Stamp Duty : £9,000. Guvmints are evil. FACT.

[Cort Haus]

Having spent over five years of scrimping, saving and sacrificing almost every pleasure to raise a good deposit to buy a flat here in London's ever-escalating nightmare of a property market, we now find that our potential home will cost a 'stamp duty' tax of £9,000 on the flat's cost of £295,000.

What a kick in the head. Do other countries have such punitive taxes on buying property?

[Spiffor]

How is a 3% tax "punitive"?

My sales tax is 6 times higher than that. And in 2007, Germany will add 3% on all its sales tax (which is already fairly high).

The really punitive thing is the price of property in London. If the prices were somehow connected to reality, the taxes would be pretty small.

[Cort Haus]

Of course it's punitive, Spiff. Stop making excuses for the bandits. How long does it take you to earn £9,000 equiv?

(rhetorical question, btw - I wasn't being nosey)

[Spiffor]

Originally posted by Cort Haus
Of course it's punitive, Spiff. Stop making excuses for the bandits. How long does it take you to earn £9,000 equiv?

30 times shorter than earning 300k.

I'm not sure to make £ 300k equiv during the length of my carreer.

[Cort Haus]

Goverments can't set market rates for property without effectively nationalising the entire economy, but they can set tax rates.

[Krill]

House prices are about double what they were 4 years ago though, and no change in Stamp duty thresholds. So this really is nothing but the gov'mint being greedy.

[Spiffor]

Originally posted by Cort Haus
Goverments can't set market rates for property without effectively nationalising the entire economy, but they can set tax rates.

Governments can actually do something about prices, even in a free market. The mechanism is not to forcibly set a price. But it is to weigh on supply and demand.

For example, your government could raise the height-limit on buildings in London, and you'll get plnety of new flats built in inner London in little time, by private investors.

The government could also have a voluntary policy of building council housing and student's housing (publicly), so that there isn't as much demand-pressure.

Another possibility, the government might use its sway to develop non-London cities and making them attractive, so that some of the excess population from greater London goes north, thus further alleviating the demand-pressure.

There are plenty of ways for property prices not to be ridiculous, even in a market economy where private actors freely set their price.

But a proportional tax of 3% isn't punitive. Or more accurately, it is only punitive when you're buying something of vital necessity whose market price is punitive already. In this case, it's more urgent to fix the market rather than the tax.

It is very likely that your flat's market value will increase by more than £9000 pounds in the near future anyway. Housing prices have grown by 15% in "prime london" these past twelve monthes. If they grow at the same rate, these £9,000 are what you'll pay extra if you buy your flat in February.
I think this kind of inflation is much more "punitive" than a tax. Especially a tax that is 5 times smaller than the average VAT.

[Cort Haus]

I agree that the Govt could do things long term to deal with the housing crisis. One thing would be to allow much-needed development on the so-called 'green belt'. This takes time, however.

Bringing property purchase tax into line could happen overnight at any budget, though. This would help treat the symptoms of the pain, if not the root cause.

[Kuciwalker]

Or more accurately, it is only punitive when you're buying something of vital necessity whose market price is punitive already.

Housing doesn't count?

[Spiffor]

Originally posted by Kuciwalker

Or more accurately, it is only punitive when you're buying something of vital necessity whose market price is punitive already.

Housing doesn't count?

Yes it does, that's the point. Housing is a vital necessity, and the market prices it way too high. That's the actual problem.

As it is, if the government removed the tax, it would save the buyer a paltry amount of money: about two monthes worth of inflation. And obviously, a middle-class family has trouble saving £4,500 a month for the sole aim of buying housing.

[DanS]

Re: Stamp Duty : £9,000. Guvmints are evil. FACT.

Originally posted by Cort Haus
Do other countries have such punitive taxes on buying property?

I don't recall having a tax of such magnitude. Can't you just roll it into your mortgage?

[Cort Haus]

Re: Re: Stamp Duty : £9,000. Guvmints are evil. FACT.

Originally posted by DanS
I don't recall having a tax of such magnitude. Can't you just roll it into your mortgage?

I suppose so - depends how it goes when we apply for the mortgage. The lending rules have just changed and it turns out we could probably borrow more than we first thought.

[DanS]

Buying a house is one of those things where you just have to hold your nose for all of the fees and taxes.

Everybody gets a piece of the action.

[Kuciwalker]

Originally posted by Spiffor
Yes it does, that's the point.

Then by your logic, the tax is punitive.

[Spiffor]

Originally posted by Kuciwalker
Then by your logic, the tax is punitive.

Yes, and the cause of that punitiveness is the gigantic housing prices in London. This is what has to be adressed, not the tax rate itself.

Because really, compared to all the money Cort is gonna shell out, that tax is puny. Remove it, and you barely solve what really matters to Cort: the amount of money that goes out of his pockets for a flat.