New Dail / New Taoiseach

Good loser

Johnboy1951 wrote: »

I would still like to hear why one section of society who spend their (tax paid) income in one particular way, should have an extra tax levied on what they buy (applied every year while they own it), while all others escape this extra tax.

Because it's an asset tax. Gives a wider tax base.



We have it now with 95% compliance. Before 1977 we had it since 1860.


Compare cars, compare dogs, compare TVs.

efanton

Good loser wrote: »

Peregrinus doesn't do 'nonsense'
By far the smartest contributor to this debate.


The rent of a property is a bargain/contract between a landlord and tenant.
Landlords cannot just nominate a rent and achieve it; supply and demand determines the rent.


Tenants get services from the local authority but they don't get the increase in asset value of a property as an owner does. Properties don't always increase in value - remember 2008.

And your point being? Is there actually a point that you are making?

Who said anything about setting rents, what does the rent charged by landlords have to do with property tax? A landlord will obviously pass on all costs to their tenant, not to do so might mean making a loss and one thing landlords in this country are not is a charitable organisation. If Property taxes rise rent will go up to cover the additional cost, but they will not necessarily go down if property taxes are reduced.

A property doesn't always increase in value, so what? What has the property value got to do with the price of rent charged? If there was a direct link rents would go down when property values drop but I have never seen that occur.
A landlord will typically charge the maximum rent he/she can get away with without the property becoming vacant.

I have seen huge property rises in values while local services were reduced.
I have also seen the complete opposite. There is no direct correlation between either, and to suggest there was is a fallacy.

And yet again I will say the intentions of providing local services has absolutely nothing to do with maintaining, increasing or decreasing property values, they there for all the benefit for all citizens whether those citizens pay tax or not.
I have no recollection of any government ever trying to use property taxes to control the market value of a property, to even attempt that would be pure lunacy.

So have you really got a point to make?

Princess Consuela Bananahammock

Good loser wrote: »

Compare cars, compare dogs, compare TVs.

You don't pay an annual tax based purely on ownership of any of these items.

Sam Russell

Princess Consuela Bananahammock wrote: »

You don't pay an annual tax based purely on ownership of any of these items.

Motor tax, dog licence, TV licence.

Princess Consuela Bananahammock

Sam Russell wrote: »

Motor tax, dog licence, TV licence.

Motor tax is for useage not poessesion and the other two aren't possession based taxes (how much annual tax do you pay on a dog?; and the last one doesn't even exist anymore.)

Bishop of hope

Princess Consuela Bananahammock wrote: »

Motor tax is for useage not poessesion and the other two aren't possession based taxes (how much annual tax do you pay on a dog?; and the last one doesn't even exist anymore.)

TV licence doesent exist?

Princess Consuela Bananahammock

Bishop of hope wrote: »

TV licence doesent exist?

Broadcasting charge now, I believe? Open to correction if wrong.

Bishop of hope

Princess Consuela Bananahammock wrote: »

Broadcasting charge now, I believe? Open to correction if wrong.

You're wrong.
A dog licence is €20 euro annually or 140 for a lifetime one.
Car tax depends on emissions measurements, not usage.

Johnboy1951

Good loser wrote: »

The whole point about LPT is that it is an asset/wealth tax.
If you 'tax wealth when it is generated' that is income tax.

Yes indeed ..... glad you are seeing the light!

Property tax is an additional way of getting tax revenue; If 95% plus of the countries in the world think it's an appropriate way of raising tax then the rational for it must be soundly based.

Just like car tax.

Yeah they all do this so we can also BS!
So you do support exactly what I posted ...... a special tax on some possessions because of how the taxed income was spent.

NOT equitable!

Nothing like car tax!

Good loser wrote: »

Because it's an asset tax. Gives a wider tax base.

We have it now with 95% compliance. Before 1977 we had it since 1860.

Compare cars, compare dogs, compare TVs.

It is not a wider tax base ..... it is more tax on a portion of the same people who pay tax on their income and a further tax on their spending. That is not widening the 'base'!

So it is just because it can easily be taxed that you agree with LPT.
No thought whatsoever to whether or not it is a just and fair tax on the whole population.

Princess Consuela Bananahammock wrote: »

You don't pay an annual tax based purely on ownership of any of these items.

Sam Russell wrote: »

Motor tax, dog licence, TV licence.

Motor tax is not based on ownership ...... nor on use ...... it is based on use on public roads. It was supposed to be a road fund and we know what happened to that idea!

Dog Licence was introduced to try to fund and control responsible ownership of dogs. It has had an effect. There are not near as many stray dogs about as there were decades ago.

TV Licence .... it was a means devised to provide funding for public service broadcasting, which is long past its useful time.

LPT is an extra 'special tax' applied to those who were prudent with their earnings and invested in their own home.
The only reason provided to support this tax in this thread, so far, is

it is easy do - you cannot easily move houses

it widens the tax base - no it does not, it just hits some of the same people again

everyone else is doing it - really? this is a good reason?


LPT is unfair, inequitable and a further burden on those who have paid their share of taxes just like their renting neighbour.
Yet this is applied on the one but not the other.

Tax income in all its forms.
If you want to widen the tax base then do that ..... by including more people in the tax net, not by triple-taxing some tax payers.

Princess Consuela Bananahammock

Bishop of hope wrote: »

You're wrong.
A dog licence is €20 euro annually or 140 for a lifetime one.
Car tax depends on emissions measurements, not usage.

It's a dog licence, not a dog tax. Serves a completely different purpose.
You don't have to pay motor tax at all if the car's not on the road.

Bishop of hope

Princess Consuela Bananahammock wrote: »

It's a dog licence, not a dog tax. Serves a completely different purpose.
You don't have to pay motor tax at all if the car's not on the road.[/quote

Well its still a payment to keep a dog, like a TV licence is a payment to watch tv, car tax is a payment to use a car on the road, you'd hardly bother with a car if you weren't going to drive it.
All taxes really. Just another name for it.

Princess Consuela Bananahammock

Bishop of hope wrote: »

Princess Consuela Bananahammock wrote: »

It's a dog licence, not a dog tax. Serves a completely different purpose.
You don't have to pay motor tax at all if the car's not on the road.[/quote

Well its still a payment to keep a dog, like a TV licence is a payment to watch tv, car tax is a payment to use a car on the road, you'd hardly bother with a car if you weren't going to drive it.
All taxes really. Just another name for it.

Another name for it because it's another thing.

In any case, you're strawmanning. My point wasnt what they wete, it was that none of them is a tax based purely on ownership, so can not be compared to property tax.

Bishop of hope

Princess Consuela Bananahammock wrote: »

Bishop of hope wrote: »

Another name for it because it's another thing.

In any case, you're strawmanning. My point wasnt what they wete, it was that none of them is a tax based purely on ownership, so can not be compared to property tax.

Why would you pay any of them if you didn't own them, of course they're based on ownership ffs.

Princess Consuela Bananahammock

Bishop of hope wrote: »

Why would you pay any of them if you didn't own them, of course they're based on ownership ffs.

Answered that one earler this morning: you don't

Princess Consuela Bananahammock wrote: »

You don't have to pay motor tax at all if the car's not on the road.

Beginning to think you don't actually understand what a tax is.

Johnboy1951

Princess Consuela Bananahammock wrote: »

Bishop of hope wrote: »

Another name for it because it's another thing.

In any case, you're strawmanning. My point wasnt what they wete, it was that none of them is a tax based purely on ownership, so can not be compared to property tax.

Small correction there ......

The TV Licence is based on possession not on use.
Even a non functioning system is subject to the licence.
Yeah, that is another bone of contention.
Hopefully all that TV licence mess will go away when some government has the balls to do it correctly and bring it up to date.

Bishop of hope

Princess Consuela Bananahammock wrote: »

Answered that one earler this morning: you don't



Beginning to think you don't actually understand what a tax is.

I'm beginning to think you are right, even when you're wrong.

Good loser

Johnboy1951 wrote: »

Yes indeed ..... glad you are seeing the light!



Yeah they all do this so we can also BS!
So you do support exactly what I posted ...... a special tax on some possessions because of how the taxed income was spent.

NOT equitable!

Nothing like car tax!


It is not a wider tax base ..... it is more tax on a portion of the same people who pay tax on their income and a further tax on their spending. That is not widening the 'base'!

So it is just because it can easily be taxed that you agree with LPT.
No thought whatsoever to whether or not it is a just and fair tax on the whole population.





Motor tax is not based on ownership ...... nor on use ...... it is based on use on public roads. It was supposed to be a road fund and we know what happened to that idea!

Dog Licence was introduced to try to fund and control responsible ownership of dogs. It has had an effect. There are not near as many stray dogs about as there were decades ago.

TV Licence .... it was a means devised to provide funding for public service broadcasting, which is long past its useful time.

LPT is an extra 'special tax' applied to those who were prudent with their earnings and invested in their own home.
The only reason provided to support this tax in this thread, so far, is

it is easy do - you cannot easily move houses

it widens the tax base - no it does not, it just hits some of the same people again

everyone else is doing it - really? this is a good reason?


LPT is unfair, inequitable and a further burden on those who have paid their share of taxes just like their renting neighbour.
Yet this is applied on the one but not the other.

Tax income in all its forms.
If you want to widen the tax base then do that ..... by including more people in the tax net, not by triple-taxing some tax payers.

You're obviously confused and confusing.


So your handle on Property Tax is correct while the rest of the world is wrong and has been for centuries. How modest.


'All the world's mad save thee and me and even thee's a little mad.'

Johnboy1951

Good loser wrote: »

You're obviously confused and confusing.


So your handle on Property Tax is correct while the rest of the world is wrong and has been for centuries. How modest.


'All the world's mad save thee and me and even thee's a little mad.'

Hehehehehehehe, sure, sure.

Anyone with a different opinion to yours has to be confused and confusing.

LPT on family homes is an abomination.

Chips Lovell

Johnboy1951 wrote: »

A privilege?
To spend earned and taxed income on a home?
What nonsense!
You think it would be better for the country if that money was instead spent on multiple holidays, new cars and extravagant imported items rather than on a home?

People who blow their earnings on luxuries are a taxman's dream, because consumption is so heavily taxed.

Fred Cryton wrote: »

Other countries in Europe don't have a tiny band of higher rate taxpayers who pay for everything. You can call them Middle Ireland or the squeezed middle or whatever. The tax burden is much more spread out in Europe.

In Germany someone earning €20,000 pays around €4,500 in income tax. In ireland, they only pay around €600 in income tax.

It's true that we have one of the most progressive tax regimes in Europe. However, according to the latest OECD figures, it's also true that the tax wedge for the average Irish worker is well below the OECD average.And that's just the tax on wages. We get off fairly lightly in terms of property and municipal taxes here.

So if we were to start taxing more like as our European neighbours, lower earners may end up paying more, but I don't think middle income earners will see much of a reduction.

efanton

Forget about tax burden, or any policy by any party on taxation.
It is totally irrelevant when a government allows itself to be subjected to absolutely outrageous housing costs and the wastage of €1 billion in tax revenues.

In the last year FG have spent
612 million on housing 50,000 families through the HAP scheme
Another 170 million on emergency accommodation
and then yet another €129 million in direct provision housing for asylum seekers

That's almost 1 billions of tax payers money for accommodation that the state has spent and will not see one single brick as a return on that investment.
1 billion per year, IF we get another government in the next month, a quarter of which SF would spend on building 20k homes a year, will be spent by FG and their partners paying landlords but not actually purchasing a single brick.
Yet SF want to spend 5 billion plus the existing budget for building housing stock building 20k homes per year and FG ad FF are in shock?


Then it gets worse. Dermot Desmond the €1.9 billion financier and entrepreneur appear to have become a miraculously SF advocate more or less totally agrees with SF policy on home building. Dermot Desmond is not and never will be a SF advocate, so the question remains that if a die hard entrepreneur believes the SF approach is correct, why are FG and the landlords of this country trying to deliberately misleading the people.
https://www.irishtimes.com/opinion/dermot-desmond-everyone-has-a-right-to-a-home-here-is-how-it-can-be-done-1.4195439

In fact its worse, far worse, if you are in the FG or FF camp.
Not only does he advocate a mass home building scheme similar to what SF are advocating, he actually takes it a step further by saying the government should actively punish the financial institutions that are using our housing crisis to generate profits.

1. Make housing affordable – remove the rent to interest arbitrage
Institutions are the main purchasers of new apartments – acquiring 95 per cent of them in 2019. The prices that the institutions will be prepared to pay will depend on their after tax yield. Currently institutions earn nothing on deposits whereas they earn about. 3.6 per cent from rented apartment buildings. With appropriate gearing the institutions can earn up to 15 per cent on their own money. To drive down the price institutions will be prepared to pay and indirectly the price developers will pay for land I recommend that the State:

a. Charge a withholding tax of 50 per cent on all apartment rental income above €500,000 and eliminate the tax deductibility of interest where the rent exceeds this level. This would approximately equate to the effective tax and other deductions payable by individuals with that level of income. The immediate impact of this tax will be to reduce the advantage rents have over deposit interest and make it less attractive for funds to gear up to fund investment in apartments

i. This will lower the price institutions will be prepared to pay.
ii. It will make it attractive for institutions to sell the apartments to owners.
iii. From an institutional perspective - subject to approval, it may become attractive for them to both sell the apartments to potential owner occupiers and to provide mortgages to the owner occupiers to fund the purchase of the apartments.
iv. The increased supply of ‘available for sale’ apartments will drive down prices at the margin.

b. Reinstate the 80 per cent windfall tax so that the State captures a substantial portion of the gift that the State is currently giving to land-owners and developers. This gift arises whenever land values are enhanced as a result of the rezoning of land or the grant of planning or the grant of increased planning. In the case of the SHD it happens by facilitating material contraventions of the local development plans and the mandating of smaller units and lower standards by ministerial order. The windfall tax collected should be re-invested by the State in social and affordable public housing.

c. To decrease the financialisation of the apartment stock and further increase the supply of apartments available for sale, the State/planning authorities should restrict the number of apartments in any one building which an investor/institution can acquire.

As with all recommendations appropriate anti-avoidance measures will be required to ensure the spirit of the proposals is achieved.

This also feed back into the ridiculous arguments we have hear on this thread advocating a property tax.

These finical institutions that are obviously taking the Irish tax payer for a ride will not pay one single cent in property tax as this tax will be transferred to the the tenant. Transfer that cost to income tax or CGT and you would suddenly see a significant difference in the availability of homes to buy or homes to rent for the ordinary Irish tax payer.

PeadarCo

efanton wrote: »

Forget about tax burden, or any policy by any party on taxation.
It is totally irrelevant when a government allows itself to be subjected to absolutely outrageous housing costs and the wastage of €1 billion in tax revenues.

In the last year FG have spent
612 million on housing 50,000 families through the HAP scheme
Another 170 million on emergency accommodation
and then yet another €129 million in direct provision housing for asylum seekers

That's almost 1 billions of tax payers money for accommodation that the state has spent and will not see one single brick as a return on that investment.
1 billion per year, IF we get another government in the next month, a quarter of which SF would spend on building 20k homes a year, will be spent by FG and their partners paying landlords but not actually purchasing a single brick.
Yet SF want to spend 5 billion plus the existing budget for building housing stock building 20k homes per year and FG ad FF are in shock?


Then it gets worse. Dermot Desmond the €1.9 billion financier and entrepreneur appear to have become a miraculously SF advocate more or less totally agrees with SF policy on home building. Dermot Desmond is not and never will be a SF advocate, so the question remains that if a die hard entrepreneur believes the SF approach is correct, why are FG and the landlords of this country trying to deliberately misleading the people.
https://www.irishtimes.com/opinion/dermot-desmond-everyone-has-a-right-to-a-home-here-is-how-it-can-be-done-1.4195439

In fact its worse, far worse, if you are in the FG or FF camp.
Not only does he advocate a mass home building scheme similar to what SF are advocating, he actually takes it a step further by saying the government should actively punish the financial institutions that are using our housing crisis to generate profits.





This also feed back into the ridiculous arguments we have hear on this thread advocating a property tax.

These finical institutions that are obviously taking the Irish tax payer for a ride will not pay one single cent in property tax as this tax will be transferred to the the tenant. Transfer that cost to income tax or CGT and you would suddenly see a significant difference in the availability of homes to buy or homes to rent for the ordinary Irish tax payer.

If the argument is that the cost of tax for a landlord is passed onto a tenant why tax landlords at all? CGT is irrelevant to a landlord/any property if they don't plan on selling.

You can stop paying money to landlords for HAP schemes and all emergency accommodation but what then. Landlords/hotels/what ever other accommodation is being used will stop providing the relevant accommodation, making all of those people homeless in the medium term while they wait a year or two for new accommodation to be build. And a year or two going well providing there is no issue with planning and hiring the relevant trades people. Now that is unless you are taking about seizing property which is far more radical than a property tax.

And then you need money. Which means either cuts in other areas or more tax. Taxing home owners is fairly standard policy of any left wing party. Given how SF calls itself a left wing party and FG are supposed to be right wing it sums up how meaningless those labels are in an Irish context. It's a reliable tax, impossible to dodge for any length of time, doesn't impact a person's marginal rate and unless its set a very high rate won't impact a person's decision to buy. It also recognises that anyone who owns a house is also wealthier all things being equal than the same person without a house.

hotmail.com

Sean Sherlock of Labour says Labour should enter a unity government/ national government to deal with the virus.

Utterly embarrassing that our Taoiseach and ministers are sticking with their foreign trips, mainly to America, during this crisis.

It's bad enough that they leave during our national day.

Do we really need to suck up to Americans that badly?

Princess Consuela Bananahammock

hotmail.com wrote: »

Sean Sherlock of Labour says Labour should enter a unity government/ national government to deal with the virus.

Utterly embarrassing that our Taoiseach and ministers are sticking with their foreign trips, mainly to America, during this crisis.

It's bad enough that they leave during our national day.

Do we really need to suck up to Americans that badly?

It's tradition. Irish people fear loss of tradition far more than hey want change.

hotmail.com

Princess Consuela Bananahammock wrote: »

It's tradition. Irish people fear loss of tradition far more than hey want change.

I suspect most people would support the ending of these rackets.

efanton

PeadarCo wrote: »

If the argument is that the cost of tax for a landlord is passed onto a tenant why tax landlords at all? CGT is irrelevant to a landlord/any property if they don't plan on selling.

You can stop paying money to landlords for HAP schemes and all emergency accommodation but what then. Landlords/hotels/what ever other accommodation is being used will stop providing the relevant accommodation, making all of those people homeless in the medium term while they wait a year or two for new accommodation to be build. And a year or two going well providing there is no issue with planning and hiring the relevant trades people. Now that is unless you are taking about seizing property which is far more radical than a property tax.

And then you need money. Which means either cuts in other areas or more tax. Taxing home owners is fairly standard policy of any left wing party. Given how SF calls itself a left wing party and FG are supposed to be right wing it sums up how meaningless those labels are in an Irish context. It's a reliable tax, impossible to dodge for any length of time, doesn't impact a person's marginal rate and unless its set a very high rate won't impact a person's decision to buy. It also recognises that anyone who owns a house is also wealthier all things being equal than the same person without a house.

All of what you have said is true. But the difference that Ireland has at the moment is that almost all new apartment properties (nearly 95%) are being snapped up by financial institutions looking for an alternative means to increase the return on their deposits which will earn virtually zero interest if held in deposit accounts in banks. This is driving up the cost of development land making it more expensive for those that would buy their own home and at the same time driving up the costs of rents to the tenants.

Just over 5% of new apartment builds are actually being bought be traditionally landlords or homeowners. Obviously this puts Ireland in a fairly unique position compared to other countries that charge a property tax and its likely that property taxes will not have the desired effect that they traditionally did have while this current trend continues.

Dermot Desmond makes some good points. In the current situation where financial institutions are buying massive amounts of apartment properties because there is such a huge difference in interest rates on deposits and the after tax yields from rental properties, rents will only rise and the cost of development sites will also only rise. With property values now being beyond what is affordable to most with the mortgage rules limiting what people can borrow, there will be an ever increasing demand for rental properties or social housing.
What revenue is being collected by the government in property tax is quickly going to be swallowed in providing ever increasing amounts of social housing or ever increasing costs for schemes such as HAP.

Being that property taxes will be a smaller cost to these financial institutions than an equivalent adjustment in taxes on earnings or profits this trend will only continue.

PeadarCo

efanton wrote: »

All of what you have said is true. But the difference that Ireland has at the moment is that almost all new apartment properties (nearly 95%) are being snapped up by financial institutions looking for an alternative means to increase the return on their deposits which will earn virtually zero interest if held in deposit accounts in banks. This is driving up the cost of development land making it more expensive for those that would buy their own home and at the same time driving up the costs of rents to the tenants.

Just over 5% of new apartment builds are actually being bought be traditionally landlords or homeowners. Obviously this puts Ireland in a fairly unique position compared to other countries that charge a property tax and its likely that property taxes will not have the desired effect that they traditionally did have while this current trend continues.

Dermot Desmond makes some good points. In the current situation where financial institutions are buying massive amounts of apartment properties because there is such a huge difference in interest rates on deposits and the after tax yields from rental properties, rents will only rise and the cost of development sites will also only rise. With property values now being beyond what is affordable to most with the mortgage rules limiting what people can borrow, there will be an ever increasing demand for rental properties or social housing.
What revenue is being collected by the government in property tax is quickly going to be swallowed in providing ever increasing amounts of social housing or ever increasing costs for schemes such as HAP.

Being that property taxes will be a smaller cost to these financial institutions than an equivalent adjustment in taxes on earnings or profits this trend will only continue.

Interest rates are low full stop both deposit and lending rates. If you think the ordinary person on the street is getting a bad deal they have it far better than large financial institutions who in recent years have had to pay negative deposit rates. This isn't news interest rates have been trending lower for a long time. We've been operating in a low interest rate environment for at least the last 10 years of not even longer depending on how you define what low interest rates are. Look at rates back in the 80's. If low interest rates where the reason for high House and rental prices we would have never had the property crash at the start of the last decade. So while people and financial institutions are looking for higher returns that's nothing new.

You need land to build houses. Given in Ireland there is an extremely high demand for houses obviously there is going to high demand for suitable land regardless of who actually buys them. Having investment funds build rental accommodation isn't a bad thing. Its actually amazing how long they took to get involved. It's overall a good thing as they are increasing supply and have large supplies of money that doesn't involve exposing Irish banks. They are also professional operations which is something that hasn't been common relatively speaking. And remember people are living in these apartments. So saying that these companies shouldn't be involved in supplying accommodation because they don't supply accommodation to X kind of people is no different than saying the government shouldn't build social housing because they will only go to homeless/those of lower incomes. Both ultimately increase supply even if serving different parts of the housing market and objecting based solely on the type of organisation is about your ideology not sorting out the homeless crisis.

The measures put in place by the Central Bank are to prevent a repeat of the last property bubble. While our politicians haven't learnt much from the crash the central bank has. Relying heavily on transaction taxes like Vat and stamp duty was one of big reasons for the austerity measures. Tax coming from transaction taxes can and more or less did stop overnight. You can't cut services or pay as quickly. That's where a property tax comes in. It's a far steadier stream of income. Unless a property tax is extremely large which no one is proposing that it should be its not going to influence the property market.

On the money spent on HAP and emergency accommodation that goes to continue for the forseeable future no matter who's in charge unless you start talking about seizing property or throwing people out on the streets.

efanton

Totally agree that any home building is welcome, be that financial institutions, developers or government. We desperately need as many homes as possible to be built.

My concern is with existing government policies and the way taxation works in the housing or rental market we will soon see virtually all workers being excluded from any opportunity of buying their own home.

With the increasing costs of sites the developers in Ireland that would typically build less than 50 homes on any particular site might be priced out of the market.

If this is allowed to continue, will we become to over dependent on the big developers or financial institutions. Is this not a return to the problems that created the crash in Ireland by another route. If the big developers and financial institutions become the only game in town with regards to significant home building will this also create a situation where our governments become so dependent on them that they dictate government polices and taxation measures regarding residential construction. the phrase 'Too big to fail' has haunting ring to it.

Also will this not also lead to a narrowing of the tax base as a greater percentage of properties are owned by a smaller percentage of owners?

Peregrinus

No. The "tax base" is whatever it is you multiply by the tax rate in order to arrive at the amount of tax due. So if you have a property tax, for example, the tax base the the value of the properties that are taxed. You can broaden the tax base by bringing more and more properties into the tax net; narrow it by excluding more and more properties from the tax net. Building more (taxable) properties would generally tend to broaden the tax base, not narrow it. The question of who owns the properties is irrelevant.

You make a good point, though, that it might be socially and politically undesirable to allow control of the country's housing stock to be concentrated in too few hands. But this doesn't seem to me to be an immediate danger. Even if property development is narrowly concentrated, property developers do not generally become long-term property owners and landlords; they develop to sell on. If necessary legal or tax policies can be tailored to incentivise this. I think concentration of property development and property financing may have problematic aspects, but I don't think that one of them need be concentration of property ownership.

efanton

Peregrinus wrote: »

No. The "tax base" is whatever it is you multiply by the tax rate in order to arrive at the amount of tax due. So if you have a property tax, for example, the tax base the the value of the properties that are taxed. You can broaden the tax base by bringing more and more properties into the tax net; narrow it by excluding more and more properties from the tax net. Building more (taxable) properties would generally tend to broaden the tax base, not narrow it. The question of who owns the properties is irrelevant.

You make a good point, though, that it might be socially and politically undesirable to allow control of the country's housing stock to be concentrated in too few hands. But this doesn't seem to me to be an immediate danger. Even if property development is narrowly concentrated, property developers do not generally become long-term property owners and landlords; they develop to sell on. If necessary legal or tax policies can be tailored to incentivise this. I think concentration of property development and property financing may have problematic aspects, but I don't think that one of them need be concentration of property ownership.

Thanks for answering that. I was a bit unsure as to whether it was total properties that were taxable or total number of owners paying property tax that determines the tax base.

property developers do not generally become long-term property owners and landlords; they develop to sell on.

My concern was not the developers it was the financial institutions. They are buying ever increasing numbers of apartment blocks and while there is more profit renting properties than there is from interest rates (and that looks to be the case for the foreseeable future), they will have ownership of an ever increasing number of rental properties that this country will depend on. The question I would ask is where is the tipping point where they own so many properties that they have undue and unhealthy influence on government policies and taxation decisions.

My other concern would be that if there is less developers in the game it will inevitably drive up the cost of construction more. At the moment developers can build apartment blocks knowing that they can sell the entire building to a financial institution. This makes apartment building far more attractive obviously as there is less time that their money is tied up in a project than building the typical housing estate of the 3 and 4 bed homes. The need to get one project sold off in order to use money invested to finance the next becomes less. This could lead to a situation where developers are borrowing more money than is prudent for multiple large scale projects with the expectation that they will sell quickly.
It will also mean that developers that can fund or finance these apartment building projects will no longer build the traditional 3 bed semi-detached house, and thus unintentionally drive up the values of these homes.

Peregrinus

It's the normal state of affairs that there should be more profit from renting out property than there is from lending out money; if that were not so then borrowing to invest in property would not be a viable business proposition, whereas of course it normally is.

The lower interest rates are and the higher rents are, the more sense it makes for people to borrow money in order to buy property, either to rent out (thus profiting from the difference between interest rates they pay on the borrowing and the rental rates they earn on the property) or to live in themselves (thus saving the difference between the rent they would otherwise have to pay and the interest rate they pay on the borrowing). So the current regime of low interest rates and high rental rates should in fact stimulate borrowing for property construction and purchase. If it isn't doing that, then there is some other inefficiency in the market that is preventing people from responding to the financial incentives.