As an American transplant, I found the British obsession with property as store of wealth puzzling, different from the US where wealth lies stocks and shares. Until I saw the the tax system bias to property over equities, and the planning act (as you mentioned).
No CGT on primary homes means we can shovel unlimited savings into primary home ladder climbing - unlike ISA's £20K cap - and make 20:1 leveraged bets confident that the planning act will help you prop up the price and you will almost never go under water. You can NIMBY all new competing supply to skew the housing market in your favour. Or charge eye-watering rents to the younger generations.
Any proposal - from a studio to movie studios - is fought to the death as possibly impacting house value; never mind having a major studio near your house may drive up the house' value as people who work there might want to live nearby.
Politically "brave" and would need a skilled communicator to sell it: "do you want to invest in a productive economy and real companies, or keep borrowing money to bid up house prices vs. each other?" The property = pension assumption needs to be broken.
Combine with big push on loosening planning rules massively. Sell it to younger generations. Phase in the CGT, start at 400k and reduce it over time to 200k or less.
Remove Stamp Duty to cushion the blow. In some cases, the house owner may be better off:
* Currently, buy at 400k, sell at 700k, no CGT, Stamp duty ~24K at 676k buying price.
* Cap CGT at 200k, 20% rate. Buy for 400k, sell for 700k, CGT 20% over 200k = 680k available to buy next home. +4K better off.
AstroZeneca, Shell, HSBC, Unilever, BP, Rio Tinto, etc are international companies that happen to be domiciled in Britain. Note the conspicuous lack of big tech ala Nvidia, Google, etc and predominace of low growth value stocks. If you eschew Britain, you just underweight those value stocks and overweight something else. It so happens value stocks have underperformed for 20 years, and tech outperformed. We might be at the point of a sea change. It isn't until you get to smaller (by market capitalization) stocks that the company is strongly dependent on British economy.
Concerns about British government seizing assets of small British investors is a more valid concern. Solution is to use a brokerage domiciled in EU or USA, but then buy world indexes and forget this idea of excluding Britain, which is small part of the total world index. British government still has powerful tools to grab your money, but it would be a multi step process of the brokerage is domiciled elsewhere, and that's probably all you need to be safe. "You don't need to outrun the tiger, just outrun the other people around you."
As an American transplant, I found the British obsession with property as store of wealth puzzling, different from the US where wealth lies stocks and shares. Until I saw the the tax system bias to property over equities, and the planning act (as you mentioned).
No CGT on primary homes means we can shovel unlimited savings into primary home ladder climbing - unlike ISA's £20K cap - and make 20:1 leveraged bets confident that the planning act will help you prop up the price and you will almost never go under water. You can NIMBY all new competing supply to skew the housing market in your favour. Or charge eye-watering rents to the younger generations.
Any proposal - from a studio to movie studios - is fought to the death as possibly impacting house value; never mind having a major studio near your house may drive up the house' value as people who work there might want to live nearby.
CGT exemption needs to be capped (like US does).
I can think of few tax proposals as politically hazardous (for exactly the reasons you lay out). But agreed, the UK has a particularly bad case of the dynamic laid out here: https://www.theatlantic.com/newsletters/archive/2022/12/homeownership-real-estate-investment-renting/672511/, and the tax rules makes that worse.
Politically "brave" and would need a skilled communicator to sell it: "do you want to invest in a productive economy and real companies, or keep borrowing money to bid up house prices vs. each other?" The property = pension assumption needs to be broken.
Combine with big push on loosening planning rules massively. Sell it to younger generations. Phase in the CGT, start at 400k and reduce it over time to 200k or less.
Remove Stamp Duty to cushion the blow. In some cases, the house owner may be better off:
* Currently, buy at 400k, sell at 700k, no CGT, Stamp duty ~24K at 676k buying price.
* Cap CGT at 200k, 20% rate. Buy for 400k, sell for 700k, CGT 20% over 200k = 680k available to buy next home. +4K better off.
AstroZeneca, Shell, HSBC, Unilever, BP, Rio Tinto, etc are international companies that happen to be domiciled in Britain. Note the conspicuous lack of big tech ala Nvidia, Google, etc and predominace of low growth value stocks. If you eschew Britain, you just underweight those value stocks and overweight something else. It so happens value stocks have underperformed for 20 years, and tech outperformed. We might be at the point of a sea change. It isn't until you get to smaller (by market capitalization) stocks that the company is strongly dependent on British economy.
Concerns about British government seizing assets of small British investors is a more valid concern. Solution is to use a brokerage domiciled in EU or USA, but then buy world indexes and forget this idea of excluding Britain, which is small part of the total world index. British government still has powerful tools to grab your money, but it would be a multi step process of the brokerage is domiciled elsewhere, and that's probably all you need to be safe. "You don't need to outrun the tiger, just outrun the other people around you."