This Might Be The Stat That Finally Changes Sentiment On Hpi

[Simon Taylor]

Today's FT reports on a study that articulates the greater cost of high housing costs.

https://next.ft.com/content/6fe16224-0ad6-11e6-9456-444ab5211a2f

Behind a paywall, but here's the main thrust.....

Rising housing costs have had the same effect on disposable income as adding 10 pence to the basic rate of income tax, according to new analysis by a think-tank.

[goldbug9999]

Its funny how it take the orthadox economist commentators and "experts" about a decade to see what whats been blindingly obvious to the average HPC denzien.

[dgul]

Today's FT reports on a study that articulates the greater cost of high housing costs.

https://next.ft.com/content/6fe16224-0ad6-11e6-9456-444ab5211a2f

Behind a paywall, but here's the main thrust.....

Rising housing costs have had the same effect on disposable income as adding 10 pence to the basic rate of income tax, according to new analysis by a think-tank.

And it really is a tax - because houses are worth more, the government can extract that wealth through claims on the home for paying for care for the elderly, etc - the young are paying for the care of the elderly through this strange function. It would be fairer to have normal house prices (whatever that means) and for all taxpayers to pay for care etc.

[Simon Taylor]

And it really is a tax - because houses are worth more, the government can extract that wealth through claims on the home for paying for care for the elderly, etc - the young are paying for the care of the elderly through this strange function. It would be fairer to have normal house prices (whatever that means) and for all taxpayers to pay for care etc.

And yet these magic capital gains that homeowners are gifted by the state's perverse interventions in the housing market are taxed incredibly lightly.

The argument against IHT is that the money has already been taxed but when it is housing assets which make up the estate - and in the majority of cases it is - the windfall has not been taxed. What is taxed, and taxed heavily, is the income earned by the people buying the probate houses, geared up to fund a mortgage.

[winkie]

As all that most hold of value is the home they live in, other than that living hand to mouth...asset rich cash poor, they are not in a position to avoid paying IHT by giving away lump sums or putting wealth into tax effective trusts and the like, few have been given tax saving knowledge anyway......the working middle classes therefore pay the most tax over a lifetime in proportion to their earnings and hpi of their home.... Ultimately may have to sell the family home to pay taxes due. If not before to pay care home costs.

[Simon Taylor]

As all that most hold of value is the home they live in, other than that living hand to mouth...asset rich cash poor, they are not in a position to avoid paying IHT by giving away lump sums or putting wealth into tax effective trusts and the like, few have been given tax saving knowledge anyway......the working middle classes therefore pay the most tax over a lifetime in proportion to their earnings and hpi of their home.... Ultimately may have to sell the family home to pay taxes due. If not before to pay care home costs.

Then perhaps IHT needs to be abolished and the recipients of the windfall taxed at the same rate as earnings.

We need to do something to suck some of that capital gain out of the system otherwise a lot of it gets put back into housing and prices continue ever upwards. This in turn dilutes the value of the earnings of those not in receipt of inheritances (they pay a greater proportion of income on rent or mortgage payments) and increases our benefits bill. As the article states, this is in effect, a tax increase.

[frederico]

Its funny how it take the orthadox economist commentators and "experts" about a decade to see what whats been blindingly obvious to the average HPC denzien.

It's scandalous

[pig]

Doesn't it make sense comparing it to general inflation ?

[R K]

Res foundation source

http://www.resolutionfoundation.org/media/press-releases/rising-housing-costs-since-the-1990s-equivalent-to-10p-increase-in-basic-rate-of-tax-for-a-typical-family/

Lindsay Judge, Senior Policy Analyst at the Resolution Foundation, said:

“The share of income working people spent on housing was fairly stable throughout the 90s and early 2000s. But spiralling house prices and stagnating wage growth created a growing wedge between housing costs and incomes, which peaked on the eve of the crash.

“Falling housing costs helped soften the living standards squeeze for many households during the downturn. But these costs are rising again and risk holding back the living standards recovery. This is particularly the case in London where any benefit from rising incomes is being wiped out by steeper housing cost increases.

“There is a risk that housing could do to future living standards what falling earnings did to recent living standards. Avoiding this will require decisive policy action over decades to get housing costs back under control.

“The government must be more ambitious. It should look beyond simply giving a few people a leg up onto the housing ladder and tackle the bigger issues of supply that is the root cause of rising housing costs. As home ownership moves out of reach for ever more families the government should also reform a private rented sector that is simply too insecure for many finding themselves dependent on it.

+1

[TheCountOfNowhere]

Amazing...Primary School Arithmetic still works. Who'd have thought it.

[“Nasty Piece of work”]

There will not be any change in sentimeñt until it is "Boomer cat food Curry Night". It is driven by greed, and any change will be driven by pant filling terror.

[Inoperational Bumblebee]

Google link for non-subscribers.

[bluegnu]

Hitting the mainstream media now too, not just tucked away on the FT...

http://www.dailymail.co.uk/wires/pa/article-3558611/Rocketing-housing-costs-equivalent-10p-tax-rise.html

[stuckmojo]

DM not accepting comments. Figure that

[TheCountOfNowhere]

There will not be any change in sentimeñt until it is "Boomer cat food Curry Night". It is driven by greed, and any change will be driven by pant filling terror.

Brilliant and correct

[Executive Sadman]

And yet these magic capital gains that homeowners are gifted by the state's perverse interventions in the housing market are taxed incredibly lightly.

The argument against IHT is that the money has already been taxed but when it is housing assets which make up the estate - and in the majority of cases it is - the windfall has not been taxed. What is taxed, and taxed heavily, is the income earned by the people buying the probate houses, geared up to fund a mortgage.

iht imo is about the furthest you can get from double taxation in a tax.

VAT is tax on spending money that has already been taxed. The same person pays that tax, ergo it could be argued he has paid tax twice on that money...double taxation.

IHT isnt double taxation because the beneficiary is a different entity to the person who has earned it and paid tax on it. Personally I'd treat IHT as the same as any other income the beneficiary recieves.

[canbuywontbuy]

Equivilant to an extra 10p of income tax but it's not included in inflation figures. FFS.

[mattyboy1973]

More from Shaun Richards:

https://notayesmanseconomics.wordpress.com/2016/04/26/the-bank-of-england-has-squeezed-disposable-income-by-inflating-housing-costs/

FLS has a lot to answer for. Not only did it drive down mortgage rates, it also hammered savings rates as the banks could get the money cheaper elsewhere. A triple whammy, hurting savers, helping to drive the boomers towards BTL due to the crappy savings rates and igniting house prices on the back of cheaper mortgages.

[LiveinHope]

Equivilant to an extra 10p of income tax but it's not included in inflation figures. FFS.

Well, it enables Cameron to stand up at PMQ and champion the Government's success at delivering 0% inflation for the benefit of the hard working family - although I thought the target was around 2%

But also perhaps, because to do so would stop the downward pull on public sector pensions now linked to CPI. Many of my colleagues with preserved public sector pensions are rather despondent at their 0% increase this year, which was calculated based upon the CPI for last September, which was -0.1%.

The latter might further fuel property as a retirement investment drawing more suckers in.

[darkmarket]

Also covered in the Sun: http://www.thesun.co.uk/sol/homepage/news/politics/7105336/Families-pay-1500-more-on-cost-of-living-than-in-1995.html

You could just take my word for it, don't feel obliged to give them any more page views...

[iamnumerate]

Today's FT reports on a study that articulates the greater cost of high housing costs.

https://next.ft.com/content/6fe16224-0ad6-11e6-9456-444ab5211a2f

Behind a paywall, but here's the main thrust.....

Rising housing costs have had the same effect on disposable income as adding 10 pence to the basic rate of income tax, according to new analysis by a think-tank.

I doubt it, if you bought before the rise you are sorted and most people don't care about others - including their own children. (BTW I do care).

[interestrateripoff]

10 p seems a rather flat figure. I'm guessing the lower down the income scale the higher the figure and effect?

Still what can go wrong with ever higher house prices.

[iamnumerate]

10 p seems a rather flat figure. I'm guessing the lower down the income scale the higher the figure and effect?

Still what can go wrong with ever higher house prices.

I would guess it is more of a problem for younger people rather than older and more relevant than the income scale.

[stuckin2up2down]

Is that it?

Not a particularly shocking stat.

Something more like the average 20 something working full time spends 70% of net income just on rent. I imagine the real stat isn't far off it.

[TheCountOfNowhere]

http://www.bbc.co.uk/news/uk-scotland-36141597

Scottish house prices have dropped by nearly a tenth and sales have reached their highest volume in almost a decade, official figures have shown.

The average house price has fallen by 8.4% to £159,198, according to new Registers of Scotland (RoS) statistics.