house prices would fall because they would immediately be a less desirable commodity
People who own one home aren't looking at it as a commodity, at least not primarily. It's their home. Capital Gains on single-home households would just disadvantage people who may already be struggling; imagine for example a young family who needs to upsize so they have room for the new baby, or a young professional looking to move closer to work.
Yeah makes sense. I suppose I was imagining it being implemented as a last resort like say the government had a choice between cutting benefits more or taxing middle class homeowners then it would be the lesser of two evils.
The middle class does not exist. Also, if you think home ownership makes someone middle class then that demonstrates how badly things have gone.
I think if your goal is to drive up developer ownership is properties and an economy in which people only ever rent and never buy, this would be a good step. It wouldn't drive down demand or prices, because the main driver for price inflation isn't single home owners, but large, often global or foreign property developers whose whole business is buying property and renting it.
I would argue that it would be counter productive. You want people to invest in properties and own and live in them - people tend to care more for their property when they own it and it's an asset for them. I'd do exactly the reverse: give tax breaks on the first home and drastically increase taxes on secondary properties, thereby cutting the legs out from under renters. This would push more properties onto the market, driving down prices. It would also have a short term affect of harming existing home owner investments, since when home prices drop, home owner investments also take a hit, but it would be a short term adjustment and the people in it for the long term and who aren't just house hopping would not be much affected.
I suppose it depends if you think homes continue to be classed as a special asset class. I had originally been thinking people would spread their wealth into other assets instead of concentrating it in their home; even like increased private pension contributions. That seems to be how it works in Germany.
Companies that specialise in providing rental properties did own a plurality of the market in 2024 (49%) so I think your concern about them buying up all the properties is valid. I was imagining that average rent would decrease if the % of housing being rentals increased, but that probably depends on a constant supply of new houses to prevent those aforementioned companies monopolising on the situation.
At the core of the situation is that we see housing as a special asset and I was wondering about that in the OP. But then, given their unique utility maybe they are a special asset.
Additionally, you have to suspend your disbelief that the electorate would accept CGT on single homes because the "nation of homeowners" mindset is so ingrained in our society. Even if the economics of it were overwhelmingly compelling people in the UK would still treat them as special assets because the "feel" special.
Hmm, my opinion would be no.
I'm of the opinion that everybody should be able to have the opportunity to own their own home.
CGT for single property ownership would act a a barrier to getting on the property ladder. Keeping it for owning multiple properties is a way to restrict purchasing multiple properties that you are not living in. Eg: second homes, letting holiday rentals.
The two biggest barriers to housing in my head are the initial proce and lack of available stock.
The biggest driver of property prices for me is the interest rate. Banks seem to like keeping interest payments at about the same levels. So when rates go down, prices go up to compensate. No government would push the rates back into double digits as that would cause a crash bringing property prices down but crippling existing repayments and making them deeply unpopular for the next election.
More available housing would help but as you've pointed out every man and their dog is investing in housing as its got the best returns. This drives up demand which pudhes up prices. It doesnt help that house building has not kept up with population growth, which also drives demand.
Of course not everyone can afford to buy, and thats where rentals come in. Used to be social housing, but that got sold off in a quick cash grab. So very limited council housing is left.
Nothee driver o housing stock is the rise of air bnb and the like. Plenty of housing that you could previously rent, now sits idle waiting for short term leases at High return prices.
My preference would be to limit short term rental stocks as a percentage of local housing, scale CGT for multiple properties, councils to have the balls to start building new coucil houses and government to start creeping up the interest rates to lower prices
I don't think it would be a barrier to entry for first time buyers because they'd only be charged CGT in the event that: 1) they sold the house, and 2) the house had increased in value during the time they owned it.
I'm not sure that banks would charge larger interest rates on smaller loans if house prices went down but maybe I've misunderstood your point there.
You are completely right about the housing supply and presumption of homeownership being baked into our economy. Scaling CGT for each additional property is also a neat idea.
Okay well my house has gone up 80% in 5 years, so I'd have to pay on all of that? How would that not make it harder for me to afford a house I'm already just barely able to afford? If my property taxes weren't capped at raising 3% a year I'd be fucked already.
Oh, it turns out I'm not the first person to have this thought. (Not surprising, I guess.)
There is a section called Housing Taxation in this paper.
National Institute Economic Review , Volume 235 , February 2016 , pp. F4 - F8
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