The housing market has reached the top of the 18-year cycle and is now going into reverse, as widely predicted.
Next time, can we wait 'til the bottom of the market and replace Council Tax, Stamp Duty Land Tax, Inheritance Tax, Capital Gains Tax and the TV licence fee with a fiscally neutral Progressive Property Tax (like in Northern Ireland or Denmark) as a small fixed percentage* of the current market value of all residential property** and then gradually turn this into Land Value Tax by exempting the first £100 per square yard and charging a higher percentage on the balance, then exempting £200 per square yard, and so on? Puh-lease?
This will act like a higher interest rate on land values, so dampening house price bubbles (and hence credit bubbles) in future.
* as to the precise rate and why pensioners will be able to afford it, see my comment in reply to ChrisC's.
**this is easy to calculate. HM Land Registry already know how big each plot is, and in each postcode sector there are about fifty or a hundred sales each year, they can work out what the average price paid per square yard is, and everybody gets a PPT bill of average value for his postcode sector times plot size in square yards.
Tuesday, 2 October 2007
UK house price crash - here we go again!
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7 comments:
How small a percentage do you have in mind?
My concern is that my mum, say, who has lives in a now fashionable and expensive (per square foot) seaside town might be forced to move from the (not large but not small) house in which she has lived for 30 years.
ChrisC, the rate would be whatever is fiscally neutral to replace that list of taxes I mentioned.
So as at today's date it would be just under 1%. If house prices fall by a third, then the fiscally neutral rate would be 1.5% and so on.
And of course, pensioners would not have to pay up front, they will be able to roll up PPT (at low or no interest) to be repaid on next transfer (death or sale) which is why Inheritance Tax has to go, to make it as fair as possible.
Or if they are prepared to haggle, they can ask their heirs to pay it in exchange for one day inheriting the house, and so on.
"average value for his postcode times plot size in square yards"
I like the sound of "plot size" as I live in a 6 storey house...again, though, does this mean that a house with a garden twice the size of the neighbour's would pay (circa) twice as much even though the market value of the houses might not vary much at all?
And why, if such a good idea, wait until the bottom of the market (assuming you know when that is at the time!) to implement?
1. That's the beauty of the system - people in flats would pay relatively small amounts, but flats are, in environmental terms, the best kind of housing.
2. And vice versa for somebody with a large garden. If the extra bit of garden is not adding value, then you should squeeze another house onto it.
3. Heaven knows why they don't do it. But we LVT-ers do take heart from the fact they have it in Northern Ireland (albeit without the rolling revaluations).
4. You can easily tell the bottom of the property market - it's when prices fall to about 3 times average earnings, as has happened three times since the early 1950s (follow the second link in my post).
5. And we can't do it now, because prices are going to fall, and people will blame it on the PPT, thus getting it a bad rep from the start. Interestingly, after they announced it was coming in in Northern Ireland, prices rose at the fastest rate in the whole of Europe
Mark, you're being naive.
Socialism poisons everything, so in the event of such a system being adopted in the UK, it wouldn't be fiscally neutral: it would be carefully biassed to favour Labour-voting areas, and would be used as (yet another) cosh to attack the middle class.
I favour keeping things as they are, because any new system is boud to be worse, perhaps much worse.
it would be carefully biassed to favour Labour-voting areas, and would be used as (yet another) cosh to attack the middle class
Labour councils spend twice as much as Lib Dem or Tory ones, yet their Council Tax is lower. Why? Because Nulab central government gives them far more central grants, which make up 80% of local government spending (if you include Business Rates).
I don't see how it would be any worse than that!
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