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.
"The government’s thinking on the housing crisis seems to have moved backward"
This infuriates me. Removing barriers to growing housing supply side is an almost no fiscal cost growth lever she can pull but doesn’t.
They have talked a good game on housing and fiddled around the edges – setting higher targets for councils. These are all slow burn and long-term.
Houses aren’t affordable, we have gone from house price/income 4:1 to 10:1 and eye-watering rents. We need radical action to get the supply side going quickly. I’d gut the Planning Act and start all over again.
No more vetoes to current home-owners on new builds/ conversions unless there is an absolutely compelling reason such as the skyscraper next door will block all my sunlight access. No more councils wasting time and money on applications to paint their front door a certain colour (mine does in some areas).
Default to yes and set a clock. Don’t let the NIMBYs delay for years. My local NW London suburb pensioners association fights any building over 2 floors with the argument “we can see the floors and hence they are detrimental”.
Hire Jeremy Clarkson as chief marketing officer for their plans, he knows all about council meddling.
Labour has a stonking majority. Cost of living crisis related to housing is hammering their core younger vote. The NIMBYs and older pensioners vote Tory and Lib Dem anyways. What does Labour have to lose? Be bold.
It surprises me how the left tends to bend over backwards to accommodate their non-voters, who then take the win and vote right anyways. When the right wins, it’s all about screwing the left and boasting about it. Biden sent billions in subsidizes to red states and got no credit. The Republicans voted against that but then took credit for money into their states and districts.
Why is Labour persisting with triple-lock? The winter fuel payment U-turn was just shoveling more money to the richest segments of the population.
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.
"The government’s thinking on the housing crisis seems to have moved backward"
This infuriates me. Removing barriers to growing housing supply side is an almost no fiscal cost growth lever she can pull but doesn’t.
They have talked a good game on housing and fiddled around the edges – setting higher targets for councils. These are all slow burn and long-term.
Houses aren’t affordable, we have gone from house price/income 4:1 to 10:1 and eye-watering rents. We need radical action to get the supply side going quickly. I’d gut the Planning Act and start all over again.
No more vetoes to current home-owners on new builds/ conversions unless there is an absolutely compelling reason such as the skyscraper next door will block all my sunlight access. No more councils wasting time and money on applications to paint their front door a certain colour (mine does in some areas).
Default to yes and set a clock. Don’t let the NIMBYs delay for years. My local NW London suburb pensioners association fights any building over 2 floors with the argument “we can see the floors and hence they are detrimental”.
Hire Jeremy Clarkson as chief marketing officer for their plans, he knows all about council meddling.
Labour has a stonking majority. Cost of living crisis related to housing is hammering their core younger vote. The NIMBYs and older pensioners vote Tory and Lib Dem anyways. What does Labour have to lose? Be bold.
It surprises me how the left tends to bend over backwards to accommodate their non-voters, who then take the win and vote right anyways. When the right wins, it’s all about screwing the left and boasting about it. Biden sent billions in subsidizes to red states and got no credit. The Republicans voted against that but then took credit for money into their states and districts.
Why is Labour persisting with triple-lock? The winter fuel payment U-turn was just shoveling more money to the richest segments of the population.
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."