Politics Thread!

[Darkflame]

Surely a mansion is big enough to take on extra people as renters to pay for any extra tax too?

[tufty]

If they don't want to voluntarily accept an easier life, repossess their houses to pay their tax, and fuck 'em off into council-run housing.

Again you too must be pretty heartless to think this acceptable. To kick people out of their home for nothing they've done.

No, I think your hypothetical pensioners are fucking idiots.

Let's look at it. What's being suggested is a "mansion tax" of 3,000 or thereabouts per year on properties valued at over 2 million.

So, your hypothetical moro^H^H^H^Hpensioners are living in a property that's valued at 2 million. And they're on "modest" pensions, so 3 grand a year is gonna hurt them. But we can assume they're no longer paying a mortgage. So either they struggle, or they sell up, invest their 2 million pound lump sum, and live off the interest. Assuming 3% (about the best you or I could get, but a couple of million cash in hand means you're far more likely to get upwards of 5%), that's 60K/year household income without touching the lump sum; that puts them well into "above average earnings" status, and probably into about the top 1/4 of UK earners.

Without lifting a finger. No need to work. No need to struggle at all. Just sit there and watch the money roll in. Plus their pensions, of course.

Alternatively, let's assume they're in their mid-60s. They can probably expect another ten to 15 years or so of healthy living, so they could, for example, blow 100K / year for 15 years and *still* have half a million plus all the compound interest on what they hadn't spent to fall back on in case they happen to live a long time. 100k/year puts them up in the "very comfortable" earnings range.

Plus their pensions, of course.

If I didn't know you better, pogo, I'd suspect you of pulling "shock tactic" Daily Mail pensioners directly out of your chocolate starfish without thinking it through clearly.

[pogo]

Surely a mansion is big enough to take on extra people as renters to pay for any extra tax too?

Such is the exorbitant price of property in the London at the moment, 10 per cent of the 'mansions' worth more than £2million are actually one or two bedroom flats.

'Mansion tax' is a deliberately misleading name as there's no way to target just 'mansions'.

What's being suggested is a "mansion tax" of 3,000 or thereabouts per year on properties valued at over 2 million.

Er, no. My assumptions were 100,000 properties over £2m (nobody knows exactly how many but it's around that) and £1.2bn to be collected (Labour's plans), so £12,000 a year. I can't see how to get £3,000 from any reasonable assumptions.

But even $3000 would be unaffordable for many. Force them to pay and you have to be prepared to forcibly evict them to collect. I think that any government that tries would lose. Lose the court case and lose politically as the opposition aligns themselves with keeping pensioners in their homes.

To avoid political suicide they'd have to include some forms of means testing. But if they do that then not only pensioners but many others will avoid the tax easily, by putting the house in the name of a child, or parent, or spouse. And suddenly it's collecting a lot less than projected and turns out to be hardly worth the effort. Even £1.2bn is only a drop in the ocean, only 1.5% of the deficit.

[tufty]

I can't see how to get £3,000 from any reasonable assumptions.

I didn't get it from "reasonable assumption", I got it from what was actually suggested (2-3m properties taxed at ~ 3k/year, far more for >3m).

Nice way of avoiding the rest of my post by the way. So, unless you've got any other hypothetical people stuffed up your arsehole who couldn't possibly live, work free, on 60K/year of interest payments...

[pogo]

There aren't 2-3m properties costing over £2m.

I didn't ignore it, I just pointed out the major flaw. Whether you think they could move to a cheaper property or move out and live on the interest, they have to sell their house. The govt. would have to be willing to force them, taking them to court and evicting them. Or it could just sling them in jail for non-payment. I don't think any government would do this, or if they did it would be political suicide as soon as e.g. a feeble 80 year old widow was helped into court to face HMRC's lawyers.

[tufty]

There aren't 2-3m properties costing over £2m.

Okay, I'll assume you *are* a moron.

Properties valued between two and three million pounds to be taxed around three thousand pounds sterling per year.
Properties valued above three million pounds to be taxed "significantly more"

Here ya go : http://www.standard.co.uk/news/politics ... 06016.html

I didn't ignore it, I just pointed out the major flaw. Whether you think they could move to a cheaper property or move out and live on the interest, they have to sell their house.

It's not a flaw. If you're sitting on 2 million quid, you can live very comfortably elsewhere (even within London, maybe even in the same area) *without having to work*. It doesn't require the government to be willing to sling people out of their homes, it merely requires people to be capable of coherent thought. Something you don't seem to be capable of.

Let's suppose you're living in a 3 bedroom house in N1, valued at around 2 million. You could sell it, and then rent a 3 bedroom house in N1 for around 550 per week, or *half* of what your interest payments are going to come to. Leaving you 30K per year to piss up the wall.

[The ghost of raids past]

Why should the person sitting on a nest egg be forced to sell it. They can give it to their children where it will be taxed to high heaven in Death Duties. Your example also makes the assumption that there is a mortgage left to pay.

I know a few people in London and Surrey that purchased houses at 300k ish they are now all worth well over a million. Is that the fault of the person or the over inflated housing market. All of those people btw have 0 mortgage currently.

A rented house is not an ideal choice, you have no security, the landlord at any time can terminate your contract. A mansion tax is unfair and penalises those of us that live in the South east where the cost of living is substantially more than the rest of the country and no we cant move the companies we work for are based here and would never consider moving.

[pogo]

It doesn't require the government to be willing to sling people out of their homes,

Yes it does. As if the tax bill arrives and the person can't pay then they aren't going to suddenly think "I know, I'll just sell the house!". Selling a house and buying another is a uniquely complex and stressful activity. Death and divorce are probably more stressful but at least they're over quickly. Moving house at the best of times takes many months. If things don't go well – if you're in a chain, are gazumped, if your house is hard to sell, ... – it can take many times longer as you stop and restart the process. It's also expensive, often with costs upfront such as getting a survey done, fixing any problems found, redecorating, as well as travel costs, hotel costs as you look for somewhere to move to.

And it's far more difficult for many retired people. Many have limited mobility, or other disabilities. They may have little experience of the housing market, especially the modern one which is mostly online. They may be unable to get credit, needed to kick start the process.

So when the "please pay £3000/£12000" letter arrives many will ignore it. They may be stressed by it, may consider ways to pay. They won't start selling their house. Even if they start the process may take too long so they can't pay the tax in time. It will take a court case and compulsory purchase and eviction to make it happen. And that I think would be political suicide for any government.

[mattley]

Let's suppose you're living in a 3 bedroom house in N1, valued at around 2 million. You could sell it, and then rent a 3 bedroom house in N1 for around 550 per week, or *half* of what your interest payments are going to come to. Leaving you 30K per year to piss up the wall.

This is where you've lost it Tufty

The idea that selling somewhere you own and moving into rented is in someway equivalent is absurd

Most people who bought 300K houses in 2000 were moving up and used inheritance to up their purchases so don't have £2K repayments, and will soon have zero as it will be paid. (also people who paid £400K in 2003)

There are very few opportunities to gain secure tenancies in this country, renting sucks.

The idea that 1.5% interest after tax on £2M with no risk is spurious at best and very unattractive when the option is secure home ownership.

The house someone lives in is not a liquid asset, it's the house that they live in and it's all they've got to live in. That some fuckers made the houses around them worth more does not make them automatically ripe for a tax grab.

[mattley]

Bin double post

[Darkflame]

To clarify; My suggestion was that if the houses are bigger then needed then the owner can rent the extra space - thus giving them an income.
It wasn't linked to the idea that the owners become renters, it was a separate idea.

If a mansion is already rented, then the owners probably are already getting a significant income no?

While I can see how definitions are complex, if space is at a premium (especially in city's) its not so much the mansion that's the problem its the people sitting on unused space. I have no idea if this is statistically significant however.

[Ollie]

Anyway, the plan is that long-standing residents who aren't earning enough to put them in the 40% tax bracket will be able to defer the mansion tax until they sell the house or die. So it's unlikely that anybody who couldn't afford to pay it would have to move.

[pogo]

Even easier to see if you could sell your house and live on the interest as rent look at the yield, i.e. rent as a % of price. This is tracked as housing is seen as an investment for some, especially in these times when everything else is so poor and/or risky, but at any time residential property is one way of diversifying. So here's the Telegraph with a list of yields from a few months ago:

http://www.telegraph.co.uk/finance/pers ... turns.html

Worst yield is London, or more precisely Kensington & Chelsea, as prices are so expensive. But even there the yield is 2.88%. So to live off your interest in similar accommodation nearby after selling you need about 3% risk free, after tax, from your bank.

[pogo]

Anyway, the plan is that long-standing residents who aren't earning enough to put them in the 40% tax bracket will be able to defer the mansion tax until they sell the house or die. So it's unlikely that anybody who couldn't afford to pay it would have to move.

That's a form of means testing that's needed. The problem with that is it collects less – a lot less as not only do you have pensioners but rich foreigners, both those cash rich but who don't pay UK income tax and those who take simple steps so the house is in the name of a non-higher rate taxpayer. They can also take steps to make sure it's never sold. Just give it away to their children. Ideally well before they die but even a few days before, unless it includes similarly complex (but separate) rules to inheritance tax designed to avoid you disposing of your assets.

[The ghost of raids past]

If you give a house away, you have to live for 7 years or you are still taxed when you die.