A Growing Problem in Real Estate: Too Many Too Big Houses • Hacker News Board

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#11

Post by NeedMoreTea » Thu, Jun 20, 2019, 10:04 AM UTC

Blackstone4 wrote: post #4

We have a similar issue in the UK since there are large houses being occupied by older couples whose children have left. Since annual property taxes are low (~4k - we call it council tax) and tax on buying property (stamp duty) is high, there is no incentive to move to a smaller place.

That was one of the advertising, rather than real justifications for getting rid of the rates - which was on ownership rather than occupation, and replacing it with first the poll tax - and we know how popular that was. Then council tax.

It was nothing other than a massive subsidy for the most wealthy as the top band is reached so early - it's only slightly less regressive than the poll tax was. The Tory campaigns were built around how "unfair" it was for the old widow or couple, who'd worked all their lives, to pay the same as a family of 5. No mention that no one in their right mind thinks a widow still needs a 4 or 5 bed house.

Double bonus: In bringing in council tax local finance could be massively further centralised, weakening the regions even more.

It's really surprising how little push there is to get shot of council tax, bring back rates or some properly progressive tax.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#12

Post by [deleted] » Thu, Jun 20, 2019, 10:05 AM UTC

mruts wrote: post #6

pjc50 wrote: post #5

This is not only "first world problems", but 1% first world problems. Well, maybe 5%: given > For their retirement in a suburb of Asheville, N.C., Ben and Valentina Bethell spent about $3.5 million in 2009 to build their dream home: a roughly 7,500-square-foot, European-style house with a commanding view of the Blue Ridge Mountains. Put $3.5m into https://dqydj.com/net-worth-percentile-calculator-united-sta... and yo…

I mean, not really. I knew plenty of people buying new mcmansions on credit when their household income wasn’t above 80k. Many many Americans over leveraged themselves by buying up huge properties with no down payment.

[deleted]

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#13

Post by masklinn » Thu, Jun 20, 2019, 10:08 AM UTC

eertami wrote: post #7

Blackstone4 wrote: post #4

We have a similar issue in the UK since there are large houses being occupied by older couples whose children have left. Since annual property taxes are low (~4k - we call it council tax) and tax on buying property (stamp duty) is high, there is no incentive to move to a smaller place.

Equating council tax with property tax is extremely misleading imo. For the benefit of people not from the UK: Council tax is effectively a bill for services & utilities paid by the occupier. Cost differs slightly based on overall property value but that's not super helpful for renters. Property taxes would be levied on the owner, and be directly tied to house value. For what it's worth I believe we desperately need…

> Property taxes would be levied on the owner, and be directly tied to house value.

Property taxes don't necessarily fix the issue though, because the property value is usually re-evaluated on sale, so the property tax increases drastically at that point.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#14

Post by masklinn » Thu, Jun 20, 2019, 10:15 AM UTC

circlefavshape wrote: post #9

Blackstone4 wrote: post #4

We have a similar issue in the UK since there are large houses being occupied by older couples whose children have left. Since annual property taxes are low (~4k - we call it council tax) and tax on buying property (stamp duty) is high, there is no incentive to move to a smaller place.

Oh come on. My youngest will be 18 in 8 years, so I should be squeezed out of my 180m2 (1800 square foot) home when she goes to college? When I'm 55?

The article is about single-child couples who built 400~700m² houses as their children were already adults.

Checking the numbers, Bethell is 78 so bought / built a 700m² house at 69. Their monstrosity of a house has 4m ceilings from the pictures. The Hambleton built their house at 82 and 68.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#15

Post by bodyfour » Thu, Jun 20, 2019, 10:16 AM UTC

eertami wrote: post #7

Blackstone4 wrote: post #4

We have a similar issue in the UK since there are large houses being occupied by older couples whose children have left. Since annual property taxes are low (~4k - we call it council tax) and tax on buying property (stamp duty) is high, there is no incentive to move to a smaller place.

Equating council tax with property tax is extremely misleading imo. For the benefit of people not from the UK: Council tax is effectively a bill for services & utilities paid by the occupier. Cost differs slightly based on overall property value but that's not super helpful for renters. Property taxes would be levied on the owner, and be directly tied to house value. For what it's worth I believe we desperately need…

It's true that council tax is paid directly by renters, whereas in the US renters only pay property tax indirectly via rental cost.

However, from the point of view of the housing market they are comparable. They're both an annual cost to holding real estate... and in the UK it is very low.

In all countries there are plenty of older homeowners with a surplus of space. Most people don't want to move out of their home if they don't have to, even if it is now larger than they need. However it's even more so in the UK because the system incentivises people to stay put.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#16

Post by Blackstone4 » Thu, Jun 20, 2019, 10:21 AM UTC

eertami wrote: post #7

Blackstone4 wrote: post #4

We have a similar issue in the UK since there are large houses being occupied by older couples whose children have left. Since annual property taxes are low (~4k - we call it council tax) and tax on buying property (stamp duty) is high, there is no incentive to move to a smaller place.

Equating council tax with property tax is extremely misleading imo. For the benefit of people not from the UK: Council tax is effectively a bill for services & utilities paid by the occupier. Cost differs slightly based on overall property value but that's not super helpful for renters. Property taxes would be levied on the owner, and be directly tied to house value. For what it's worth I believe we desperately need…

I feel that it was not "extremely misleading" within the given context which referenced older couples in larger properties. In this case, they are the ones typically paying the council tax.

I agree with you that the UK needs property taxes to be paid for by the owners. This would help reduce speculation and encourage utilisation of the existing housing stock. But as another post has mentioned, objections include "think of the old people who are worth $1m+ in property but would have to move out because they have low income"....boohoo...

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#17

Post by Blackstone4 » Thu, Jun 20, 2019, 10:23 AM UTC

masklinn wrote: post #13

eertami wrote: post #7

Earlier quoted context omitted.

Equating council tax with property tax is extremely misleading imo. For the benefit of people not from the UK: Council tax is effectively a bill for services & utilities paid by the occupier. Cost differs slightly based on overall property value but that's not super helpful for renters. Property taxes would be levied on the owner, and be directly tied to house value. For what it's worth I believe we desperately need…

> Property taxes would be levied on the owner, and be directly tied to house value. Property taxes don't necessarily fix the issue though, because the property value is usually re-evaluated on sale, so the property tax increases drastically at that point.

That's an implementation concern which can be addressed through data/analystics. i.e. a record can be kept of the size of your house in sq ft and property taxes adjusted for recent sales in the area.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#18

Post by LifeLiverTransp » Thu, Jun 20, 2019, 10:24 AM UTC

I never understood this? Is this codified, that those big houses can not be subdivided? Imagine you have a big house in LA or SA - just build a capsule hotel in it and solve a lot of peoples problems.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#19

Post by dogma1138 » Thu, Jun 20, 2019, 10:32 AM UTC

Blackstone4 wrote: post #4

We have a similar issue in the UK since there are large houses being occupied by older couples whose children have left. Since annual property taxes are low (~4k - we call it council tax) and tax on buying property (stamp duty) is high, there is no incentive to move to a smaller place.

The UK has a different issue. The size of the homes is just absolutely tiny even for the same number of bedrooms it has been shrinking and it shrinking still.

The houses in the article aren’t Victorian era detached houses that are being hogged they are fairly new built homes just big ones.

Also council tax even for a large house is often quite lower than 4K, stamp duty starts at 125K and between that and 250K it’s just 2%. So with the exception of London and a few other cities in not sure it’s what is preventing retired people form buying newer builds, the fact that the new build is likely considerably worse than the 80 year old house they live in just might be however.

Re: A Growing Problem in Real Estate: Too Many Too Big Houses

#20

Post by masklinn » Thu, Jun 20, 2019, 10:41 AM UTC

mruts wrote: post #6

pjc50 wrote: post #5

This is not only "first world problems", but 1% first world problems. Well, maybe 5%: given > For their retirement in a suburb of Asheville, N.C., Ben and Valentina Bethell spent about $3.5 million in 2009 to build their dream home: a roughly 7,500-square-foot, European-style house with a commanding view of the Blue Ridge Mountains. Put $3.5m into https://dqydj.com/net-worth-percentile-calculator-united-sta... and yo…

I mean, not really. I knew plenty of people buying new mcmansions on credit when their household income wasn’t above 80k. Many many Americans over leveraged themselves by buying up huge properties with no down payment.

> McMansion is a pejorative term for a large "mass-produced" dwelling

The subjects of the article:

> Ben and Valentina Bethell spent about $3.5 million in 2009 to build their dream home: a roughly 7,500-square-foot, European-style house with a commanding view of the Blue Ridge Mountains.

> Robin and David Saltman moved from New Jersey to Ponte Vedra Beach, Fla., where they spent more than a year custom-building their dream house with a pool on the ocean.

> George and Diana Hambleton […] selected the materials for the roughly 4,200-square-foot house, including reclaimed barn wood and Wisconsin flagstone.