UK. New companies coming to the UK are already now headlines such is their rarity. Senior executives are not immune from calculating their own tax profile as well as their companies. A property tax could be highly damaging. Second home taxation at punitive rates has an initial attractiveness but the implications need to be thought through. A similar arguement on commercial rates took place in the last government and was carried on by this one - the result was / is a reduction in rates to promote activity and support small businesses. Furnished Holday Lets may feel different but the associated income is very substantial for certain uber-resorts. Quote Link to comment Share on other sites More sharing options...
libspero Posted August 7, 2011 Share Posted August 7, 2011 (edited) Social Engineering mediated by local or national property taxation will be a step to far for the UK population. The principle of a free market in residential property (and an expectation of a rise in this asset) is enshrined in our pschye, with a knowledge that there will be a generational transfer of the assets to families at death. In other words, people want to personally enjoy and then control that transfer of wealth rather than entrust it to government (council or Parliament) through increased taxation. When you consider that council tax is already based loosely on the value of properties (as opposed to the services consumed), then this social engineering already exists. Given that the vast majority of the population don't own second homes, I imagine any form of punitive taxation would be relatively easy to pass (politics of envy). Which leaves us back at the question of whether it is actually a good/productive thing or not. Land value taxation may well be progressive (i.e. fairer in terms of redistribution of wealth), but it could well diminish the total wealth of a country in a global market. It could act as major disincentive for relocation to the UK. New companies coming to the UK are already now headlines such is their rarity. Senior executives are not immune from calculating their own tax profile as well as their companies. A property tax could be highly damaging. I'm not sure there is any evidence for that. I'm not an LVT convert yet, but many countries have property taxes instead and do very well despite it. Germany, USA, China.. all have property taxes. The Chinese even have property taxes specifically targeting second homes. Second home taxation at punitive rates has an initial attractiveness but the implications need to be thought through. A similar arguement on commercial rates took place in the last government and was carried on by this one - the result was / is a reduction in rates to promote activity and support small businesses. Furnished Holday Lets may feel different but the associated income is very substantial for certain uber-resorts. I agree that it needs to be thought through. If such a policy proved to reduce seaside resorts to baron, employment free ghost towns then there would be no benefit. The only point (as far as I'm concerned) in taxing second home ownership is to incentivise the freeing up of housing stock at a time when we have a national housing crisis. The alternative I guess is to allow the building of new housing estates up Bonfire Hill and Shadycombe Road. Otherwise we are just socially engineering a forced local housing market Edited August 7, 2011 by libspero Quote Link to comment Share on other sites More sharing options...
Lone_Twin Posted August 7, 2011 Share Posted August 7, 2011 A better solution than punitive taxation would be massive relaxation of planning restrictions. If there is a great demand for something in a place no person should hinder it's supply. Building a small home costs diddly sh11t and if "planners" and other non productive busy bodies stood aside the market would provide. As it is, expensive regulation of plan, design and build ensures councillors and their land owning or developer mates stay fat on the back of artificially restricted supply. With the added benefit that it keeps the locals weak and needy begging for handouts like HB. "Thank goodness for the council" they all wimper. Suckers. Quote Link to comment Share on other sites More sharing options...
Tiger Woods? Posted August 7, 2011 Share Posted August 7, 2011 This proposal fell at the first hurdle at the recent South Hams Council meeting. It can never be right that a Council demands an arbitrary tax for less service (i.e. second home owners do not use social services or education, the largest council tax beneficiaries) from any sub-group of society especially on the pretext that they have to pay to them for a particular privilege (as the highly dubious, previously suspended Council Brazil put it). The privilege in this case (a second house) was paid for, alongside Stamp Duty, out of post-tax income for most. Councils are not there to layer extra tax as some form of society pay-back on an asset. Not quite so clear to me. I think you are missing the externalities imposed upon the local community. Second homes mean that excess infrastructure has to be maintained (e.g. roads, school catchments need to be bigger requiring more transport for kids that would otherwise be able to walk to village primary etc i.e. at minimum should pay full council tax) , local businesses are not being frequented on a day to day basis (less business tax take; loss of employment meaning greater burden on council etc.), house prices maintained at a higher level (hence increasing cost of council housing/housing benefits) which is the argument for the super-tax. Quote Link to comment Share on other sites More sharing options...
mightytharg Posted August 7, 2011 Share Posted August 7, 2011 Land value taxation may well be progressive (i.e. fairer in terms of redistribution of wealth) I don't think that word means what you think it means. Quote Link to comment Share on other sites More sharing options...
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