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I think the increase in the value of a house is a bit of a red herring. Averaged out across the whole country a 3-bed family home has the exact value of a 3-bed family home
Indeed, which is why it's not necessary for houses to increase in prices continuously. That may be a red herring for homeowners but it's not a red herring for people like me who can't afford a house.
It seems quite odd to tax people just for ownership of something that is really just a functional object for your everyday life (it would be a bit like taxing shoes or a bed)
I agree, but shoes and beds are not thought of like investments, and the prices of shoes and beds are probably going down in real terms rather than up at a startling rate. I only support a tax like CGT in its capacity to curb the use of property as an investment and to limit growth to match wages/inflation.
The real value of a house is not the gain in its value, but the fact that the money you put into paying off your mortgage is still, in effect, yours ... rather than spaffed away in rent
You don't need to explain that to me! I feel this pain every month when a large chunk of my salary goes down the drain
frankenbike-
Indeed, which is why it's not necessary for houses to increase in prices continuously. That may be a red herring for homeowners but it's not a red herring for people like me who can't afford a house.
I agree completely. There are various reasons why house prices are going up (the double-income trap being one, which might be slightly blunted if people re-prioritise their work/life balance due to Covid). I think the red herring I was referring to was seeing an increase in the value of someone's primary residence as an increase in their realisable assets.
I agree, but shoes and beds are not thought of like investments, and the prices of shoes and beds are probably going down in real terms rather than up at a startling rate. I only support a tax like CGT in its capacity to curb the use of property as an investment and to limit growth to match wages/inflation.
I think houses as primary residences are "Vimes Boots"-type investments. They don't effectively make you ready money, but they greatly reduce your expenditure, while providing you with something you need. The challenge is to find a tax that reflects the fact that a (first) house is a home, rather than just an investment vessel.
You don't need to explain that to me! I feel this pain every month when a large chunk of my salary goes down the drain
With you there! I'm renting at the moment too.
ffm
I think the increase in the value of a house is a bit of a red herring. Averaged out across the whole country a 3-bed family home has the exact value of a 3-bed family home i.e., if you buy a house then the value you realise from selling it will allow you to buy only a house of exactly the same size (actually slightly less because of SDLT and various other costs associated with selling, buying and moving). You could sell it in order to get another property that you want more, for example by moving to an area where prices are proportionally lower and getting a bigger place, or moving to a more desirable area and getting a smaller place, but a house is always just worth (in and of itself) a house.
It seems quite odd to tax people just for ownership of something that is really just a functional object for your everyday life (it would be a bit like taxing shoes or a bed), not least because you're already taxed on the income you use to pay for it and quite often have to take on significant debt to own that asset.
The real value of a house is not the gain in its value, but the fact that the money you put into paying off your mortgage is still, in effect, yours (i.e., embedded in the value of the house you can then sell) rather than spaffed away in rent. There are other intangible benefits like peace of mind, but also some tangible losses (SDLT, maintenance etc.). I don't know what the solution is, but the huge disparity in the personal financial impact of owning vs. renting might be better addressed by reducing the latter.