Anyone else in the South East worried about Andy Burnham bringing in a land tax?

[Beachbooks]

With it looking likely that Andy Burnhan will be the next PM, I was interested to see if anyone else in London / the south east were worried about potential tax raises specifically around the land tax rather than stamp duty ?

A lot of my friends who live locally are worrying that he will make the land tax for the South East so high in proportion to other areas of the UK that it will be financially very difficult to afford but then also extremely difficult to sell!!

BTW we have very standard house and garden but we live in an expensive area

"Desperate times"? People are still out spending (debt probably) like drunken sailors, someone from the 1930"s would have a heart attack on the spot if they saw how people live now.

Also, they can't take their properties with them. So moving to Dubai wouldn't help. You would need to sell your property to avoid the tax. Of course, this also applies to people currently living in Dubai (or anywhere) but owning expensive property in the UK. It's not the same as an income tax or wealth tax which tend to push people to live full time elsewhere while maintaining assets in the UK. So either...

1. Most people don't change behaviour or sell up. The government takes in the income expected
2. Many people owning the properties most affected either sell up and downsize to less expensive properties or sell up and leave the country all together. This has the impact of significanctly lowering house prices in the most expensive areas and for the most expensive houses in the rest of the country and the government doesn't get the revenue expected

Whether house prices going down in the South-East would be good/bad/neutral depends on your perspective. But lots of people would consider it a win.

I think 1% is very high mind and not realistic. My assumption is it's at that level because the people proposing it want to significantly lower taxes elsewhere. There is a very libertarian/antitaxation strand of thinking that wants land tax as an alternative to any other taxation including income tax. As opposed to those who see it as a way of raising revenue without increasing tax elsewhere while possibly also changing behaviour/reducing house prices inflation. I think Burnham and the people around him fit into the second category not the Libertarians.

Incidentally I think there is also a sizeable amount of young "London Professionals" who would not be heartbroken if house prices in the capital fell or at least stopped increasing so fast.
The only person I know who moved to Dubai (a highly educated well paid professional) did so partly because house prices and the cost of living were so high in London that even on their salary they didn't feel rich. Plenty of dynamic young people paying high income taxes and unable to afford a house to raise a family in would support the change I think. And those are the people we don't want leaving the country.

Depends what you categorise as "dynamic" I suppose, but lots of people would welcome a full on property crash in London.

Only those who don’t understand the very real potential for an economic fall out across the country

The eventual benefits will be far greater, the bit you are missing is that the banks need to lend on mortgages, a crash benefits them as there will be a flood of new borrowers, people with mortgage debt will just get to pay over 50 years if they lose a job,at the moment mortgage lending is down to about half the historical average? Eventually enough people get priced out of an economy and it has to collapse into something new.

I think gradual decrease in property prices would be less damaging to the economy. Or whatever the outcome of all of the people currently holding London property investments while living overseas selling said investment.
That wouldn't happen because even a high tax (1% annually) on the value of the property wouldn't necessarilt mean it wasn't worth keeping. But "rich people will sell their London investment properties" isn't exactly a doomsday scenario.

I mentioned dynamic slightly sarcastically. But what I meant was even people who would be considered very high wage, the kind of people that the right are always warning will leave the country, are struggling to buy properties in London. If course it's even worse for people on average wages. But the only people invested in high London house prices are the super-duper rich or those that already own properties (who are either older or in the super-duper rich category).

Very true, you can"t move the property, that is why it is such a sweet tax target, the problem arises thought that because we have created such an unequal society regarding property ownership many people in large house are in their 90"s and might not have the income to pay a hefty property tax, the young professionals could pay it but they are priced out of decent property by the actions of the big banks that many of them work for!

I posted a link recently about the high end stuff taking a big hit due to stress in private credit/hedge fund circles, people were trying to offload to cover other positions etc. obviously they could have property in two or three countries and decided to get out ( try to get out) of the big London bubble first? If AB puts his Robin Hood tights on and gets serious this trend could accelerate?

Property needs to be as detached from the real economy as possible, it is a shelter, the place where you live while you contribute to the real economy.

Which doesn’t mean it should be a tax haven.

It shouldn"t be expensive and it shouldn"t be taxed.

If Burnham’s devolution works out you’d get a gradual decrease in London. As other places retain people or attract them.

He should stick to that over making London more inaccessible.

The problem is, that only part of the reason for London's house price is it's outsized role in the UK economy. The other factor is simply the self-reinforcing fact that it's a good investment. Which attracts buyers from China, Russia, The Middle East etc. They might never even visit their properties let alone live there. There are other parts of the UK with struggling economies but very high house prices, pricing locals out (eg parts of Cornwall) due to tourism/second homes. Prices falling could also help those areas.

Of course, taxing land value could also supress the emergence of London-like property bubbles emerging elsewhere if he is successful in rebalancing the economy. Which is another good reason for it.

If it was 1% it would add about 25% extra tax to our band C £280k, fairly average value house I doubt that would go down well.

I just want to clarify that being concerned about young workers leaving the UK is not at all a right wing point, whatsover. It is a concern born by economics and the demographic crisis which is urgent and acknowledged in many other European countries, where they are doing all they can to value and retain the younger working generation.
Whereas here we have the misselling of student loans, younger generation pay taxes through their noses if good earners and if they get a property tax that is higher than stamp duty would have been, it will deter even more of them. They aren’t stupid.
Like I said I think it is 40% of Londoners born abroad so many of the younger generation are dual nationals. I am not convinced the second generation EU lot will move to another part of the UK, I really doubt it.

https://www.gov.uk/government/statistics/income-tax-liabilities-statistics-tax-year-2022-to-2023-to-tax-year-2025-to-2026/bulletin-commentary#table-22---number-of-individual-income-tax-payers-by-country-and-region

When you look at the HMRC tables, the particular thing to note is that the percentage of people falling into the higher rate has doubled very quickly with fiscal drag. Combo Tories and Labour and also higher percentage in the additional rate due to the lowering.

The psychological effect of that is that there is very low tolerance for additional taxation, in any shape, or form amongst those now in those brackets.

The only property tax he would get away with would be one that is fiscally neutral for most or even a saving. And it better not be missold to young people like the student loans aka told one thing that it will be cheaper than paying stamp duty up front, and work out the opposite in the long run due to future governments tinkering with it and retrospectively increasing it!

I agree
but
a fairly average house in one area of the country costs vastly different in another
A small 3 bed terrace straight onto the street, flat fronted ie classic small cottage in my area if £400k and we are not London
Thats a £4000 Council tax for 92m2

A four bed detached ( plus some semis ) is £860k and 165m2 that would be £8,600 council tax ( more than double the current tax )

A lot of people would be completely priced out whilst just trying to live in their homes

I see that point.
But how many of the younger generation living in and working in London/the South East actually own their homes and would be faced with having to pay land tax? In the UK as a whole 35%of adults between 25-34 own their own homes, and 14%of adults under 24. Which is about the same as before the 2008 crash. But in London (where houses are most expensive and therefore the LVT is the biggest problem) that number is much smaller. So actually, the amount of the younger generation who would find that property taxes were higher than stamp duty etc would be small, even if you only include good owners. In particular if you used the income from property tax to slightly lower the income tax burden, or lesson some of the cliff edges most younger people (even higher earners) would be better off. Since younger people are more likely than most to have high wages than a lot of property assets.