“Those drawing on wealth or income from additional properties are disproportionately rich and wealthy”

“Those drawing on wealth or income from additional properties are disproportionately rich and wealthy”

16:31 PM, 21st August 2017, About 4 years ago 38

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The Resolution Foundation, a Tory think tank with former cabinet minister and Conservative lord David Willetts as executive chair, has published an article concluding that “those drawing on wealth or income from additional properties are disproportionately rich and wealthy.”

Click here to read the full article.

The article states there is a case for further action beyond Stamp Duty surcharges for second homes and Section 24 mortgage interest relief reductions, because “the younger generations are failing to accumulate wealth at anything like the rate of their predecessors.”

They advocate:

  • Greater regulation of the PRS
  • Increased security of tenure for tenants
  • Further taxation on very affluent people
  • Implementing the White Paper commitment to tackle empty homes

“These are options and challenges our Intergenerational Commission will continue to explore, because from the perspective of many of Britain’s real ordinary folk who still desire to own their home but find doing so increasingly out of reach, one house would be enough.”

Their policies are based on the rise of second and multiple property owners against the decline of main residence home owners in the last 15 years.

The figures cited are that the share of British adults in families with any property wealth fell 8%, whilst the share with multiple property wealth increased by 30%.

However, they admit that when looking at property wealth trends they have not even taken into account the net wealth after finance!

The report said: “Disregarding mortgage debt (because of difficulties in identifying which properties mortgages are secured against), the assets held in second or additional properties had a gross value of £760 billion in 2012-14 (adjusted to 2017 prices) – that’s 15% of the £5.2 trillion held in gross property wealth overall. This equates to an average of £150,000 per adult with multiple sources of property wealth, a 20% increase since 2000-02. With average net total wealth just over £200,000 in 2012-14, and typical (median) wealth just £84,000, owning multiple properties clearly represents a huge wealth boost.”

This report is looking at the symptoms of the disease and not the disease which is quite simply a failure of supply to keep up with demand increasing prices beyond wage inflation. Economics 101 surely?

There has been a total failure by government in the last 20 years to build or help create the environment to build, enough properties year on year to the point where we are now.



Comments

by Gary Dully

7:17 AM, 22nd August 2017, About 4 years ago

There are many MP's and Lords who are disproportionately wealthy due to bribes, 2nd incomes, cash for questions, directorships, foreign aid trips to corrupt governments and expense fiddling.

I would suggest that the housing crisis is their fault, not mine.

by Whiteskifreak Surrey

7:51 AM, 22nd August 2017, About 4 years ago

That is getting really dangerous. I wonder if the Ltds are going to be the next target? If Hammond has a little bit of common sense he will dismiss that stupid opinion of an equally stupid think-tank.
Is there anyone in this government who actually see a broader picture of the housing disaster in this country? I do not think so.
Time to start selling?

by Sam Caine

8:15 AM, 22nd August 2017, About 4 years ago

So shall we comment on Laura's analysis? In order to further her education, perhaps.

by Old Mrs Landlord

8:40 AM, 22nd August 2017, About 4 years ago

Sadly, you are talking about a generation who have grown up in a world where there is little to instil self-discipline, all lifestyles have equal validity, and the concept of deferred gratification is derided. Not only do they want it all, they want it now. Looking around them they see that the benefits system, instead of being just a safety net for the genuinely unfortunate, means work has become optional and life can be one long holiday if you know how to exploit the system (and those mugs whose hard work pays the taxes which pay you to do nothing). This becomes a self-perpetuating state of affairs because the human body is designed for use and deteriorates with prolonged inactivity. The satisfaction of achievement, the joy that comes from a job well done or mastering a difficult new skill, the pleasure of getting something you've saved up for and the satisfaction of achievement and the knowledge that you have made a contribution to society are their own reward. Life isn't, never has been and never will be fair, and looking back over many years I can see that many of today's inequities actually result from well-intentioned efforts to make it fairer.

by Annie Landlord

8:57 AM, 22nd August 2017, About 4 years ago

Of course LTD companies will be next. I couldn't find a way to incorporate anyway, but I will sell my small portfolio as soon as I can. I've just had enough. As a pensioner I don't need the stress of continually worrying how and when the government will next try to destroy my retirement. The only reason I haven't sold up already is that I have some very vulnerable tenants and I can't bear to evict them.

by Dennis Leverett

9:01 AM, 22nd August 2017, About 4 years ago

It's not surprising that this country is a mess financially with people like him running it. My dad left four of us £700.00 in his will. I did as Deborah described from nothing, working very hard, foregoing fancy cars and holidays etc. Now sort of retired, no debts, reasonably comfortable from rental income and pension and reasonably asset rich. Most whingeing youngsters I know today are up to their eyeballs in credit through buying the fancy cars, big tv's, lifestyle they can't afford. Fortunately my kids have grown up with right ethics and make me proud. My local MP is a typical Tory hypocrite, in my opinion, was let off his dodgy expenses claim etc. not worth pursuing was the excuse!!!! Never gives a proper answer to any questions I ask. All of these reports are so flawed its very worrying. I find it all so very frustrating today, but I'm just a grumpy old man I guess. Scream, Scream, Scream.

by Kathy Evans

9:10 AM, 22nd August 2017, About 4 years ago

Disproportionately wealthy compared with most MPs, Lords, landed gentry, captains of industry - even surgeons - I don't think so. Anyway, since the Tories sold off most of the council houses (which housed a huge proportion of the population in the past), where are all the "ordinary" people supposed to live if there are no private landlords? These days the media seems to have forgotten that it used to be "normal" to rent (council if you could get it) for your whole life - or live in a single rented room if you were single.

by Mark Alexander

9:14 AM, 22nd August 2017, About 4 years ago

If section 24 was applied to companies the owners of those companies would be better off. I don't understand why people are concerned about that.

Companies offset their mortgages against income and pay 19% tax on the profits. If finance costs were no longer an allowable expense, but a 20% tax credit was applied to finance costs as it is for individual landlords, that's a 1% positive differential.

Next year, corporation tax is scheduled to reduce to 18% so the differential would double. The year after corporation tax is scheduled to fall to 17% so that would be a further improvement.

I can envisage Government looking into changes to prevent individual landlords incorporating but that's all the more reason to get on with it now surely?

by Kathy Evans

9:15 AM, 22nd August 2017, About 4 years ago

But most of my tenants have more actual income than I do (not more capital, OK), but they chose to spend it differently.

by Gromit

9:29 AM, 22nd August 2017, About 4 years ago

I doubt they'd use exactly the same tax credit as they do for non-incorporated Landlords. I would guess it would be 10% (being a nice round number).

But this is all pure speculation unless you know otherwise.


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