Hey there! Sign in to join this conversationNew here? Join for free

B921 - Alternative Tax (Amendment) Bill 2016 Watch

Announcements
    Online

    20
    ReputationRep:
    (Original post by James Milibanter)
    For a start the definition needs changing. as for everything else it's self evident in the bill.

    It isn't a tax on how much your house costs, but instead a tax on the land only - rental value of a property (aka Ground Rent), it will apply on empty properties as well as inhabited properties, commercial properties as well as residential, and it makes sure that those with a higher Ground Rent value pay more than those with a lower ground rent value. If someone owns property in the UK, whether or not they live here, they will pay the tax as a landowner. The difference between this tax and the last one is that the last one penalises people who have effectively fallen victim to exorbitant market prices, this amendment fixes this, for example, someone in my family owns a property worth quite a lot but is relatively poor nonetheless and s/he lives in this house with at least 9 other family members, with the last tax she'd be expected to pay upwards of £10k a year which is about 30% of her income (ex. other taxes). With this amendment the tax paid is about the same as the current council tax rate.
    I disagree. For the vast majority of property, rent will strongly correlate with sale value, especially in a country where buy-to-let is so prevalent (as people buying to let will quickly adjust high rent:value ratios). This doesn't solve any of the problems of the previous tax.
    • Political Ambassador
    Offline

    2
    ReputationRep:
    (Original post by TheDefiniteArticle)
    I disagree. For the vast majority of property, rent will strongly correlate with sale value, especially in a country where buy-to-let is so prevalent (as people buying to let will quickly adjust high rent:value ratios). This doesn't solve any of the problems of the previous tax.
    This isn't based on sale value at all though, nor is it based on market rents.
    Online

    20
    ReputationRep:
    (Original post by James Milibanter)
    This isn't based on sale value at all though, nor is it based on market rents.
    So what is it? The definition is obviously fuzzy. If you refine it to mean the rent which is actually paid, you exclude from tax vacant properties (and also for most properties this will be the market rent, or close to it). If you refine it to mean the rent which the property is 'worth', that's the market rent. Both are iniquitous results.

    Let's also note that you're only applying this to leaseholds so far and thus excluding from tax the majority of short-term rents.
    • Political Ambassador
    Offline

    2
    ReputationRep:
    (Original post by TheDefiniteArticle)
    So what is it? The definition is obviously fuzzy. If you refine it to mean the rent which is actually paid, you exclude from tax vacant properties (and also for most properties this will be the market rent, or close to it). If you refine it to mean the rent which the property is 'worth', that's the market rent. Both are iniquitous results.

    Let's also note that you're only applying this to leaseholds so far and thus excluding from tax the majority of short-term rents.
    It's the land only rent value effectively. The legal definition (and the one used by the Libbers back in 2011 when a ground rent tax was first introduced) is "the capital amount that an estate of fee simple in the land might reasonably be expected to realise upon rental for twelve months assuming that any improvements to the land, had not been made, and assuming that the land may continue to be used for any purpose for which it is being used or could be used at the date of valuation".
    Online

    20
    ReputationRep:
    (Original post by James Milibanter)
    It's the land only rent value effectively. The legal definition (and the one used by the Libbers back in 2011 when a ground rent tax was first introduced) is "the capital amount that an estate of fee simple in the land might reasonably be expected to realise upon rental for twelve months assuming that any improvements to the land, had not been made, and assuming that the land may continue to be used for any purpose for which it is being used or could be used at the date of valuation".
    My understanding of 'improvements to the land' is different from yours, though I haven't seen the original Act so I'm possibly wrong. For a start, property built upon land constitutes part of the land. Secondly, I understand 'improvements' to exclude ameliorations in value within that single tax year, not since the dawn of time itself. Thirdly, that definition, as I understand 'improvements to the land', means 'market rent'.
    • Political Ambassador
    Offline

    2
    ReputationRep:
    (Original post by TheDefiniteArticle)
    My understanding of 'improvements to the land' is different from yours, though I haven't seen the original Act so I'm possibly wrong. For a start, property built upon land constitutes part of the land. Secondly, I understand 'improvements' to exclude ameliorations in value within that single tax year, not since the dawn of time itself. Thirdly, that definition, as I understand 'improvements to the land', means 'market rent'.
    It's assuming that there are no improvements on the land, the tax is on the rent value on the land itself, rather than a tax on the property on the land.
    Online

    20
    ReputationRep:
    (Original post by James Milibanter)
    It's assuming that there are no improvements on the land, the tax is on the rent value on the land itself, rather than a tax on the property on the land.
    What's the source for that interpretation? I also expect this to hit countryside land disproportionately hard, as well as hitting land which it would be easy to get planning permission for particularly hard. The land-only rental value is also a rather obscure concept and very hard to calculate, which will cost millions in administration, both in the first place and by way of judicial review.
    • Political Ambassador
    Offline

    2
    ReputationRep:
    (Original post by TheDefiniteArticle)
    What's the source for that interpretation? I also expect this to hit countryside land disproportionately hard, as well as hitting land which it would be easy to get planning permission for particularly hard. The land-only rental value is also a rather obscure concept and very hard to calculate, which will cost millions in administration, both in the first place and by way of judicial review.
    It isn't an interpretation, it's what ground rent is. It's also not that hard to calculate either, and besides it'll be up to the GRC
    Online

    20
    ReputationRep:
    (Original post by James Milibanter)
    It isn't an interpretation, it's what ground rent is. It's also not that hard to calculate either, and besides it'll be up to the GRC
    My understanding of ground rent is that it's the basic rent paid for a lease, regardless of what it represents.

    It is difficult to calculate because in many areas of the country, particularly cities, there really isn't anywhere undeveloped as a point of comparison. This is part of what causes high administration fees and difficulty.
    • TSR Support Team
    • Clearing and Applications Advisor
    Offline

    20
    ReputationRep:
    What would stop landlords from moving from a renting model based on long leases to an Airbnb style model that provides for short term renters, hence circumventing the tax? Whilst they lose the benefits of a stable income (in that demand and income received aren't guaranteed for a long period of time), short term contracts typically offer better yield for landlords and this bill would mean the option reduces their tax liability. Places that are hugely popular like London would have very high demand for short-term rentals anyway so the downside for short-term rentals is minimal in these areas, causing a reduction in the housing supply available to long term renters in the places where they are most needed.
    • Political Ambassador
    Offline

    2
    ReputationRep:
    (Original post by The Financier)
    What would stop landlords from moving from a renting model based on long leases to an Airbnb style model that provides for short term renters, hence circumventing the tax? Whilst they lose the benefits of a stable income (in that demand and income received aren't guaranteed for a long period of time), short term contracts typically offer better yield for landlords and this bill would mean the option reduces their tax liability. Places that are hugely popular like London would have very high demand for short-term rentals anyway so the downside for short-term rentals is minimal in these areas, causing a reduction in the housing supply available to long term renters in the places where they are most needed.
    The landlord would have to pay the tax on Ground Rent as a landowner anyway. If they find the demand for short term leases then that's not a bad thing/
    Online

    20
    ReputationRep:
    (Original post by James Milibanter)
    The landlord would have to pay the tax on Ground Rent as a landowner anyway. If they find the demand for short term leases then that's not a bad thing/
    The tax will be passed on through increased prices.
    • Political Ambassador
    Offline

    2
    ReputationRep:
    (Original post by TheDefiniteArticle)
    The tax will be passed on through increased prices.
    See an earlier post where I described why that wouldn't be the case
    Online

    20
    ReputationRep:
    (Original post by James Milibanter)
    See an earlier post where I described why that wouldn't be the case
    Your explanation is poor, because it misses the most relevant sector - the housing sector, where location is uniquely important.
    • Political Ambassador
    Offline

    2
    ReputationRep:
    (Original post by TheDefiniteArticle)
    Your explanation is poor, because it misses the most relevant sector - the housing sector, where location is uniquely important.
    It's exactly the same principle as the other scenarios. The Ground Rent Value is not solely based on Land value and as such this tax will differ on different sites, and landlord will only increase their rents at detriment to themselves.
    Online

    20
    ReputationRep:
    (Original post by James Milibanter)
    It's exactly the same principle as the other scenarios. The Ground Rent Value is not solely based on Land value and as such this tax will differ on different sites, and landlord will only increase their rents at detriment to themselves.
    That's not at all accurate. Equilibrium exists at every landlord increasing rents by the smallest amount of any increased cost in the market (the product market being housing of comparable quality, the geographical market being - well, that's obvious). The same applies to your other example, it's just less pronounced because moving across a city is less important for businesses than for individuals.
    • TSR Support Team
    • Clearing and Applications Advisor
    Offline

    20
    ReputationRep:
    (Original post by Rakas21)
    Also your notes are pretty spurious and for all the good reasons you could have picked and the ways you could have phrased it, you've instead adopted a hippy dippy approach.. Most of your note reasons were conjecture.
    I've just noticed the notes section is a direct copy of jesusandtequila's post in the old 2011 Libertarian bill. http://www.thestudentroom.co.uk/show....php?t=1871961
    • Political Ambassador
    Offline

    2
    ReputationRep:
    (Original post by The Financier)
    I've just noticed the notes section is a direct copy of jesusandtequila's post in the old 2011 Libertarian bill. http://www.thestudentroom.co.uk/show....php?t=1871961
    shhhhhhhhhhhhhhh
    • TSR Support Team
    • Clearing and Applications Advisor
    Offline

    20
    ReputationRep:
    (Original post by James Milibanter)
    shhhhhhhhhhhhhhh
    Plagiarism isn't tolerated m8
    • Political Ambassador
    Offline

    2
    ReputationRep:
    (Original post by The Financier)
    Plagiarism isn't tolerated m8
    you prick
 
 
 
TSR Support Team

We have a brilliant team of more than 60 Support Team members looking after discussions on The Student Room, helping to make it a fun, safe and useful place to hang out.

Updated: January 29, 2016
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • Poll
    Break up or unrequited love?
  • See more of what you like on The Student Room

    You can personalise what you see on TSR. Tell us a little about yourself to get started.

  • The Student Room, Get Revising and Marked by Teachers are trading names of The Student Room Group Ltd.

    Register Number: 04666380 (England and Wales), VAT No. 806 8067 22 Registered Office: International House, Queens Road, Brighton, BN1 3XE

    Quick reply
    Reputation gems: You get these gems as you gain rep from other members for making good contributions and giving helpful advice.