Debate Magazine

Killer Arguments Against LVT, Not (487)

Posted on the 18 January 2021 by Markwadsworth @Mark_Wadsworth

As we come up to the big part 500 anniversary episode, here is an article which TBH spotted in The Daily Mail.
It is an absolute classic of the Home-Owner-Ist genre and highly recommended reading. See how many lies, contradictions, self-delusion and diagonal comparisons you can spot.
It would take me days to debunk them all, but this diagonal comparison is worth a mention:
Older people who bought houses years ago, and who are living on a small income, could struggle to pay their tax bill and be forced to sell a cherished family home.

And not every owner-occupier in the South has benefited from huge windfall gains. Young people with huge mortgages on recently purchased tiny flats in the capital would be hammered too, with a chilling effect on their aspirations.

Poor Widows in Mansions (low income, massive unearned gain, no mortgage) and recent purchasers (high income, no unearned gain yet, large mortgage) are at absolute opposite ends of the spectrum! If one deserves sympathy, then the other doesn't. Even if you ignore the extremes, how does that translate to sympathy for the vast majority in the middle (medium income, modest unearned gain, small/cheap mortgage)??
As it happens, these problems melt away on closer inspection:
1. Fairer Share said that clearly there would be a 'defer and pay on death' option for the former.
2. For the latter in a "tiny flat in the capital" which cost them (say) £500,000, this tax would be like a small % increase in mortgage interest rates. Instead of paying 0.2% Council Tax each year (£1,000), they'd be paying 0.48% Proportional Property Tax each year (£2,400), which is only £117 a month and no worse than a 0.28% increase in mortgage rates, which purchasers should have budgeted for. The government can ease the strain by just dropping interest rates, although the chances are that interest rates have fallen by 0.28% since they took on a mortgage, so they are no worse off than they originally expected.
If they are in a "tiny flat" then no doubt they 'aspire' to 'move up the property ladder' some time in the next ten years, at which stage they will save at least £15,000 SDLT (we don't need to worry about whether SDLT is borne by buyer or seller - when you trade up you are both). So when they achieve their 'aspiration', they will get all their money back and it will make 'moving up the property ladder' a lot cheaper and easier.


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