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This suggestion will not surprise many on this forum. I suspect it is the first of many "helpfull" suggestions to come, for the housing market....

Surely if the elderly asset rich are downsizing, then they can afford to pay stamp duty from the released equity?

https://www.thisismoney.co.uk/money/mortgageshome/article-8479463/Cut-stamp-duty-downsizers-property-bosses-urge.html

Cut stamp duty for elderly downsizers or the property market won't recover, top housing bosses warn the Treasury

  • EXCLUSIVE: Letter calls on Rishi Sunak to reform stamp duty as part of a new Help to Downsize housing scheme to support older homeowners 
  • Older people typically live in properties that are too large and unsuitable for their needs while young people struggle to find a home of their own 
  • More than half of the 15 million surplus bedrooms in the UK lie within the homes of older people

...In a letter addressed to Rishi Sunak, leaders from across the housing and retirement industries have pleaded for stamp duty to be waived for older homeowners who move to smaller, more suitable homes, thereby freeing up large family homes to those in dire need of more space.....

...At the same time, many homeowners in this generation have nearly all of their wealth tied up in their homes, leaving them cash poor but asset rich and faced with a stamp duty bill potentially running into tens of thousands of pounds if they want to move to a smaller property.

However, by downsizing to a cheaper home they would free up cash, whereas the buyer of their property would face an even bigger stamp duty bill.

...They say around a third of all older homeowners - 4 million people - report a desire to move to a more suitable property. Yet the UK has one of the lowest rates of moving among its over-65 population of all developed countries.

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8 minutes ago, ForGreatLager... said:

They managed to stump up the money for their Buy to Lets......

Yeah but house prices are falling now so they need free money

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7 minutes ago, Si1 said:

Yeah but house prices are falling now so they need free money

Perhaps they could stop spending so much money on cruises, golf clubs, viagra, Jaguars and Daily Mail subscriptions. Failing that, they could always go back to work. That fruit’s not going to pick itself.  

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1 hour ago, moonriver said:

Surely if the elderly asset rich are downsizing, then they can afford to pay stamp duty from the released equity?

https://www.thisismoney.co.uk/money/mortgageshome/article-8479463/Cut-stamp-duty-downsizers-property-bosses-urge.html

Why not tax property wealth? Higher tax (there is currently council tax, but this is quite low as a proportion of high value properties) for owning more valuable property would incentivise downsizing.

If you want to tax people who benefit from property wealth, you catch all of them with property wealth taxes. If you want to encourage efficient use of properties, property wealth taxes are much better than stamp duty. 

Stamp duty not only gives many wealthy property owners the choice of not paying by not moving. It penalises people who move (people who get a job in another region, who need a bigger house and can't build an extension, etc.).

A land value tax is probably the best option, though it could also be based on property value.

Is there any justification for stamp duty (aside from the surcharge for second properties, which should be much higher than 3%)?

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36 minutes ago, cbathpc said:

Jesus. They should just make the official policy ****** young people if this comes in

? That is the official policy...have you been paying attention?

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39 minutes ago, ucnvpe0 said:

Sadly, it's the kind of market manipulation I can imagine happening. It's crazy.

I love what's going on.

Basically house prices may well be tanking. Boomers are, for the first time, looking at cashing in their housing chips.

And they're faced with a dilemma. Either they avoid paying stamp duty (or having it levied on what they're selling, either way it's a cost) by simply not moving or downsizing. And maybe chase the market down. Or they have to bite the bullet and pay stamp duty. It's a money losing dilemma. And of course of they have already made a loss in their perceived house value then it's even worse. They cannot be allowed to lose money. They need guberment help goddamit.

Edited by Si1
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2 hours ago, moonriver said:

...At the same time, many homeowners in this generation have nearly all of their wealth tied up in their homes, leaving them cash poor but asset rich

Sounds like they're not asset rich if all the capital they accumulated in a working life was one house costing 3x single wage at the time of purchase. Two adults in the house, that's 80-100 potential wage-years between them and they only put 3 aside, even accounting for tax and interest that's 9 years of wages saved at most. Where did the rest of it go?

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2 hours ago, moonriver said:

Older people typically live in properties that are too large and unsuitable for their needs while young people struggle to find a home of their own 

So they want to downsize to what, the same houses that FTBs can’t afford? 

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35 minutes ago, Si1 said:

I love what's going on.

Basically house prices may well be tanking. Boomers are, for the first time, looking at cashing in their housing chips.

And they're faced with a dilemma. Either they avoid paying stamp duty (or having it levied on what they're selling, either way it's a cost) by simply not moving or downsizing. And maybe chase the market down. Or they have to bite the bullet and pay stamp duty. It's a money losing dilemma. And of course of they have already made a loss in their perceived house value then it's even worse. They cannot be allowed to lose money. They need guberment help goddamit.

Chasing the market down will be perfect for bringing reality and reflecting on sentiment.

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6 hours ago, Dorkins said:

Sounds like they're not asset rich if all the capital they accumulated in a working life was one house costing 3x single wage at the time of purchase. Two adults in the house, that's 80-100 potential wage-years between them and they only put 3 aside, even accounting for tax and interest that's 9 years of wages saved at most. Where did the rest of it go?

The economy depends on the majority of letting money slip through their fingers.  I never looked at it this way.  Wife & I have accumulated maybe 20 years of income into retained capital in property, pensions & savings.  Not as good as I thought it was, despite being exceptional vs the great unwashed.

No regrets,  I loved raising my boys who are both now well adjusted & kind men, but occasionally I muse on the millions I could have if I'd remained single & worked my money hard, somehow magically  gifted with knowledge at 20 I have now..

 

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8 hours ago, Dorkins said:

Sounds like they're not asset rich if all the capital they accumulated in a working life was one house costing 3x single wage at the time of purchase. Two adults in the house, that's 80-100 potential wage-years between them and they only put 3 aside, even accounting for tax and interest that's 9 years of wages saved at most. Where did the rest of it go?

Avocado bathroom suites, cheese and pineapple hedgehogs, teas-maids and hostess trolleys?

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1 hour ago, Timm said:

Avocado bathroom suites, cheese and pineapple hedgehogs, teas-maids and hostess trolleys?

Reminds me of the generation game with Larry Grayson.

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4 hours ago, hotblack42 said:

The economy depends on the majority of letting money slip through their fingers.  I never looked at it this way.  Wife & I have accumulated maybe 20 years of income into retained capital in property, pensions & savings.  Not as good as I thought it was, despite being exceptional vs the great unwashed.

No regrets,  I loved raising my boys who are both now well adjusted & kind men, but occasionally I muse on the millions I could have if I'd remained single & worked my money hard, somehow magically  gifted with knowledge at 20 I have now..

 

Tell me about it.

Two long time friends of mine, single no kids, retired. Not been in big money jobs except one, briefly.

Both worth minimum £3/4 m, including a basic small property each. One had c £500k cash until bought the place after retiring.

Also have a relative, got through a load of useless women down the years until married a businesswoman. Both now loaded, several homes too.

It's easy really, that's what amazed me. I'm on the path now, it's never too late.

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16 minutes ago, ForGreatLager... said:

It’s getting to the point that you’ll have to become a South American drug baron just to have a normal life!

Indeed. The young just don't have a work ethic anymore....

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2 hours ago, Si1 said:

Similarly, apparently, getting rid of the triple lock pension will be really bad for the young.... (?)

 

https://www.theguardian.com/commentisfree/2020/jul/03/scrapping-pensions-triple-lock-young-people

It's a weird article. He doesn't consider the possibility the pension policy may change in the future. He doesn't acknowledge that the young today are already going to start drawing their state pension later (at least 68, but possibly older). He doesn't acknowledge the possibility that demographic and economic changes might make pensions and healthcare costs increase significantly. 

He doesn't consider where the money will be transferred instead if the triple lock is removed. He makes the error of only comparing the young and old as pensioners! OK, young people might receive lower pensions in the 2050s onwards, but they will be beneficiaries of this money be transferred elsewhere (overall they will be better off even if their future pension income is lower)! Whereas current pensioners will lose out on the next few years of the triple lock and as they are nearing the end of life, they have less opportunity to benefit from the alternative uses of this money.

He refers to the "principle of the triple lock" but is there a principle? (It seems to me as unfair and indefensible as stamp duty) Why should the state pension increase by a minimum of 2.5%? I think the most sensible policy would be to move it in line with average earnings.

If pensions are too low, they should be increased. Once they are high enough they should rise in line with salaries.

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  • 415 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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