Stamp Duty

[drplokta]

Apparently, the Tories have decided to raise the stamp duty threshold to £250,000 for first-time buyers only. Can anyone come up with a workable definition of a first-time buyer for purposes of this policy (remember that the taxman can't ask to see documents more than seven years old)?

Comments

[timill]

It's a policy. It doesn't have to make sense.

[fjm.livejournal.com]

Can anyone find a house in London for less than 250,000?

[drplokta]

There are over 15,000 properties currently for sale in London for less than £250,000.

[erikvolson.livejournal.com]

Amazing how you know that. It's as if you have multiple datacenters with most of the information on London's real estate at your beck and call.

[hawkida.livejournal.com]

What's that got to do with anything? How many first time buyers want to buy a house in London?

And anyway, look at Rightmove - search for a property in London ordered by price and there's a lot before you hit the 250k mark. Admittedly many are flats or maisonettes, but the mortgages and stamp duty issues are the same.

[fjm.livejournal.com]

Actually, I work with lots of Londoners, our admin staff, and many of them or their children in their twenties are priced out of the property market. What many of them have realised is that the problem with buying a flat is that the price differentials between flats and houses are opening up so wide, that a flat is not necessarily a good "first buy", particularly if they are planning family.

[hawkida.livejournal.com]

Depends on the size of the flat. If it's one bedroom, sure. But plenty of families are growing up right now in flats all over the country. And some of them are in places where a flat costs a hell of a lot less than in London. London's expensive, but that doesn't mean Londoners necessarily deserve preferential treatment.

[darth-tigger.livejournal.com]

I'm wondering what happens if a couple buys a house where one of them is a first time buyer but the other isn't.

[ang-grrr.livejournal.com]

Don't be silly: in the brave new conservative world people won't buy a house until they are *married* and able to afford to *raise children*. Nobody will be single or, dare I say it, *divorced*.

[redbird]

Nor yet widowed, I assume.

[ang-grrr.livejournal.com]

Of course not. The conservatives are abolishing death to remove the threat of inheritance tax.

[grahamsleight.livejournal.com]

Dunno. But I believe there are a number of pre-existing schemes in the housing market (eg buy/rent deals, places for key-workers) only open to first-time buyers.

[purplecthulhu.livejournal.com]

Someone who has not paid stamp duty on a house purchase before? Surely there are records of this?

[drplokta]

But if first-time buyers are to be exempt from stamp duty, then when they come to buy again they won't have paid stamp duty on a previous house purchase. And what about all the people who currently own houses that they bought for less than the stamp duty threshold? And how do you tell that the Miss A Smith who paid stamp duty on the purchase of 3 Acacia Avenue in 1985 is or is not the same person as the Mrs A Jones who currently resides at 5 High Street and is buying 1 The Meadows (apart from a national ID card scheme, which as well as its other problems can hardly be made retroactive)?

[drplokta]

Also, what about people who have previously owned houses in other countries, on which they have presumably not paid UK stamp duty?

[purplecthulhu.livejournal.com]

Clearly they've not paid stamp duty in the UK, so would qualify. There are always loopholes, why obsess about them?

[purplecthulhu.livejournal.com]

Presumably there will be a record that person X has claimed this tax relief so that they can't claim it again. There are already plentiful ID checks when buying/selling a house (passports are very useful for this) so I don't think an ID database is required, even if it did work.

No system can be made perfect, so we shouldn't assume that can be done here. Obviously avoidance of stamp duty through fraudulent claims of being a first time buyer will be a crime. So it's rather like any other form of tax relief, isn't it?

[bohemiancoast.livejournal.com]

Well, even if they could work out who the first time buyers were, which they can't, this policy is still complete pants. Ooh, inflationary subsidies in volatile markets! So, say you now save £4,000 stamp duty; ooh lookie, the house you were interested in has gone up in price by £4,000 overnight, because everyone who fancies it can now afford an extra £4,000.

Oooh, cliff edges! Suddenly huge numbers of houses cost £249,999.

Ooh exciting family destabilisation, because *nobody* buys a house jointly ever again in a world with this policy. Perhaps not even in a world where this policy has been suggested as a possibility.

And let's not forget that we still aren't doing anything about the fact that £250,000 will buy you a damp-ridden two-bed maisonette in London, or a small mansion in Bootle.

No. Total carp.

A better, but still shit, policy, would be to up the value of the children's bonds but lock them down to houses only.

[drplokta]

You can't save £4,000 in stamp duty because the most you can currently pay on properties under £250,000 is £2,499.99. There's already a big cliff-edge encouraging houses to be priced under £250,000 (£7,500 payable on a £250,000 house; £2,499.99 payable on a £249,999 house), so it probably wouldn't make things much worse.

The inflationary subsidy is not quite as bad as you make out, because second-time buyers and buy-to-let investors don't get the subsidy, so this would improve the relative position of first-time buyers against other groups.

It's certainly true that this will stop two people from buying together and using up both first-time buyer discounts, even if they're married (unless they exempt a couple up to £500,000, which might get some uptake in London).

[fishlifter.livejournal.com]

buy-to-let investors don't get the subsidy

M's suggestion over breakfast was that if this were coupled with an increase in stamp duty for anyone buying a second home or buy-to-let, it might help with house price inflation. Economists may be able to tell me whether that would work, but sadly I think everyone will first recognise the politics of why it won't be happening.

[del-c.livejournal.com]

say you now save £4,000 stamp duty; ooh lookie, the house you were interested in has gone up in price by £4,000 overnight, because everyone who fancies it can now afford an extra £4,000.

More generally, that's the reason I'm a Londoner who is against London Weighting. All it does is drive up the price of groceries.

[fishlifter.livejournal.com]

To be fair this is a criticism of the news story rather than Conservative policy, but I was entertained by the reporting that:

'The new policy announcements are also expected to include tax breaks for families with children worth up to £2,000 a year.'

Should we expect a new Child Valuing Agency?

[nuttyxander.livejournal.com]

Total chocolate fire-guard territory.

If you want to sort out first time buyers allow them to defer paying off student loans to give young professionals more money to afford mortgages (or write them off).

Also, just build more bloody housing. And improve the standards in the outstandingly crap UK rental sector, especially in London.

All this talk of environmental measures on homes seems to assume that no-one rents and/or that people who rent won't want cheaper energy bills. How can I as a tenant ever hope to get double glazing or insulation in a home when anything equipped like that is creamed off to be sold rather than rented?

(ceases rant and goes off to use remaining working shower)

[andrewducker]

Bah. Taking the cliff edges out would be much more useful.

Easy

[surliminal.livejournal.com]

.. someone who hasn't bought a house for seven years. (Or more recently but not in the UK.)

[alexmc.livejournal.com]

I hate to say it but the only workable way I can see is to ask the credit agencies whether this person had a mortgage. However I can see lots of problems with that approach - and isnt one I recommend.