Thoughts On Morality has saved me the bother of ripping into today's hare brained idea.
I would just add that it's even worse than he says. Let's assume our potential FTB has £20,000 cash saved up for a deposit. If he can launder this via a pension fund, he will get £5,000 tax relief added to the fund (minus dealing charges and commissions), which he can then withdraw to pay a slightly larger deposit again (minus dealing charges and commissions) and if enough people do it, then this will merely result in slightly higher house prices.
Now, who's paying that £5,000? As usual, it is 'everybody else'. And who gets the benefit? The usual rent seekers, the pension funds and the Baby Boomers etc. who are selling up.
Clearly, if the idea were to catch on, the next logical step would be to allow any tax favoured pension fund to invest in housing, an idea which was mooted a few years ago but then shelved again (in a rare outbreak of commonsense by the previous government).
Perspective
1 hour ago
5 comments:
Comrade F, do you remember what buildings societies were really like, or are you too old?
You know, I somehow missed the whole thing about tax relief.
Next step - government offers to top up mortgage deposits by amount equivalent to tax relief?
RA, that would be the obvious next step, and the one after that would be to reintroduce MIRAS. And why restrict MIRAS to 15% or 10% the interest element on the first £30,000 of a loan? Why not full income tax and NIC relief on the entire amount of the payments, capital+interest? On first, second and third homes?
If they want to speed up the rate at which money is channelled from the productive economy to land owners, then this would be the way forward :-(
MW - I am starting to lose the will to live again. That prat Brian Brinley MP was on about this on Con Home the other day. I called his post drivel. He hasn't responded.
This seems like a very good idea politically. It pleases deluded would-be home-owners, who are more able to buy an overpriced house. It pleases Tory party donors in the construction industry as they get to sell more overpriced houses, possibly at even more inflated prices. It pleases the HOists who see their houses increase in value yet further. It pleases the banks as they get to sell more mortgages and finally, the gov't is seen to be "doing something" about the "housing crisis". What's not to like?
Mark, how long do you give it before the housing market receives the MIRAS touch again?
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