This BBC report http://www.bbc.co.uk/news/education-43992782 on the reduction in likelihood of people moving house ignores one large elephant in the room. It manages to mention rising house prices but not the other factor that affects housing mobility - tax. I wonder if the rate of housing mobility changed in 1997, because it was that year that Gordon Brown changed the stamp duty on house purchases from the rate under the Conservative government of 0% on the first £60,000 and 1% on the rest to:
0% on the first £60,000
1% on the amount between £60,000 and £250,000
1.5% on the amount between £250,000 and £500,000
2% on amounts above £500,000
Gordon Brown raised the rates a year later:
0% on the first £60,000
1% on the amount between £60,000 and £250,000
2% on the amount between £250,000 and £500,000
3% on amounts above £500,000
A year later Gordon Brown raised the rates again:
0% on the first £60,000
1% on the amount between £60,000 and £250,000
2.5% on the amount between £250,000 and £500,000
3.5% on amounts above £500,000
And a year later the 'clunking fist' did it again:
0% on the first £60,000
1% on the amount between £60,000 and £250,000
3% on the amount between £250,000 and £500,000
4% on amounts above £500,000
Note that these higher and higher rates were not charged on the amount in each band but on the whole amount to that band. This is what reduced housing movement massively, especially in London and the South East of England where house prices are higher.
There was some tinkering on the 0% band spread in later Gordon Brown budgets and more and more subsequent to that. The biggest change came under the Conservative government in December 2014 when stamp duty was changed so that the charge was made payable on the portion of value in each bracket, which was fairer than the Gordon Brown tax grab, but who expects fairness from a Labour government?
Yes house prices massively increased over the period discussed by the BBC but not to mention the massive changes in Stamp Duty under successive Labour governments cannot be a mistake. Once again the BBC are protecting the Labour Party from criticism over its previous record, I can think of no other reason to omit this factor.
1 comment:
I live in an expensive area and would like to downsize, whilst still remaining in the area near to our family. The cheapest property would still be in excess of of £500K, so we stay put. £20K duty plus all the other costs will will pay my gardener and an occasional home help for quite a few years and I would actually be out of pocket moving to a smaller property.
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