This is really great. Even more interesting since I live in one of the very, very red parts in the south east so have a particular interest in how much my house is earning each year - a lot more than me, as it turns out.
Even having had some modest success with those businesses, I expect we’d have made considerably more return on the initial capital by now if we’d simply bought almost any cheap property here in Cambridge and traded up over the years since, and we could have done it without all the commitment and hard work that goes into getting a business up and running.
The thing that is most infuriating is that the property market is being artificially propped up again and again, both though schemes that pump more money into the market and through planning restrictions that mean we don’t build anything like enough new homes to meet demand. This is great if you have a small portfolio of buy-to-lets or perhaps if you’ve reached a stage where you want to downsize, but not really for anyone else and certainly not for those who just want to buy (or build) a home for their family to live in instead of as an investment vehicle.
Put another way, my objection in this case is not to those who have successfully invested in property ownership, whether politicians or not; it is to the fact that doing so was a viable option in the first place, because the housing market has been systematically manipulated over many years now to artificially inflate the value of properties. This gives a false sense of security to a lot of people, and for the same reason, it makes it politically difficult to implement policy that will restore some sense of proportionality to house prices, such as significantly loosening planning rules so we can simply build more homes.
That is what needs to change, IMHO. The value of a property can be whatever the market wants it to be, given what the land it’s on is worth and what it costs to build and connect up and so on, but we shouldn’t be forever inflating the market by artificially making property a scarce resource.
Seriously. Take a parcel, make 5 tiny houses with matching tiny garages... In france on that surface you would have a block perhaps 3 story high of 20 luxury flats with underground garage, electric gates etc.
Sure, it wouldn't be be dream 'detached house' thing, but perhaps it's time for the way british people see their 'home' to evolve with the resources they have...
I know quite a lot of people in France who owns a flat. THEIR flat, and it doesn't feel less like 'home' than the random tiny estate 'semi detached' in ASBOland.
One had such a damp problem that the main bedroom was uninhabitable, but it took months to figure out who was responsible for fixing it and get the required permissions. In reality, I moved out as soon as I could at the end of the initial tenancy period so I never saw that work done.
One was flooded from an upstairs flat where the plumbing failed. We literally had two large police officers trying to break its door down for several minutes to gain access for the emergency plumber before we discovered that the neighbour had been in all along and somehow slept through everything.
In the next one, you couldn’t walk around or talk normally late at night for fear of the downstairs neighbours getting irate at the noise. Don’t even think about turning up the TV, playing a musical instrument, or running a washing machine after 8pm!
It would take a degree of desperation I have never been unlucky enough to experience for me to ever live in a flat again, or a level of build quality and isolation far beyond anything I have ever experienced in any flat I have lived in or visited.
I lived in quite a few in France, and I remember playing electric guitar, loudly, at 3am in one and the neigbours couldn't hear it!
They did object about the Djembe session tho :-)
I'm also one of the lucky one whose house price has risen by 25% over the last 2.5 years. However, it means I'd have to pay 40% tax on that delta, leaving me in no position to buy anything equivalent (let alone better) in the same area.
The only people who 'profit' are people who want to seriously downsize or leave the 'red' areas. Everyone else is on the same mad train, apart from the banks, solicitors, insurers, estate agents, 'developers' and other bubble hangers on.
1) asset appreciation will be taxed at capital gains rates, not marginal income rates. That tops out at 28%, not 40% 2) with some exceptions, primary dwellings aren't subject to capital gains tax when sold.
You pay it on your second property I believe, but only if you sell, and only if it is a second property at that point.
CGT is also only 10% or 20% depending on your earning situation.