Per David Cameron in today's Metro "... that housing is so unaffordable to young people is partly to do with his ... rampant council tax".
Completely and utterly wrong. Council tax doesn't make much difference - as we all well know, houses are cheaper in areas where council tax is higher. So the first time buyer is paying less on the mortgage but more in council tax. A higher council tax depresses house prices.
One of the reasons why Land Value Tax is the least worst tax.
Dismayed
2 hours ago
2 comments:
It doesn't make much difference, for the simple reason, you pay council tax anyway as a tenant. Monthly outgoings have little/no effect on whether or not people buy- in fact usually, the monthly mortgage payment on a property is less than it would be to rent the same property.
Yes, legally a tenant pays Council Tax. But economically the Council Tax is borne by the landlord...
Imagine two landlords letting two identical properties, one on one side of a street (side A, which is in a borough with a very low council tax of £50 per month) and one on the other side (side B, in a different borough with a very high council tax of £200 per month).
If you are looking to rent, and know that the rent on Side A is £950 a month, you know that your total housing costs are £1,000 (£950 rent plus £50 Council Tax).
How low does the landlord on side B have to reduce his rent before you would consider renting on side B?
Answer = £800. Think about it.
The increase in Council Tax between side A and side B is borne by the landlord, the property owner. Not by the tenant.
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"monthly mortgage payment on a property is less than it would be to rent the same property"
This is quite simply not true. Most recent BTL-ers are running a cash loss every month; their mortgage repayments are higher than the rent they get (once you net off insurance and the like).
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