| Archive for Downsizer For an ethical approach to consumption |
| Calli |
Stamp Duty HolidayWould this prompt you to sell in this climate? Or is now a good time to capitalise your assets? |
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| bodger |
Not a good time to sell but certainly getting towards being a good time to buy if you have some dosh lying idley around.. | ||||||
| JB |
Probably not even yet a good time to buy. ISTR people were talking about prices falling for another two or three years yet.
And a stamp duty holiday won't make too much difference to most people. If they're in negative equity a percent off the price won't change that and if it's because they can't remortgage because all the discount deals hagve disappeared then stamp duty won't even have that mucyh effect. |
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| Blue Peter |
There is some question as to whether it is a holiday (you pay no duty) or a deferral (you pay the duty later).
Either way, this leak will cause the market to seize, since no one contemplating a transaction in the near future (which includes those in the process now) will want to proceed until the details are known. Alternatively, they'll just demand the amount of stamp duty they would have had to pay off the price. Brilliant! Peter. |
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| JB |
So even in a best case scenario the government have just instantly wiped 3% off the value of all housing 
Arguably housing is overpriced and that reduction would be a good thing but it's hardly a good way to go about acheiving it. |
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| Blue Peter |
I'm coming to the conclusion that Neither Broon nor Badger have a clue. They're not sitting next to you, by any chance, are they? Peter. |
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| Shane |
What took you so long? |
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| Behemoth |
The last ten years. | ||||||
| Blue Peter |
I guess that I'm just a bit sloooooooooooooooooooooooow 
Peter. |
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| RichardW |
Re: Stamp Duty Holiday
As its only affects the BUYER then no. It might prompt me to buy right at the end of the offer (assuming prices keep falling). You dont always sell & buy. Sell quick buy slow is the advice for NOW. Richard |
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| JB |
It will affect the seller because the price the buyer will offer has just dropped. So if you are trying to sell right now the value of your property has just dropped, possibly quite heavily. | ||||||
| bagpuss |
I think I am being stupid here but why does no stamp duty drop the value of a property, stamp duty is paid to the government not the seller | ||||||
| Penny |
Until housing is again within reach of normal people without huge multiples of income, it will be overpriced. Current prices are ludicrous and unsustainable, and have been pushed up by banks lending when they shouldn't. |
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| JB |
If I'm about to buy a property for 300k then with stamp duty it will cost 309k. If there's a suggestion that by not buying for 1, 3, whatever months then that stamp duty will disappear and the total price will fall to 300k then the only way someone will buy now is if the price before stamp duty is cut to 291k so that the price + stamp duty is the same as the price if they wait. |
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| RichardW |
Why? The % is on top of the offer price not out of the offer price. Why should they offer less & not pay the tax so winning twice? They should pay more. The buyers budget includes the tax, if they are not paying it they have extra money avaliable. Richard |
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| RichardW |
But the same will happen the the house they are selling. but lets be honest its the first time buyers that need the help not those buying & selling £300K houses. Also would you want to risk the sale of your house by delaying 1 to X months? Richard |
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| bagpuss |
So its a price drop until when the stamp duty cessation is confirmed or denied rather than because of the potential stamp duty cessation, makes more sense now |
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| JB |
That would only be true once the tax is removed. For the moment the tax is in place but there is a suggestion that it will be removed. So for someone who must sell now they can only do so by changing their asking price to match the potential future tax cut. No buyer right now would be advised to do anything other than wait and the only way for a seller to get around that is to cut prices. |
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| JB |
Possibly not but buyers have the upper hand as they have a choice of properties to buy. Sellers have only one property to sell. If they're not willing to risk losing a sale the only way they can push that sale through is to cut prices, which of course means less money for them to buy the next property so the whole market goes down or stagnates. |
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| JB |
The problem there is that the government can't confirm the stamp duty cessation because they need the tax income and they can't deny it because noone will believe them. |
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| bagpuss |
Any predictions as to how quickly either the source of the leak or a scape goat will get fired? |
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| RichardW |
I think you are over thinking this. If you are selling & buying (the most common) then will you risk loosing your purchase & by default your sale by delaying things when over the scheme of things you are only loosing out to the tune of 3% of the DIFFERENCE between the house you are selling & the house you are buying? Until its confirmed with a start date any comment are speculation. Sales & purchases wont be hugely affected by gossip mongering. As we are "just" about to sell if the buyers try this on they will get told to F off if they want a discount. If they want to delay till the start of the no stamp duty, if its a long time I will also want some of the money they save for my trouble as I wont save cos I am not buying. They want the house at a price thats agreed With a 3% fee to the gov. If they pay that fee or not is none of my concern I still want the same price. We had that many viewings that I am confident that we would find a new buyer quickly. Richard |
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| bodger |
Leak or not, its only a drop in the ocean. The only effect that it will have is that it might sell a few newspapers. No matter what the government do, the prices of houses are going to plummet, which will be great for new buyers but disasterous for the poor sods who've just bought. I feel very sorry for them. Its alright saying that they shouldn't have gone in for massive mortgages but what choice did they have ?
I just don't fully understand what mechanism allowed house prices to rise to the level that were at. |
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| Blue Peter |
Rent? Peter. |
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| bodger |
Because of the situation, renting is not the cheap easy option you seem to think it is. |
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| Blue Peter |
What situation? Peter. |
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| bodger |
Err ! The one I thought we were discussing The one where people are going to be losing their homes and where rents are being made more expensive on a monthly basis than paying a mortgage.
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| Chez |
The rental market *is* very buoyant, apparently - presumably for the very reason that people can't afford to buy.
We have just had the estate agent round to give us an appraisal. He reckons our best chance of selling is at auction, for approx 20% less than we bought for two years ago. |
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| JB |
Because it is a tax on the sale alone the loss would be 3% of the total value not 3% of the difference. If I sell at 200k and buy at 300k, a not unreasonable second time buyer situation, then my buyer will pay 202k of which I get 200k and the treasury 2k, I will pay 309k of which the vendor gets 300k and the treasury 9k. If in, for example two months, stamp duty is withdrawn then my buyer would pay 200k, saving 1k, I would pay 300k saving 9k. On the basis that my sale price at the bottom end of the market is largely unaffected because that's subject to 1% tax and there will still be houses available in two months, which in a stagnating market is pretty much guaranteed, then I would be better off by 9k by waiting so I will not be looking to buy now. The loss is 3% of the total because it is tax and the only way I would go ahead is if the person from whom I am buying cuts their price to compensate. In the mean time the market is left to fall, stagnate or both. |
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| Treacodactyl |
That's can be just as much of a gamble though. I knew a couple of people a few years back who sold and moved into rented accommodation. House prices would need to fall by over 50% for it to be worth their while and even if they do they've been restricted to what they can do in the rented house. |
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| Blue Peter |
I think that in general you'll find that rents are less than a mortgage on a property, Peter. |
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| Treacodactyl |
It is still within reach of many people in the UK. Once the banks sort themselves out I can see prices rising again, especially if there's less houses being built due to the recent problems. No doubt there'll be a bust after that and so on... |
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| Chez |
In my experience over the last few years, they have tended to be more. |
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| bodger |
'General' is a very broad term but in my experience and that of my nephew who is paying close to two thousand a month in rent, the cost of rent has risen as peoples reluctance or inability to take on mortgages has increased. | ||||||
| Chez |
And, lest we forget, as the Buy To Let market has taken off. People have been putting up their rents to cover their increasing BTL mortgages. |
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| boisdevie1 |
If the government reduces/cuts/has a stamp duty holiday then all they are doing is trying to artificially inflate the housing market. And they will lost income which they will either have to find by:
increasing other taxes increasing government borrowing cutting government expenditure whichever choice they make will have an effect an everyone who lives in the UK. All they are trying to do is reduce the pain in the short term. There are no free lunches. |
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| Penny |
I disagree, basic house prices and basic salaries just don't stack up without huge deposits or massive multiples. |
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| Penny |
There was a high demand, estate agents pushed values up, banks changed their lending polices to allow bigger multiples of salary, which made it possible for a couple on a joint salary of about 30k to have a 160k mortgage. Utterly ridiculous, and unsustainable. When cheap funding for these mortgages dried up, and issues such as Northern Rock cropped up, they had to stop behaving in such a reckless way. Sh*t Fan Hit 
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| Treacodactyl |
Mortgages of over 5x joint salary were more the exception than the rule, probably much less than 1% of total lending surely? Basically I think interest rates were set far too low since 9/11 making people think they can borrow too much. |
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| Penny |
Unless banks were consistently lending at these levels over the past few years, then the prices could not have got so high. The maths just doesn't add up. Average salary around 23k, average house price 218k ish which means 3 time joint average salary is £138k, meaning a deposit of around 40% would be required. |
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| Treacodactyl |
I think you're missed a few things. You need to look at the average salary for people with mortgages. Also a fair amount of mortgages will be people re-mortgaging where I believe the LTV is lower. I could be wrong but I've never really heard of a joint multiple of 5x salary, let alone it being common practice. |
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| Penny |
When I was a Bank Manager, we were pretty strict with criteria, a couple with a decent normal salary could still afford to buy their first house, if they had the 5% deposit. Salaries have not risen that much, but house prices certianly have. The only real difference is the amont people can borrow, which has inflated the house prices. I know several people who have borrowed more than 5x salary. The housing market may survive for a while without new borrowers coming in, but eventually there will be no-one who can afford to be the first in the chain, if banks maintain their current tight lending criteria (which they should do) that's when prices will really have to fall. |
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| bagpuss |
The other thing which is allowing them to borrow so much is longer terms I know of at least one person with a 35 year mortgage | ||||||
| Chez |
That's the norm in some countries, I think? I remember hearing that in Switzerland, where my ex partner used to work, his colleagues were really shocked that you could get a mortgage for as little as twenty years. They were all set up with mortgages that passed from one generation to the next. | ||||||
| bagpuss |
I think the Japanese do it that way to, wasn't normal in this country until quite recently.
Other countries are also much keener on longer term fixed rates than most banks here are |
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| Blue Peter |
When I look on rightmove at properties that are both for sale and for rent, the rents don't cover even an interest only repayment mortgage (which I suppose is the closest comparison - though with IO, you are supposed to have a repayment vehicle), Peter. |
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| Chez |
Doesn't that depend on your deposit, though?
It's all so complicated - not helping my mood at all today  . I think I might try to persuade Arvo to live in a yurt: http://www.broomeretreat.co.uk/
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| Blue Peter |
Yes, clearly. If you have a 100% deposit, then you have no mortgage and renting is infinitely dearer 
Peter. |
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| Chez |
I was more thinking about the rental income of people who have BTL mortgages versus their rising mortgage costs; which are therefore causing rents to climb, whilst at the same time, more people are having to rent because they can't get a mortgage. I'm not feeling terribly clear this afternoon, sorry. |