I was looking at the stamp duty numbers again after my hasty post earlier and they don't appear to add up:Someone buying a home for £175,000 will save £1,750 under the scheme, which is likely to cost the Treasury £600m.
Lets assume that all houses in that stamp duty bracket save the full £1,750, so that means the treasury expects £600m/£175k=~350k transactions are covered by this change, which does seem a lot.
Then we are told:The government estimates half of all property transactions will now be exempt from stamp duty - up from one third when the threshold was £125,000.
So this means our glorious central planners expect c.700k transactions in the next 12 months.
This doesn't seem to stack up with what those in the private sector think:
Based on Bank of England figures of 36,000 mortgage approvals in June, Wolsey Securities projected that the number of housing transactions will be 400,000 this year, compared with the worst years of the 1990s housing market crash, when transactions ran at approximately 1m a year at their lowest.So our central planners are working on their new policy doubling the transaction rate. Hmm, I know where my money's going.
3 comments:
I just left a post on another blog about this; surely the point is that the £600 million is a part of the unbudgeted losses he's already suffering because no one's buying houses? What does Stamp Duty raise a year (OK, I just Googled it; £6.4 billion in 2007).
So the worry is NOT "where's the £600 million coming from", but "where's the £6.4 billion coming from?
And I think we know the answer to that, don't we?
We're doomed.
Good point FT. As I said in an earlier post, there is also the rest of the economy that is driven by the housing market ie furniture, DIY etc. The gap may well be a lot more than £6Bn when you add the lost taxes from that part of the economy.
Tough as it seems the only solution to this is to let house prices find their natural level and try to look after those most affected through no fault of their own.
PS I don't count people who took equity release to fund cars, holidays and other Opex as being in trouble through no faut of their own. Ditto those who lied on self assessment forms.
I agree; let house prices find their own level. How better to help the market recover? To help first time buyers? Just get the Government to sod off and leave it all alone.
Periodically a reminder's needed that money can't be created from nowhere. We need a property / land tax of some description to impose some sanity. 15 years ago I was regularly in California and they, IIRC, had a system which didn't tax property gains on sale if those gains were rolled over into buying a new house, or into taking a smaller mortgage.
Take out equity for other purposes, though, and you got slapped for tax, but good. Seems reasonable to me as a halfway house.
I'd much rather we could get back to the sanity of recognising that mortgage payments or rent are the price we pay for the warm glow of knowing that the weather's on the outside, on a cold winter's night.
Mortgages shouldn't be seen as investments, and rent shouldn't be seen as a "waste", in a sane society.
Post a Comment