This does not mean we should not tax property, or wealth; other arguments are available both in favour and against such. We do rather a lot of taxing of property already through rates, council tax and so on. The OECD records Britain as gaining 12.5 per cent of all tax revenue from property, well over twice the OECD countries’ average of 5.6 per cent. It is the taxation of property transactions that needs to go.
Part of the solution to our current housing woes is that those with more space than they need — empty nesters, say — downsize to make room for the next generation. A transactions tax actively militates against this. Perhaps Mr Javid would like to revive Nigel Lawson’s gleeful shooting of a tax each budget. If so, stamp duty should be the first up against the wall.
Downsizing empty nesters, making room for the next generation? There’s no shortage of grey-haired folks willing to consider trading down; it’s more the dearth of suitable properties to move to. By that I mean a two-bed flat with the equivalent floorspace of a contemporary detached three-bed house – preferably in the centre of a major city, close to reasonable arts and leisure venues, good public transport and access to decent medical facilities.
The Australian government introduced a supposed incentive to downsize. If you sell your house you can each put $300k into your superannuation free of tax and without affecting your normal allowances. The only problem is that you can only do it between the ages of 65 and 75. We’ve effectively been empty nesters for 4 years since our youngest went off to uni in Brisbane. MrsBud won’t be 65 for another 7 years, so it’s actually a disincentive to downsize. We’ll just roll around in our 6 bedroom mansion for at least another 7 years.
We’re empty nesters in UK. At the time we had our present house built, one of the Planning requirements was to design homes that could be adapted for changing needs as one gets older (Lifetime Homes or something like that). So we did. And we’re not going anywhere just because some interfering prodnose changes the Government’s mind. Who knows, if we hang on long enough, the Government may change its mind again (when the prodnose becomes an empty nester).
https://scholar.harvard.edu/files/shoag/files/why_has_regional_income_convergence_in_the_us_declined_01.pdf
This is an interesting paper I read recently that posits reduced ability of people to move about within the US as the source of various ills, including lower productivity and persistent inequalities between regions.
If you factored in all the harms caused by stamp duty (and planning restrictions) in the UK, I wonder how that compares to the government revenue (and for planning restrictions, some measure of environmental value protected).
@Bernie G – you make a good point. I would like, in a decade or so, to head back to Blighty to find a semi-retirement home with exactly the characteristic you describe. Except in decent provincial city, not a major one.
If I look at my home town, there are very few flats and most of those available have very poor spec; they are designed for people who can’t afford a house, not people who don’t want one.
The only way to get decent-sized rooms is to buy a 4+ bedroom house (which command a premium due to the glut of awful pokey 3 bedroom semis).
Friends of mine wanted to downsize some years ago from their 4-bed house. Ideally they wanted a two-bed bungalow, but locally everything smaller was being bought up, demolished, and replaced with something bigger. They ended up “downsizing” to a 3-bed house.
Who the hell are you to judge how much space we “need”?
Fuck off, Worstall.
Oh, sorry, you already have.
@Bernie: “the dearth of suitable properties to move to. By that I mean a two-bed flat with …” – don’t forget that you’d probably want top class sound insulation.
By the way, how does the two bedroom thing work? What happens when a child, spouse, and nippers come to visit?
The second bedroom would be to accommodate Mrs G’s frocks. If anyone wants to visit there’s a perfectly adequate hotel 3-4 miles away – happy to meet up for lunch or dinner.
“don’t forget that you’d probably want top class sound insulation.”
Absolutely crucial, if you’re coming from anything detached. And which is all far too rare in the UK – most sound insulation in UK flats is dire.
“Fuck off, Worstall.”
In fairness to Timmy, he’s not judging. He’s simply suggesting a way to make life a little easier for those that do make that judgement for themselves. It’s a bit of a stretch to link “getting rid of stamp duty” (for everyone) with “we’ve decided you don’t need all that space”…
Or maybe, this time, it was a tad dry for me..
‘It’s a bit of a stretch to link “getting rid of stamp duty” (for everyone) with “we’ve decided you don’t need all that space”…’
The link will probably be Mr Jeremy Corvid and his IRA sidekick.
Abolish all stamp duty, not just property.
If must persist, then on property put it back to flat 1% as it was before Blair, Brown, Osborne meddled and damaged property market.
Javid now saying he never suggested changing incidence from buyer to seller.
As we know MPs & Ministers won’t allow damage to economy which makes us poorer – that’s their oft said reason for thwarting Brexit.