Thanks for listening, to see more of our work visit: www.ifs.org.uk Timecodes: 00:00 - Introduction 2:10 - How is housing taxed? 3:30 - Council tax 10:55 - Council tax single person discount 12:51 - Stamp Duty 20:40 - Tax, landlords and the rental sector 27:35 - Should landlords be taxed more? 32:30 - What is the government's strategy? 36:17 - Conclusion
One of the best podcasts I've heard from the IFS. Brilliant to hear a robust discussion with Tim challenging Paul of some of his views, would love to hear more of this kind of thing from you guys. I wouldn't call you guys an echo chamber, but it's only now I've realised that your podcasts generally have everyone agreeing with each other
Quite liked this, always a nice change of pace to have a guest that's not afraid to challenge others in the discussion. Not something I'd like to see all the time on here, but again a nice change of pace from what can sometimes stray towards the world's most inoffensive echo chamber! :D
Not heard of TIm before but great to have him disagreeing and challenging Paul on some of his views. You must get him on again soon! One of the best episodes yet!
The London problem isn’t due to a lack of housing in London, it’s due to a lack of good jobs elsewhere. Building more houses in London isn’t going to fix the issue, just postpone it. It’s gotten to the point that commuter flights (yes flights) to London are fully booked unless booked well in advance. We should be encouraging businesses to diversify their locations, it’ll be better for the economy as a whole. Stamp duty etc wouldn’t be as much of a problem if this was the case.
With hybrid working becoming ever more established, it should incentivise people established in their careers to move out of London, or at least within a two hour commute. However, that trend seems to be reversing, if anything, possibly because London has a cultural and social pull that isn't replicated in many other places.
The single adult discount is to deal with the little old lady whos husband dies. As with most of these things it is politically impossible to change. If you can't sell a poll tax and you can't sell means testing winter fuel allowances then you have no hope of introducing a "widow tax".
The guest commented that council tax hasn’t gone up as much as house values, which is correct. But Council tax has increased by 20 times in the last 30 years while income has only increased by about 4 times. These people are just looking for a way to increase these taxes. Council tax is double what it should cost!
The reason housing demand is higher in London, is due to economic distortions within the economy. Victorian Britain had a more equitable distribution of industry and trade. Centralised government has distorted demand and supply.
Did you know - even though we have a housing shortage, the tax system penalties the 2.8 million small private landlords if they try and build a house to rent it out? If they build a house, keep it, and rent it out, they make a loss. They have to sell it. Which means, even though we have 2.8 million PRS landlords, most of which are highly motivated by property - but all they can do it be in the market is buy someone else's house and rent it out. Which means in general, all power to 'Build to Rent' sits in the hands of the commercial landlords. Which is more likely to speed up house building - 2.8 million people wanting to build a couple of new houses locally so they can rent them out - or a few hundred companies going through the existing processes and all the flaws that we know of already?
A good episode but I was so disappointed that there was no mention of a Land Value Tax! I’ve been asking for it for so long, and here was an episode on property taxes… Ah well. Please could you do an episode exploring Land Value Tax? Every time I hear an economist talk about it they go all moon-eyed and wax lyrical about how brilliant such a tax would be, and then simply sigh and say it’ll never happen and then move on. Why is it brilliant? Why won’t it happen? I would love a deep dive on it.
Would probably run into the same problem as council tax; with out a date values and government's scared of the political consequences of triggering a revaluation.
@@roberthuntley1090 it would be less work to evaluate than council tax as it would be simply based on the land itself rather than building that are on it.
Stamp duty is why my wife and I won't move. We live in the SE and our home is worth a lot and the stamp duty on a move is more than I'm prepared to pay.
Tax is not linear, raising taxes doesn't give you more money, the recent tax increase of section 24 for landlords now raises less tax than it did before
Terrifying to hear the ease with which you want more tax. Why not less spending? If you tax my house based upon its “value” do I get a rebate when the price drops (in real terms)? Will you compensate for maintenance and insurance and int rate northeast payments? Madness
Absolutely agree These three old farts don't want to give up their pensioners lifestyles. They didn't make enough kids and allowed the nation to get old Rather than stay competitive and dynamic they want to keep their entitlements and just tax the young more and more
The decimation of council housing stock removed it's stabilising effect on the capital risk of housing. The Danish solution is to insure against intrest rate and house price drops which adds to the cost of the mortguage. Balancing out council tax with a land value tax would solve most the issues with the system by it targeting the parties most able to pay.
My cottage in Republic of Ireland which I recently sold, had a council tax of €120 euro pa, in total. Compare to the council tax in Farnham, Surrey, which is like paying a mortgage that can never be paid off. Both countries provide welfare, schools etc. local authorities operate their own investment schemes valued at millions of pounds but still claw in a monthly council tax.
That’s why Irish are on streets… thousands of property lying empty… and the Irish are on streets homeless… failed govt policy… own a house Tax them through the roof!!!
"Build more houses in London, so young people can move to London". We have an unbalanced economy, so enabling London to grow more is exasperating this problem. Surely a big part of the solution is creating good jobs outside the SE of England.
You can't cover every last square inch of London in housng because people want to live there. There are a tonne of other considerations. "The solution to all these probelms is build more houses", you say. I could not agree less. The solution is for the govt to regulate the housing market as it did in the 90s and be harsher on who can own what where.
@@FireflyOnTheMoon Did you watch the full video. One of presenters proposed solution is building more houses in London. I am more in favour of creating jobs outside London & SE.
The problem is that only finance and ancillary industries are growing, and it's extremely beneficial to be close to London in those industries. Any other industry pays a big penalty in higher wages and expenses for being close to London.
Stamp duty is a real problem in the SW as wages are low but property prices are getting very expensive especially since the race for space with people from city’s out competing locals We can just afford to move but can’t face paying the stamp duty so we’ll just stay put (shame we’re fed up living here and want to move)
Really good to hear the differences of opinion discussed sensibly and rationally. Much better to have debate on things to see how the potential for political opinions can affect the conclusions. There's a reason economists of all stripes aren't singing from the same hymn sheet.
Your £250k house now worth £990k fine. What is £1 worth between these periods? What did you spend on interest, lost opportunity to invest your £s, insurance, maintenance, council tax contributions. The gain is nothing like it appears - that’s the scam
Good affordable transport links are a huge part of this as well… I agree more houses for families are needed, not the 10 or more times of flats that are bought by foreign investors and more flats are built , more houses are needed
What about capital gains tax on owner occupied housing? This is normally covered by the principal private residence exemption so no CGT arises on a future sale at a profit. However, if the house is developed with a profit motive then CGT should arise on that part of any gain, but in reality, does it? It seems that wherever you look these days, houses are being developed with extensions etc yet the public see this as a tax free win, and I am sure that nearly all of them get away with it. One of the problems with this is that at a time when we need to be building new homes, significant resources are being focused on these seemly CGT free extensions. Surely this is an area that needs to be tightened up and soon.
I question the argument that we need to 'Build more housing in south East where it's needed', turn the investment to the rest of the UK, promote jobs outside London (or remote) , move the house demand out of London.
Enjoyed the more debate style of this, you should do some more with guests with differing viewpoints on the topic, even if it’s just differences in emphasis.
Also being relative wealth for those who have bought more expensive houses and then have less money than say the same for an employee of the same company living in a less expensive area ….. a lot of thought needs to be put into as well ….
Landlords are only Assets Rich. The liabilities and Risks with high interest rates, bad tenants, unpaid rent, relentless taxing from councils Draconian fees, damage to property and tax and legislation is all about poor government, which is why landlords are selling at the fastest rate ever creating a homelessness crisis. The constant tenant Tax and legislation all goes onto the cost of rents. Rents have rocketed purely to government tax and legislation, while debts and easy money government causes inflation and interest rates rises, Government are the problem not landlords
You can increase your rent as you see fit but if tenants can't afford the rent your property will remain void until you drop the rent to what people can afford. So in essence it's become a loss making business.
@marissakeynes2532 some of my tenants enjoy from £100-250 a month below market value, I've had to take the hit for last two years on doubling and tripling mortgage costs.
What fiscal studies have you been studying????? Government DO NOT pay councils, the councils pay the government and they give back to others according to how their policy goes. You all think in a fascist mindset.
Council tax is an issue because it hasn't tracked current house prices, especially in prime areas. Stamp Duty is an issue because it *has* tracked current house prices, especially in prime areas. That's a pretty clear sign of a poorly designed tax system.
The appallingly bad distribution of wealth in the U.K. is the principal cause of our stalled economy. The top 5% - 10% have sucked out much of the purchasing power from the rest of us. Living standards are flat-lining and so is the economy. You cannot redistribute wealth without taxation. The rich will not choose to hand over wealth voluntarily even if it benefits them in the long term. Brexit has also been a disaster costing tens of billions of lost revenue. The PPE scandal added to the debacle.
No need to build more houses, just use the ones we have efficiently. Stop second homes, holiday lets/airbnb's, foreign owned and often empty properties in central London, get students into purpose built accommodation (why so many students?) and encourage commercial users to relocate out of properties originally built as houses but now professional offices. Also reduce net migration. We can't build a Bristol or Birmingham every year in the UK just to stand still.
Paul needs to learn the correct counters to the what-aboutery of civil servants. An international comparison is a good way to disarm such arguments as their resort is then - "we're different and that justifies having bad policies"
A third of my income goes to the council and therefore the consolidation fund for THEM to spend on what THEY want. Not what I need. I feel that the ‘poll tax’ was a far better way as everybody paid it not just the owner of a property. Those that gained paid nothing towards it, I paid it but now I pay a LOT MORE for a lot less benefit to me.
I work 40 hours a week thats considered full time. £15 a hour paid. If i want to get a few extra quid to help pay for things i do overtime at work at £18.75/ hour 30%(ish) of this is taken off me in tax making it so much harder to gain any extra cash to try and buy things which would benefit the economy 🤔 Basically i do overtime and the more hours i work the more the government get this seems wrong to me. Ive already put my 40+ hours in give me a break 😢 We claim 25% student discount its bugger all but its something
30% is nothing, try 62% after £100k and having child care removed and not child benefit. You have to get to £146k pa just to make up for the loss and increased tax.
@Burtis89 well, you still have to face 40% after 50kpa before you're hit with 62% effective tax from £100kpa. If you think 30% tax isn't worth your time then you'll never progress further to get to £50k, which doesn't buy you half what it used to. I'm not on £146k, I'm closer to £100k, but that leap need from £100k to £146k to make it a net benefit is too much in one go, I have to go backwards before going forward in real net terms. This is what subsidises your lower tax of 30% while offering you greater benefits like childcare if you need. Besides, I have no disposable income with where mortgage rates are, childcare costs and living inside the M25 and commuting to the city. If you want a better standard of living, you've got plenty of headroom to reach £100k and save into a pension if 40% is too much.
Bizarre this discussion takes no account of the impact of importing 10 million more people to the country needing housing on the cost, price and availability of housing. Or the spiralling cost of housing benefit which now costs about the same as we raise in business rates - a massive subsidy to landlords which incentivises buy to let and rental levels. Perhaps we need more people involved in policy debates on housing who live in Stoke or Stockton than Surbiton. And maybe we will only get more affordable housing for our kids and grandkids when people love them more than they love their high house prices and asset wealth. In the end the price of housing is absolutely crazy in the UK - boosted by a massive rise in demand due to migration and money printing/artificially low interest rates. And when all the policy decision makers own houses in Surbiton, Primrose Hill and Barnes - it is never going to be solve because despite the talk they have no interest in doing so! No wonder TIm opposes a council tax revaluation owning a house in Surbiton - under the old domestic rates situation/a proper reform of council tax he would be paying thousands more a year (and quite correct too) with reductions for people in the north - his opinion is hardly unbiased!!
stamp duty stops people downsizing and I live in the north-west, a decent bungalow in my area is £500k so it does affect the north too. The idea that the government wants to build a large number of houses everywhere is stupid, build houses where they're wanted, build over London and the South-east, unfortunately treasury officials would be upset. Also having an economy based almost entirely in London is a bad thing, few other countries have centralised economies on one city
Isn’t that part the issue. The right place has been seen as London for years. London has had the investment and now we are scratching around for space to build more rather than invest in other cities. We don’t help this by not being able to do big infrastructure like HS2, and even if we could we still obsess with starting these projects in the south which just exacerbates the London issue. The north west is London of 30 years ago the country just needs to wake up and support it. Housing is more affordable it has the airports, public transport, infrastructure and space to expand …. Just needs the London centred mindset to end!
Isn’t a genius idea to provide landlords with targeted tax relief specifically for affordable asts… imposing lower rents, but marginally higher net income after tax for the landlord? A win-win? Targeted and already built
I think that your views about landlord taxation which eventually results in additional costs for tenants is spot on. Plus landlord taxation is treated simply as a revenue raising opportunity by the government of the day. What does the IFS think about immigrant taxation to pay for additional services and infrastructure that are required? We already have a graduate tax so what about an immigrant tax too?
I've never understood how so many people can believe that landlords are evil and motivated only by greed whilst also appearing to also believe that they will just meekly absorb any extra costs themselves rather than passing them on to tenants or evicting those tenants to exit the rental market.
@@SmileyEmoji42 A lot of people have poor experiences with landlords/letting agencies, for example them jacking up the rent while dragging their heels on essential maintenance. If you are paying someone higher rent, you expect to have things fixed in a timely manner, in the last house we rented it took well over a year to get a cracked window replaced (this among various issues with the house). If you are paying more, you expect a service to match that.
The government is the biggest landlord. They decided they are owed a share of the rent (money that was already taxed as income), and it's due before the deduction of mortgage interest. The landlord does all the work and takes on the liability, rents have to rise just to break even. Then if you sell, you owe 24% of the 'profit', but it really theft by currency devaluation.
@@bassfunkypenguin What has that got to do with what I said? Do you expect these bad landlords that you have experienced to get better the more money is taken from them??????
I still think that this is severely wrong-headed. I lived in London for 10 years. London cannot expand in proportion to its popularity - and more importantly, beyond brown field sites cannot produce properties where they would be desired - without destroying their appeal. What's required is the regionalisation of GB creating jobs and power centres outside London to create draws, or even holds, on regional kids to let them succeed closer to home.
London could grow to become a city of 20M people and that would probanly be a good idea Lots of people close together results in economic productivity gains. You wouldn't want the state to disperse the population artificially Also London isn't just a draw for the younger people of the UK but a lot of Europe too. The London tech scene is bigger than the French Italian German Spanish combined
@@kaya051285 The state already artificially agglomerates people by nestling every single centre of power with 5 square miles of each other. British tech is big because we speak American (!) and invented a good chunk of it. There is no reason for our tech centre to be the same place as our legislative centre and the same place as our financial centre. It's like having Silicon Valley, Washington D.C. and New York in one place.
The UK population, which was estimated to be 67.0 million in mid-2021, is projected to rise by 6.6 million to 73.7 million over the next 15 years to mid-2036. We cannot simply build our way out of this issue.
19:00 what absolute BS, i live in Surbiton (10yr) and most people are here for the schools. Old people, like most people, would move if stamp duty wasn't so punitive. What you should be analysing is where else in the world the UK should be looking to model. Not having some dewb talk about Surbiton when he doesn't know this area at all - let alone speak for it
Backhand deals with developers has killed the house building market. Self builds need to be opened up and encouraged, regulations allowing and encouraging alternative building methods that have proven to be viable (prefab for example) which other countries have used for years need to be allowed. There are hundreds of thousands who would build their own homes if not for these regulations/council corruption.
This episode could have the alternative title "Why Britain's tax system is broken". I.E there are civil servants like this man with ridiculous arguments who gain the ear of Chancellors.
I prefer to pay council tax then service charge scam ...for leaseholders .I'm punished that I have my own property , maintenance cost is 50% of the rent
For three so called “experts” you really don’t live in the real world. Single person 25% council tax relief basically also allows for the fact a single person household uses less resources. It also recognises a single young person in a one bedroom apartment has a single income not two or maybe three. The big issue is the developers do not build enough property for single people and it’s subject to the same stamp duty regardless of how many people live there. My wife & I downsized but we paid a penalty through legal costs & stamp duty so where is the incentive to move out of a larger property when you retire?
I think part of the issue with council tax is down to the existence of settlements in certain areas, we simply have settlements that can't justify their existence economically, so can never logically and progressively raise the necessary amount of money locally.
While house building is in the hands of the Building Industry they will NEVER build enough. Why would they?? Tories created that situation maybe Lab can change it. But they should build council houses.
Council tax is a con. Property tax. Pay the tax according to how much your house is worth. And don't cap it. Why should wealthy people be protected, they are wealthy!
Normally agree with the IFS. However they seem to have fallen into the trap of forgetting to take into account peoples emotions. I get the numbers are an economists best friend but not everyone is an economist. People see their houses as homes. They lived in them, invested in them and downsizing makes them think of mortality. Whilst clearly inefficient use of resources has downsides it may increase happiness.
The housing market sould not not be a market, homes should be for living in. Middle class and above, while complaining, buy multiple houses as investments.all landlords are rackrenters, leeching on thosecwho ard trapped unable to buy. Severe legislation is needed to transform this. It is already apparent this will be a one term govt, the constant onslaught from the riight and the tough decisions necessary make this a certainty. Given this they can make fundamental changes to alter this, they need to be far more radical, theyre going out at the next election anyway.
Yes build more houses. Why do people want to move to London? Good paying jobs. So invest outside London to create good jobs other than London. We had the same problem with railways back in the 60s. Closing lines instead of investing in these areas so they can be more profitable. All I hear is "London this and London that" your part of the problem guys
Really disappointed with much of Tim Leunig's response. Very much thrusting his (occasionally questionable) opinions into the debate, rather than focusing on interpreting the best available evidence and observations of the real economy. To suggest that stamp duty doesn't really disincentive house moving made him lose all credibility in my mind. I much prefer IFS discussions based around evidence and observations!
We DO NOT need to build more houses in London & the South East we need to distribute jobs more nationally. We do not have capacity for more cars, more delivery vans, buses etc. we don’t have enough doctors, dentists, and the South East is short of water. This is about the most stupid thing the three of you have discussed.
Failure to mention Land Value Tax, widely regarded as the most sensible solution, has destroyed you credibility. Name your funders who are not largely supportive of LVT. Full disclosure.
There never talk of reducing taxes always where can we add more and get more on a struggling population with a bloated and inefficient government than can't manage money but just bickers with the opposition. We want to move to London as its where I work but will be crushed by stamp duty so remain stuck. This country is in a pathetic state and simply will only get worse and worse
This is such a key topic but this episode is extremely disappointing with fairly arbitrary contributions from all sides. The key point to keep in mind (which is barely mentioned in the podcast) is the massive distortion that the CGT-exemption on main residences has on the allocation of capital/savings - why try and be an entrepreneur or even invest in a business when you can make a higher return from doing nothing (particularly with an inelastic supply curve and high rate of household formation driven mainly by high net immigration) through owning your home and waiting. Now clearly, imposing CGT after each transaction would be counter productive (reducing geographic and social mobility, etc). However, there is an obvious entry point for CGT on homes - to replace IHT. We have just seen CGT on shares introduced on death so why not CGT on all those property gains through one’s lifetime (using land registry data). Now, it would mean some record keeping (to allow deductions for capital expenditures - extensions, loft conversions, etc) but it would bring property (more) into line with other assets and therefore stop a huge misallocation of resources. One second point (I have lots of others but I am not going to follow the scattergun approach of the podcast participants) - why on earth, in the discussion on council tax, didn’t they mention the point of local taxation in the context of local democracy?! In the current system, a fraction of voters actually pay the tax and there is a huge discrepancy between (say) four single people in a flat-share and a pensioner in a similar sized property - even with the 25% discount, on this basis, the latter would pay 3x in council tax what one of the professionals does. This is a problem as each person had one vote - so those who don’t bear the burden of taxation can vote for more services knowing they will not bear their ‘share’. The whole point of local taxation is to fund local services and yet currently there is a huge democratic deficit (this was actually why Thatcher wanted to introduce the Community Charge). Local authorities are massively inefficient and frequently overspend because voters (who are not the same as tax payers) rarely punish them.
Hmmm…the whole purpose of this episode is to introduce the term ‘owner occupier’. Once everyone is normalised to this term then the usurious bankers will start taxing home owners who are probably divorced on their ‘extra rooms’. My God what a usurious system. Thank God for Islam!
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Thanks for listening, to see more of our work visit: www.ifs.org.uk
Timecodes:
00:00 - Introduction
2:10 - How is housing taxed?
3:30 - Council tax
10:55 - Council tax single person discount
12:51 - Stamp Duty
20:40 - Tax, landlords and the rental sector
27:35 - Should landlords be taxed more?
32:30 - What is the government's strategy?
36:17 - Conclusion
One of the best podcasts I've heard from the IFS. Brilliant to hear a robust discussion with Tim challenging Paul of some of his views, would love to hear more of this kind of thing from you guys. I wouldn't call you guys an echo chamber, but it's only now I've realised that your podcasts generally have everyone agreeing with each other
Quite liked this, always a nice change of pace to have a guest that's not afraid to challenge others in the discussion. Not something I'd like to see all the time on here, but again a nice change of pace from what can sometimes stray towards the world's most inoffensive echo chamber! :D
Absolutely mad banter between these three 😂
Not heard of TIm before but great to have him disagreeing and challenging Paul on some of his views. You must get him on again soon! One of the best episodes yet!
Stamp duty is essentially a tax on moving house, and it acts as a deterrent, discouraging people from relocating.
The London problem isn’t due to a lack of housing in London, it’s due to a lack of good jobs elsewhere. Building more houses in London isn’t going to fix the issue, just postpone it. It’s gotten to the point that commuter flights (yes flights) to London are fully booked unless booked well in advance.
We should be encouraging businesses to diversify their locations, it’ll be better for the economy as a whole. Stamp duty etc wouldn’t be as much of a problem if this was the case.
With hybrid working becoming ever more established, it should incentivise people established in their careers to move out of London, or at least within a two hour commute.
However, that trend seems to be reversing, if anything, possibly because London has a cultural and social pull that isn't replicated in many other places.
The single adult discount is to deal with the little old lady whos husband dies. As with most of these things it is politically impossible to change. If you can't sell a poll tax and you can't sell means testing winter fuel allowances then you have no hope of introducing a "widow tax".
The guest commented that council tax hasn’t gone up as much as house values, which is correct. But Council tax has increased by 20 times in the last 30 years while income has only increased by about 4 times.
These people are just looking for a way to increase these taxes. Council tax is double what it should cost!
The reason housing demand is higher in London, is due to economic distortions within the economy. Victorian Britain had a more equitable distribution of industry and trade. Centralised government has distorted demand and supply.
Did you know - even though we have a housing shortage, the tax system penalties the 2.8 million small private landlords if they try and build a house to rent it out? If they build a house, keep it, and rent it out, they make a loss. They have to sell it. Which means, even though we have 2.8 million PRS landlords, most of which are highly motivated by property - but all they can do it be in the market is buy someone else's house and rent it out. Which means in general, all power to 'Build to Rent' sits in the hands of the commercial landlords. Which is more likely to speed up house building - 2.8 million people wanting to build a couple of new houses locally so they can rent them out - or a few hundred companies going through the existing processes and all the flaws that we know of already?
A good episode but I was so disappointed that there was no mention of a Land Value Tax! I’ve been asking for it for so long, and here was an episode on property taxes… Ah well. Please could you do an episode exploring Land Value Tax? Every time I hear an economist talk about it they go all moon-eyed and wax lyrical about how brilliant such a tax would be, and then simply sigh and say it’ll never happen and then move on. Why is it brilliant? Why won’t it happen? I would love a deep dive on it.
You won't see if mentioned by the IFS because of those who provide their funding
Would probably run into the same problem as council tax; with out a date values and government's scared of the political consequences of triggering a revaluation.
@@roberthuntley1090 it would be less work to evaluate than council tax as it would be simply based on the land itself rather than building that are on it.
Great to hear some alternative viewpoints .
Thank you IFS, excellent.
Stamp duty is an utter scam
Stamp duty is why my wife and I won't move. We live in the SE and our home is worth a lot and the stamp duty on a move is more than I'm prepared to pay.
Tax is not linear, raising taxes doesn't give you more money, the recent tax increase of section 24 for landlords now raises less tax than it did before
Land value tax in its purest form would replace all taxes mentioned here and also all taxes on income. Seemed worth at least a brief mention
It would have been interesting if you had discussed a land value tax!
Terrifying to hear the ease with which you want more tax. Why not less spending? If you tax my house based upon its “value” do I get a rebate when the price drops (in real terms)? Will you compensate for maintenance and insurance and int rate northeast payments? Madness
Absolutely agree
These three old farts don't want to give up their pensioners lifestyles. They didn't make enough kids and allowed the nation to get old
Rather than stay competitive and dynamic they want to keep their entitlements and just tax the young more and more
The decimation of council housing stock removed it's stabilising effect on the capital risk of housing. The Danish solution is to insure against intrest rate and house price drops which adds to the cost of the mortguage.
Balancing out council tax with a land value tax would solve most the issues with the system by it targeting the parties most able to pay.
My cottage in Republic of Ireland which I recently sold, had a council tax of €120 euro pa, in total. Compare to the council tax in Farnham, Surrey, which is like paying a mortgage that can never be paid off. Both countries provide welfare, schools etc. local authorities operate their own investment schemes valued at millions of pounds but still claw in a monthly council tax.
That’s why Irish are on streets… thousands of property lying empty… and the Irish are on streets homeless… failed govt policy… own a house Tax them through the roof!!!
"Build more houses in London, so young people can move to London".
We have an unbalanced economy, so enabling London to grow more is exasperating this problem. Surely a big part of the solution is creating good jobs outside the SE of England.
You can't cover every last square inch of London in housng because people want to live there. There are a tonne of other considerations. "The solution to all these probelms is build more houses", you say. I could not agree less. The solution is for the govt to regulate the housing market as it did in the 90s and be harsher on who can own what where.
@@FireflyOnTheMoon Did you watch the full video. One of presenters proposed solution is building more houses in London. I am more in favour of creating jobs outside London & SE.
The problem is that only finance and ancillary industries are growing, and it's extremely beneficial to be close to London in those industries. Any other industry pays a big penalty in higher wages and expenses for being close to London.
Factories no longer. UK in the majority has a very poor future
I don't understand why we get "Well, that's all we've got time for. We didn't get time to talk about X/Y/Z" in the podcast format.
Stamp duty is a real problem in the SW as wages are low but property prices are getting very expensive especially since the race for space with people from city’s out competing locals
We can just afford to move but can’t face paying the stamp duty so we’ll just stay put (shame we’re fed up living here and want to move)
Really good to hear the differences of opinion discussed sensibly and rationally. Much better to have debate on things to see how the potential for political opinions can affect the conclusions. There's a reason economists of all stripes aren't singing from the same hymn sheet.
Your £250k house now worth £990k fine. What is £1 worth between these periods? What did you spend on interest, lost opportunity to invest your £s, insurance, maintenance, council tax contributions. The gain is nothing like it appears - that’s the scam
Really interesting. Thank you.
Good affordable transport links are a huge part of this as well… I agree more houses for families are needed, not the 10 or more times of flats that are bought by foreign investors and more flats are built , more houses are needed
People who own a £70 million house in London pay less council than somebody who owns a £200.000 house in Darlington .... ABSOLUTLY CRAZY !!!
What about capital gains tax on owner occupied housing? This is normally covered by the principal private residence exemption so no CGT arises on a future sale at a profit. However, if the house is developed with a profit motive then CGT should arise on that part of any gain, but in reality, does it?
It seems that wherever you look these days, houses are being developed with extensions etc yet the public see this as a tax free win, and I am sure that nearly all of them get away with it. One of the problems with this is that at a time when we need to be building new homes, significant resources are being focused on these seemly CGT free extensions. Surely this is an area that needs to be tightened up and soon.
How many homes in London, Manchester, Leeds etc are vacant and owned by overseas domiciled companies
I question the argument that we need to 'Build more housing in south East where it's needed', turn the investment to the rest of the UK, promote jobs outside London (or remote) , move the house demand out of London.
Enjoyed the more debate style of this, you should do some more with guests with differing viewpoints on the topic, even if it’s just differences in emphasis.
Also being relative wealth for those who have bought more expensive houses and then have less money than say the same for an employee of the same company living in a less expensive area ….. a lot of thought needs to be put into as well ….
Landlords are only Assets Rich.
The liabilities and Risks with high interest rates, bad tenants, unpaid rent, relentless taxing from councils Draconian fees, damage to property and tax and legislation is all about poor government, which is why landlords are selling at the fastest rate ever creating a homelessness crisis.
The constant tenant Tax and legislation all goes onto the cost of rents. Rents have rocketed purely to government tax and legislation, while debts and easy money government causes inflation and interest rates rises, Government are the problem not landlords
You can increase your rent as you see fit but if tenants can't afford the rent your property will remain void until you drop the rent to what people can afford. So in essence it's become a loss making business.
@marissakeynes2532 some of my tenants enjoy from £100-250 a month below market value, I've had to take the hit for last two years on doubling and tripling mortgage costs.
@@mikedudley4062 Yep that's what I'm saying. It's become loss making and it's not worth being a LL for the reason you've mentioned.
The purpose of council tax isn't, and shouldn't be, for south-east to subsidise Burnley. That is the purpose of national taxes.
My pension in the South is NO MORE than the North and I have to pay a lot more for nothing.
What fiscal studies have you been studying????? Government DO NOT pay councils, the councils pay the government and they give back to others according to how their policy goes. You all think in a fascist mindset.
Council tax is an issue because it hasn't tracked current house prices, especially in prime areas.
Stamp Duty is an issue because it *has* tracked current house prices, especially in prime areas.
That's a pretty clear sign of a poorly designed tax system.
The appallingly bad distribution of wealth in the U.K. is the principal cause of our stalled economy. The top 5% - 10% have sucked out much of the purchasing power from the rest of us. Living standards are flat-lining and so is the economy. You cannot redistribute wealth without taxation. The rich will not choose to hand over wealth voluntarily even if it benefits them in the long term.
Brexit has also been a disaster costing tens of billions of lost revenue. The PPE scandal added to the debacle.
No need to build more houses, just use the ones we have efficiently. Stop second homes, holiday lets/airbnb's, foreign owned and often empty properties in central London, get students into purpose built accommodation
(why so many students?) and encourage commercial users to relocate out of properties originally built as houses but now professional offices. Also reduce net migration. We can't build a Bristol or Birmingham every year in the UK just to stand still.
Brilliant. Good to hear some debate. Brilliant!!
Great debate!
Amazing ❤
Paul needs to learn the correct counters to the what-aboutery of civil servants. An international comparison is a good way to disarm such arguments as their resort is then - "we're different and that justifies having bad policies"
A third of my income goes to the council and therefore the consolidation fund for THEM to spend on what THEY want. Not what I need. I feel that the ‘poll tax’ was a far better way as everybody paid it not just the owner of a property. Those that gained paid nothing towards it, I paid it but now I pay a LOT MORE for a lot less benefit to me.
I work 40 hours a week thats considered full time. £15 a hour paid.
If i want to get a few extra quid to help pay for things i do overtime at work at £18.75/ hour 30%(ish) of this is taken off me in tax making it so much harder to gain any extra cash to try and buy things which would benefit the economy 🤔
Basically i do overtime and the more hours i work the more the government get this seems wrong to me.
Ive already put my 40+ hours in give me a break 😢
We claim 25% student discount its bugger all but its something
30% is nothing, try 62% after £100k and having child care removed and not child benefit. You have to get to £146k pa just to make up for the loss and increased tax.
@Jay-xr3sb fair but if you got 100k your not having a hard time of it.
146k is 116k more than I get
@Burtis89 well, you still have to face 40% after 50kpa before you're hit with 62% effective tax from £100kpa. If you think 30% tax isn't worth your time then you'll never progress further to get to £50k, which doesn't buy you half what it used to.
I'm not on £146k, I'm closer to £100k, but that leap need from £100k to £146k to make it a net benefit is too much in one go, I have to go backwards before going forward in real net terms. This is what subsidises your lower tax of 30% while offering you greater benefits like childcare if you need.
Besides, I have no disposable income with where mortgage rates are, childcare costs and living inside the M25 and commuting to the city.
If you want a better standard of living, you've got plenty of headroom to reach £100k and save into a pension if 40% is too much.
@@Burtis89life is unfair and always will be. Best to accept or make a change.
@@dboynette indeed just voicing a opinion dude
Bizarre this discussion takes no account of the impact of importing 10 million more people to the country needing housing on the cost, price and availability of housing. Or the spiralling cost of housing benefit which now costs about the same as we raise in business rates - a massive subsidy to landlords which incentivises buy to let and rental levels. Perhaps we need more people involved in policy debates on housing who live in Stoke or Stockton than Surbiton. And maybe we will only get more affordable housing for our kids and grandkids when people love them more than they love their high house prices and asset wealth. In the end the price of housing is absolutely crazy in the UK - boosted by a massive rise in demand due to migration and money printing/artificially low interest rates. And when all the policy decision makers own houses in Surbiton, Primrose Hill and Barnes - it is never going to be solve because despite the talk they have no interest in doing so! No wonder TIm opposes a council tax revaluation owning a house in Surbiton - under the old domestic rates situation/a proper reform of council tax he would be paying thousands more a year (and quite correct too) with reductions for people in the north - his opinion is hardly unbiased!!
stamp duty stops people downsizing and I live in the north-west, a decent bungalow in my area is £500k so it does affect the north too. The idea that the government wants to build a large number of houses everywhere is stupid, build houses where they're wanted, build over London and the South-east, unfortunately treasury officials would be upset. Also having an economy based almost entirely in London is a bad thing, few other countries have centralised economies on one city
Isn’t that part the issue. The right place has been seen as London for years. London has had the investment and now we are scratching around for space to build more rather than invest in other cities. We don’t help this by not being able to do big infrastructure like HS2, and even if we could we still obsess with starting these projects in the south which just exacerbates the London issue. The north west is London of 30 years ago the country just needs to wake up and support it. Housing is more affordable it has the airports, public transport, infrastructure and space to expand …. Just needs the London centred mindset to end!
Isn’t a genius idea to provide landlords with targeted tax relief specifically for affordable asts… imposing lower rents, but marginally higher net income after tax for the landlord? A win-win? Targeted and already built
Reform is needed, Reform UK.
I think that your views about landlord taxation which eventually results in additional costs for tenants is spot on. Plus landlord taxation is treated simply as a revenue raising opportunity by the government of the day. What does the IFS think about immigrant taxation to pay for additional services and infrastructure that are required? We already have a graduate tax so what about an immigrant tax too?
I've never understood how so many people can believe that landlords are evil and motivated only by greed whilst also appearing to also believe that they will just meekly absorb any extra costs themselves rather than passing them on to tenants or evicting those tenants to exit the rental market.
@@SmileyEmoji42 They are seen as parasites, making money off poor people
@@SmileyEmoji42 A lot of people have poor experiences with landlords/letting agencies, for example them jacking up the rent while dragging their heels on essential maintenance. If you are paying someone higher rent, you expect to have things fixed in a timely manner, in the last house we rented it took well over a year to get a cracked window replaced (this among various issues with the house). If you are paying more, you expect a service to match that.
The government is the biggest landlord. They decided they are owed a share of the rent (money that was already taxed as income), and it's due before the deduction of mortgage interest. The landlord does all the work and takes on the liability, rents have to rise just to break even. Then if you sell, you owe 24% of the 'profit', but it really theft by currency devaluation.
@@bassfunkypenguin What has that got to do with what I said? Do you expect these bad landlords that you have experienced to get better the more money is taken from them??????
Top podcast gents
Perhaps Paul's last. Good way to bow out from IFS.
Interesting that even the experts don't agree!
The most watched bit of the clip is my comment on the USURIOUS bankers!
I still think that this is severely wrong-headed. I lived in London for 10 years. London cannot expand in proportion to its popularity - and more importantly, beyond brown field sites cannot produce properties where they would be desired - without destroying their appeal. What's required is the regionalisation of GB creating jobs and power centres outside London to create draws, or even holds, on regional kids to let them succeed closer to home.
London could grow to become a city of 20M people and that would probanly be a good idea
Lots of people close together results in economic productivity gains. You wouldn't want the state to disperse the population artificially
Also London isn't just a draw for the younger people of the UK but a lot of Europe too. The London tech scene is bigger than the French Italian German Spanish combined
London or the UK - only one can now prosper.
@@kaya051285 The state already artificially agglomerates people by nestling every single centre of power with 5 square miles of each other. British tech is big because we speak American (!) and invented a good chunk of it. There is no reason for our tech centre to be the same place as our legislative centre and the same place as our financial centre. It's like having Silicon Valley, Washington D.C. and New York in one place.
Regarding tax on rentals you forgot to mention how over regulated it has become as well
The UK population, which was estimated to be 67.0 million in mid-2021, is projected to rise by 6.6 million to 73.7 million over the next 15 years to mid-2036. We cannot simply build our way out of this issue.
And they keep toppling governments in other countries causing a migration problem and then complain.
19:00 what absolute BS, i live in Surbiton (10yr) and most people are here for the schools.
Old people, like most people, would move if stamp duty wasn't so punitive.
What you should be analysing is where else in the world the UK should be looking to model. Not having some dewb talk about Surbiton when he doesn't know this area at all - let alone speak for it
Backhand deals with developers has killed the house building market. Self builds need to be opened up and encouraged, regulations allowing and encouraging alternative building methods that have proven to be viable (prefab for example) which other countries have used for years need to be allowed. There are hundreds of thousands who would build their own homes if not for these regulations/council corruption.
This episode could have the alternative title "Why Britain's tax system is broken". I.E there are civil servants like this man with ridiculous arguments who gain the ear of Chancellors.
Lol watching ti's is like an episode of ' tell me you are a rich entitled leftwing southerner without telling me' 😂
Reform is needed, could be prophetic :/😂
A mortgage is the biggest liability most people have. A house is not a asset
As long as there is equity of course it is an asset. Plus kinda convenient to have a place to live.
I prefer to pay council tax then service charge scam ...for leaseholders .I'm punished that I have my own property , maintenance cost is 50% of the rent
For three so called “experts” you really don’t live in the real world.
Single person 25% council tax relief basically also allows for the fact a single person household uses less resources. It also recognises a single young person in a one bedroom apartment has a single income not two or maybe three.
The big issue is the developers do not build enough property for single people and it’s subject to the same stamp duty regardless of how many people live there.
My wife & I downsized but we paid a penalty through legal costs & stamp duty so where is the incentive to move out of a larger property when you retire?
I think part of the issue with council tax is down to the existence of settlements in certain areas, we simply have settlements that can't justify their existence economically, so can never logically and progressively raise the necessary amount of money locally.
While house building is in the hands of the Building Industry they will NEVER build enough. Why would they?? Tories created that situation maybe Lab can change it. But they should build council houses.
Council tax is a con. Property tax. Pay the tax according to how much your house is worth. And don't cap it. Why should wealthy people be protected, they are wealthy!
Normally agree with the IFS. However they seem to have fallen into the trap of forgetting to take into account peoples emotions. I get the numbers are an economists best friend but not everyone is an economist. People see their houses as homes. They lived in them, invested in them and downsizing makes them think of mortality. Whilst clearly inefficient use of resources has downsides it may increase happiness.
The housing market sould not not be a market, homes should be for living in. Middle class and above, while complaining, buy multiple houses as investments.all landlords are rackrenters, leeching on thosecwho ard trapped unable to buy. Severe legislation is needed to transform this. It is already apparent this will be a one term govt, the constant onslaught from the riight and the tough decisions necessary make this a certainty. Given this they can make fundamental changes to alter this, they need to be far more radical, theyre going out at the next election anyway.
Yes build more houses. Why do people want to move to London? Good paying jobs. So invest outside London to create good jobs other than London. We had the same problem with railways back in the 60s. Closing lines instead of investing in these areas so they can be more profitable.
All I hear is "London this and London that" your part of the problem guys
Riveting discussions about arranging the deckchairs. The great takening is on the horizon.
Really disappointed with much of Tim Leunig's response. Very much thrusting his (occasionally questionable) opinions into the debate, rather than focusing on interpreting the best available evidence and observations of the real economy. To suggest that stamp duty doesn't really disincentive house moving made him lose all credibility in my mind. I much prefer IFS discussions based around evidence and observations!
As a landlord, I will deliberately charge my tenants 40% less than market rate in order to subvert the usurious bankers’ designs. Thank God for Islam.
We DO NOT need to build more houses in London & the South East we need to distribute jobs more nationally. We do not have capacity for more cars, more delivery vans, buses etc. we don’t have enough doctors, dentists, and the South East is short of water.
This is about the most stupid thing the three of you have discussed.
Failure to mention Land Value Tax, widely regarded as the most sensible solution, has destroyed you credibility.
Name your funders who are not largely supportive of LVT.
Full disclosure.
So a straight property tax, 0.5% of value
This discussion is a waste of time when you don't talk about the affect of 10 million people coming into the country.
There never talk of reducing taxes always where can we add more and get more on a struggling population with a bloated and inefficient government than can't manage money but just bickers with the opposition. We want to move to London as its where I work but will be crushed by stamp duty so remain stuck. This country is in a pathetic state and simply will only get worse and worse
This is such a key topic but this episode is extremely disappointing with fairly arbitrary contributions from all sides. The key point to keep in mind (which is barely mentioned in the podcast) is the massive distortion that the CGT-exemption on main residences has on the allocation of capital/savings - why try and be an entrepreneur or even invest in a business when you can make a higher return from doing nothing (particularly with an inelastic supply curve and high rate of household formation driven mainly by high net immigration) through owning your home and waiting. Now clearly, imposing CGT after each transaction would be counter productive (reducing geographic and social mobility, etc). However, there is an obvious entry point for CGT on homes - to replace IHT. We have just seen CGT on shares introduced on death so why not CGT on all those property gains through one’s lifetime (using land registry data). Now, it would mean some record keeping (to allow deductions for capital expenditures - extensions, loft conversions, etc) but it would bring property (more) into line with other assets and therefore stop a huge misallocation of resources. One second point (I have lots of others but I am not going to follow the scattergun approach of the podcast participants) - why on earth, in the discussion on council tax, didn’t they mention the point of local taxation in the context of local democracy?! In the current system, a fraction of voters actually pay the tax and there is a huge discrepancy between (say) four single people in a flat-share and a pensioner in a similar sized property - even with the 25% discount, on this basis, the latter would pay 3x in council tax what one of the professionals does. This is a problem as each person had one vote - so those who don’t bear the burden of taxation can vote for more services knowing they will not bear their ‘share’. The whole point of local taxation is to fund local services and yet currently there is a huge democratic deficit (this was actually why Thatcher wanted to introduce the Community Charge). Local authorities are massively inefficient and frequently overspend because voters (who are not the same as tax payers) rarely punish them.
What impact will near term demographics have on housing stock with loss of baby boomer generation.
Move to a property tax, and the owner pays the tax….
And watch rents rise by exactly the same amount
The uk is turning into dystopian world 😔
Let me sell up and leave first please
Replace stamp duty and IHT with CGT on ALL property sales.
Why would someone living in a large home want to downsize if they’d be clobbered with tax? No thanks
@m9017t they made money for nothing, giving a bit back shouldn't be a problem.
@@REX4340 you don’t get it, what would be the incentive to move house and downsize if the government took a huge chunk in the process?
@@m9017t buying stuff with the profit, lowering their heating costs, giving money etc etc etc
Hmmm…the whole purpose of this episode is to introduce the term ‘owner occupier’. Once everyone is normalised to this term then the usurious bankers will start taxing home owners who are probably divorced on their ‘extra rooms’. My God what a usurious system. Thank God for Islam!
Don't build housing, regulate the market.
No.