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- Boris Johnson (the British Prime Minister) sold his London family home in 2019 for £3.75M after having rented it out for £2000/week (just under 4x the nationa

by nly 5y ago

- Boris Johnson (the British Prime Minister) sold his London family home in 2019 for £3.75M after having rented it out for £2000/week (just under 4x the national average income) while living in his Government provided accommodation in his role as Foreign Secretary (2016-2018).[0] - Property prices have shot up 10% during the pandemic, bolstered in part by the Government cutting stamp duty on sales. - A few days ago the Government raised National Insurance (which is an income tax) on all workers to pay for social care while protecting property wealth with a contribution cap. Nobody in power is popping the property asset bubble in the UK any time soon. It's a sacred cow. I'm in the top 2% of earners by income in the UK and I'm still completely priced out of wrt to buying a modest family home (or flat) a humane, commutable distance of central London. Price/Income ratios are too high even for me because I'm competing with my peers. It's a supply problem, and a problem of foreign investment and bad incentive schemes. [0] https://www.mirror.co.uk/news/politics/boris-johnson-clinging-rent-free-12949436 https://www.mirror.co.uk/news/politics/boris-johnson-clingin...

notanzaiiswear 5y ago
Or many people want to live in London.
bb123 5y ago
There is housing available within commuting distance - I bought a 2 bedroom flat walking distance from a station with a 35 minute link to Kings Cross for under 200k. People seem to think they have some sort of God-given right to live in central London. If you want to buy a property you may need to make some sacrifices in that department. Yes the town I live in is pretty shite, and I have to train to work or to see friends on the weekend but I own my home.
- yesOfCourse9 5y ago
  Yes only the elite, who speculate prices beyond the reach of normies, should be allowed to live where they want. Nice embedded class based bias by the stiff upper lip crowd. Make the minority that hands itself free money subject to the same open market and you have a point.
  - II2II 5y ago
    > Yes only the elite, who speculate prices beyond the reach of normies, should be allowed to live where they want. It is not even a case of living where you want to, nor is it a case of supporting a particular lifestyle. It is a question of quality of life. If your commute is 30 minutes door-to-door, you are losing an hour a day. That hour could be better put to use to improving your skills, working paid hours, taking care of your personal well-being, or leisure. It is also worth noting that most people measure commute time as time in transit with a private vehicle, this incurs additional costs (meaning working additional hours) and the only way to get around it involves a significant tradeoff for time. There are many people who do not want to live an elitist lifestyle and would be happy to live somewhere other than where the elites live. What they don't want to endure is a quantitative and qualitative diminishing in their quality of life.
- heavenlyblue 5y ago
  How often is the train? Or is it one of these rare direct 35 minute trains?
- jvvw 5y ago
  Luton? I think some parts of London are more reachable from affordable places than others and that requirements do change when you have a family (more space and you may not need the best school but you don't want a terrible one). We live further up the Thameslink line and we get a lot of people moving here from London after having children, but it is a long commute.
  - Sanguinaire 5y ago
    I lived in Luton for a year and commuted in to London. Yes, it is certainly more affordable; but only because the NHS covers the cost of dealing with your stab wounds. For non-UK people: yes of course I'm joking, however Luton is the home of both a large immigrant population and the "English Defence League", the closest thing we have to the KKK.
- nly 5y ago
  Define 'commutable distance', because to me that means 30-40 minutes door to door. Hitchin is 33 minutes to Kings Cross on Thameslink and I could definitely do my commute from Hitchin station in ~50 minutes, which is roughly 10 minutes more than it takes me from Zone 3, door to door, now. If you look around on RightMove, 2 bed flats going near Hitchin station (Purwell) are ~£335K and a 20 minute walk away, so my commute would be up to 70 minutes. Then factor in that you're dropping £5K/year for a season ticket (roughly the equivalent to adding ~£100K to your mortgage at current interest rates), giving up a lot socially, still don't have a garden, still have a pokey little flat, is it worth it? I respect your life choices, but it's not for me. > People seem to think they have some sort of God-given right to live in central London. I think anyone earning in the top 2% should be able to do this, yes. After all, central London contains 2.3% of the UK population. If they're all at the top then by definition it should be possible. In any case, I don't want to get too personal. My partner works all over London also so being in London makes sense for us. I also respect that this is a nationwide issue affecting a lot of people worse off than me.
  - throwaway1777 5y ago
    We’re talking about where all the people who work at costa and pret live more than the top 2% earners. I guess they all need to commute in from the outskirts to make the rich people’s coffee.
  - bryanrasmussen 5y ago
    >I think anyone earning in the top 2% should be able to do this, yes. After all, central London contains 2.3% of the UK population. If they're all at the top then by definition it should be possible. Ok but if you're barely in the top 2% that would sound like you'd afford the worst in London - is it the worst you're going for or are you expecting to be the quality of what you'd get other places? Obviously I don't know if you're barely or not, just since you said top 2% and not top 1% it might be you are just at the edge.
    - bin_bash 5y ago
      Clearly some of the top 2% would live outside of London as well
imtringued 5y ago
>- Property prices have shot up 10% during the pandemic, bolstered in part by the Government cutting stamp duty on sales. Something that is hard to understand is how taxes influence the price of homes and land. People have a fixed budget. The rule of thumb is that they will spend at most 30% of their income on housing. Popular cities usually have an inrush of educated people getting high paying jobs. The existing residents see their % rise beyond 30% as a result but the rule of thumb still applies. When you have a fixed budget then adding more taxes won't lead to spending more, it means the government siphons money off the purchase of the home. That money cannot be used to purchase homes. When people talk about how taxes make housing expensive they are dead wrong. Taxation does not change your budget. When the government drops taxes on housing what happens is that a bigger chunk of the budget is being used for actually purchasing housing rather than paying taxes. This means house prices will rise and you will not be better or worse off than before. However, the rise in home prices fuels speculation. People buy houses expecting that they go up. The reduction in taxes created a gap and speculators simply insert themselves in that gap and take their profits. The problem isn't the speculation in itself but rather the expectation that housing will always go up. It's not only investors that want to make money. Homeowners see an opportunity to create a big gap by voting for restrictive zoning or making new construction a legal minefield. The real problems begin when even grandma and her dog are speculating.
- ItsMonkk 5y ago
  Exactly. If property taxes were raised to 100% annually of the cost of the home, the price of the house would instantly drop to somewhere near the annual rent cost. "Buying" the house would end up being close to a security deposit. It goes without saying though, that 100% annually is not a good number. It would disincentivize building, which is something we really need right now. The right number is a Land Value Tax such that the cost of the property equals the cost of the building. So if you have two properties, one in downtown SF, and one in the middle of Montana, and each are the exact same house, but the Montana house sells for $200k and the SF house sells for $1M, really it's the land in SF selling for $800k. So that SF market price should move to $200k. To do so we need to tax the property at increasing rates(per sqft of land) until they match. When we tax enough, the new price will reach its improvement value. In the short term this will have devastating effects on the Net Worth of individuals who took out loans or otherwise bet their income on owning a home, so I advocate for a one time tax break(that for exceptional cases like the elderly would be transferable for straight cash upon sale of the property) equivalent to the drop in market value of the home. So in the SF case, they would get a $800k tax credit. Once this system is in place being a NIMBY will no longer be a profitable stance, and will instead cost that area money in taxes. As it will no longer be a perverse incentive, the population will mostly switch to becoming YIMBY's, and advocate for better Zoning rules and to ease up on silly restrictions. The tax money can be spent on high value improvements to the area that will boost everyone's quality of life, and if none are found, can be simply given back equally to all. Once this system in place and the tax credits have been used up, we can even go further and get rid of income taxes, sales taxes, corporate taxes, and capital gains taxes. The value of the land tax will be enough to replace all of them. All from a tax that because land is at a fixed supply, is completely non-distortionary and results in no dead weight loss. Housing can either be an investment or affordable long-term, it can not be both.
yodelshady 5y ago
> Nobody in power is popping the property asset bubble in the UK any time soon. It's a sacred cow. It's a bad mad, especially considering how much the Tories have relied on there being homeowners. Their whole thing is that that group is the sensible middle, who work for a living, but also appreciate that suppliers of capital have limits. Odder still to not protect flat owners with cladding (I'm not one, FWIW). Higher-density housing is happening, and you've just told your next cohort of supporters to a) never invest in this asset class, we will render it worthless, b) never vote for us either, even as homeowners we won't support you.

by nly 5y ago

notanzaiiswear 5y ago

Or many people want to live in London.

bb123 5y ago

There is housing available within commuting distance - I bought a 2 bedroom flat walking distance from a station with a 35 minute link to Kings Cross for under 200k. People seem to think they have some sort of God-given right to live in central London. If you want to buy a property you may need to make some sacrifices in that department. Yes the town I live in is pretty shite, and I have to train to work or to see friends on the weekend but I own my home.

yesOfCourse9 5y ago
Yes only the elite, who speculate prices beyond the reach of normies, should be allowed to live where they want. Nice embedded class based bias by the stiff upper lip crowd. Make the minority that hands itself free money subject to the same open market and you have a point.
- II2II 5y ago
  > Yes only the elite, who speculate prices beyond the reach of normies, should be allowed to live where they want. It is not even a case of living where you want to, nor is it a case of supporting a particular lifestyle. It is a question of quality of life. If your commute is 30 minutes door-to-door, you are losing an hour a day. That hour could be better put to use to improving your skills, working paid hours, taking care of your personal well-being, or leisure. It is also worth noting that most people measure commute time as time in transit with a private vehicle, this incurs additional costs (meaning working additional hours) and the only way to get around it involves a significant tradeoff for time. There are many people who do not want to live an elitist lifestyle and would be happy to live somewhere other than where the elites live. What they don't want to endure is a quantitative and qualitative diminishing in their quality of life.
heavenlyblue 5y ago
How often is the train? Or is it one of these rare direct 35 minute trains?
jvvw 5y ago
Luton? I think some parts of London are more reachable from affordable places than others and that requirements do change when you have a family (more space and you may not need the best school but you don't want a terrible one). We live further up the Thameslink line and we get a lot of people moving here from London after having children, but it is a long commute.
- Sanguinaire 5y ago
  I lived in Luton for a year and commuted in to London. Yes, it is certainly more affordable; but only because the NHS covers the cost of dealing with your stab wounds. For non-UK people: yes of course I'm joking, however Luton is the home of both a large immigrant population and the "English Defence League", the closest thing we have to the KKK.
nly 5y ago
Define 'commutable distance', because to me that means 30-40 minutes door to door. Hitchin is 33 minutes to Kings Cross on Thameslink and I could definitely do my commute from Hitchin station in ~50 minutes, which is roughly 10 minutes more than it takes me from Zone 3, door to door, now. If you look around on RightMove, 2 bed flats going near Hitchin station (Purwell) are ~£335K and a 20 minute walk away, so my commute would be up to 70 minutes. Then factor in that you're dropping £5K/year for a season ticket (roughly the equivalent to adding ~£100K to your mortgage at current interest rates), giving up a lot socially, still don't have a garden, still have a pokey little flat, is it worth it? I respect your life choices, but it's not for me. > People seem to think they have some sort of God-given right to live in central London. I think anyone earning in the top 2% should be able to do this, yes. After all, central London contains 2.3% of the UK population. If they're all at the top then by definition it should be possible. In any case, I don't want to get too personal. My partner works all over London also so being in London makes sense for us. I also respect that this is a nationwide issue affecting a lot of people worse off than me.
- throwaway1777 5y ago
  We’re talking about where all the people who work at costa and pret live more than the top 2% earners. I guess they all need to commute in from the outskirts to make the rich people’s coffee.
- bryanrasmussen 5y ago
  >I think anyone earning in the top 2% should be able to do this, yes. After all, central London contains 2.3% of the UK population. If they're all at the top then by definition it should be possible. Ok but if you're barely in the top 2% that would sound like you'd afford the worst in London - is it the worst you're going for or are you expecting to be the quality of what you'd get other places? Obviously I don't know if you're barely or not, just since you said top 2% and not top 1% it might be you are just at the edge.
  - bin_bash 5y ago
    Clearly some of the top 2% would live outside of London as well

imtringued 5y ago

>- Property prices have shot up 10% during the pandemic, bolstered in part by the Government cutting stamp duty on sales. Something that is hard to understand is how taxes influence the price of homes and land. People have a fixed budget. The rule of thumb is that they will spend at most 30% of their income on housing. Popular cities usually have an inrush of educated people getting high paying jobs. The existing residents see their % rise beyond 30% as a result but the rule of thumb still applies. When you have a fixed budget then adding more taxes won't lead to spending more, it means the government siphons money off the purchase of the home. That money cannot be used to purchase homes. When people talk about how taxes make housing expensive they are dead wrong. Taxation does not change your budget. When the government drops taxes on housing what happens is that a bigger chunk of the budget is being used for actually purchasing housing rather than paying taxes. This means house prices will rise and you will not be better or worse off than before. However, the rise in home prices fuels speculation. People buy houses expecting that they go up. The reduction in taxes created a gap and speculators simply insert themselves in that gap and take their profits. The problem isn't the speculation in itself but rather the expectation that housing will always go up. It's not only investors that want to make money. Homeowners see an opportunity to create a big gap by voting for restrictive zoning or making new construction a legal minefield. The real problems begin when even grandma and her dog are speculating.

ItsMonkk 5y ago
Exactly. If property taxes were raised to 100% annually of the cost of the home, the price of the house would instantly drop to somewhere near the annual rent cost. "Buying" the house would end up being close to a security deposit. It goes without saying though, that 100% annually is not a good number. It would disincentivize building, which is something we really need right now. The right number is a Land Value Tax such that the cost of the property equals the cost of the building. So if you have two properties, one in downtown SF, and one in the middle of Montana, and each are the exact same house, but the Montana house sells for $200k and the SF house sells for $1M, really it's the land in SF selling for $800k. So that SF market price should move to $200k. To do so we need to tax the property at increasing rates(per sqft of land) until they match. When we tax enough, the new price will reach its improvement value. In the short term this will have devastating effects on the Net Worth of individuals who took out loans or otherwise bet their income on owning a home, so I advocate for a one time tax break(that for exceptional cases like the elderly would be transferable for straight cash upon sale of the property) equivalent to the drop in market value of the home. So in the SF case, they would get a $800k tax credit. Once this system is in place being a NIMBY will no longer be a profitable stance, and will instead cost that area money in taxes. As it will no longer be a perverse incentive, the population will mostly switch to becoming YIMBY's, and advocate for better Zoning rules and to ease up on silly restrictions. The tax money can be spent on high value improvements to the area that will boost everyone's quality of life, and if none are found, can be simply given back equally to all. Once this system in place and the tax credits have been used up, we can even go further and get rid of income taxes, sales taxes, corporate taxes, and capital gains taxes. The value of the land tax will be enough to replace all of them. All from a tax that because land is at a fixed supply, is completely non-distortionary and results in no dead weight loss. Housing can either be an investment or affordable long-term, it can not be both.

yodelshady 5y ago

> Nobody in power is popping the property asset bubble in the UK any time soon. It's a sacred cow. It's a bad mad, especially considering how much the Tories have relied on there being homeowners. Their whole thing is that that group is the sensible middle, who work for a living, but also appreciate that suppliers of capital have limits. Odder still to not protect flat owners with cladding (I'm not one, FWIW). Higher-density housing is happening, and you've just told your next cohort of supporters to a) never invest in this asset class, we will render it worthless, b) never vote for us either, even as homeowners we won't support you.