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Weekend reading: Has the chancellor made his mind up on housing?

Weekend reading

Good reads from around the Web.

Bank of England governor Mark Carney was once described as behaving like an unreliable boyfriend with his mixed signals over interest rates.

By that measure, chancellor George Osborne is the housing market’s noncommittal adulterer.

Not long ago George was puffing it up with gestures like First Buy and Help to Buy.

Then came his emotional decision to sugarcoat the case for hoarding the biggest home you possibly can with his changes to inheritance tax.

Nor should we forget the right-to-buy extension for Housing Association tenants – announced amid the steepest housing crisis for generations – which seems designed solely to shore up this administration’s Thatcherite credentials.

Or what about the Help to Buy ISA, which launches this week? A sweet nothing if you’re looking to buy in London, but useful elsewhere and a political carrot at last for those who dare to be aged under 60.

Toying with our affections

Like any good Tory, Osborne seemed in love with a strong housing market.

But more recently he looks to be getting cold feet – and at least sounding like he understands that ever-higher house prices aren’t necessarily a commitment he wants to sign up to.

Osborne revamped stamp duty in December 2014, and in doing so he took some of the steam out of prime London property.

And in July the second of this year’s procession of Budgets surprised us all with overdue changes to tax relief for buy-to-let landlords.

But if the housing market were a person, it was on hearing this week’s Autumn Statement that it might just have snapped it – a hastily packed suitcase bursting open at the door, and the embattled lover collapsing amid their underwear and travel-sized Apple hardware sobbing: “Just tell me what you want.”

Because the Statement saw the Chancellor mix his messages in the very same message!

The following graph illustrates the confusion. It shows the share price of housing giant Berkeley Group from Tuesday afternoon until Thursday morning – with Wednesday clearly being the fireworks:


  • At first the share price soared on Wednesday after early briefings that Osborne was going to ramp up home building with billions of pounds worth of taxpayers’ money, which he duly went on to announce.
  • Osborne even revealed that home buyers in the capital would be granted access to a new jumbo-sized London Help to Buy scheme, worth up to 40% of a new build property’s value. Happy days for housebuilders!
  • But then, just after 1.30pm, the share price plunged, when the Chancellor added that – oh, by the way – he was also going to increase stamp duty on buy-to-let purchases by a flat 3%.

Now don’t get me wrong, I think it all adds up to Osborne’s most coherent attempt yet at getting at the core problems of the UK housing market – the under-supply of new houses, and over-investment by landlords at the expense of what’s supposed to be a home-owning democracy.

This table from The Guardian shows how the 3% stamp duty add-on will increase landlord’s costs significantly:


Source: The Guardian

The cunning of the flat 3% hike is clear; it increases buy-to-let buying costs disproportionately at the lower end, where the first time voters buyers are found.

Together with those changes to Landlord’s tax relief announced in the summer, it could be a game changer for the dominance of buy-to-letters in the market.

The end of the affair

As I wrote in my article on fixing the property market, it’s not that buy-to-let is inherently wrong.

Rather we have a housing shortage in the UK and landlord growth has come at the expense of first-time buying.

Given that most of us want to own our own homes, even if we’re personally sitting pretty it makes sense to re-tilt the playing field back in favour of those who could buy in previous decades – and who theoretically can now – but who find themselves squeezed out by deep-pocketed, cashflow-insensitive landlords.

Some say these changes are unfair because they will penalize independent landlords, but not larger incorporated operations who can sidestep the extra charges.

However I’m not convinced that matters from the perspective of curbing house price growth and enabling more people to buy their own homes.

I suspect professional operations are also less insensitive to falling yields and less inclined just to bank on future price appreciation – two issues with the buy-to-let sector (in the South East, anyway) that is arguably even making it a threat to economic stability.

Others complain that making buy-to-let less attractive is just the latest example of the older generation pulling up the drawbridge after making off with the profits.

The Telegraph – already angry about the tax relief tweaks – noted:

One in three Tory MPs own buy-to-lets – but they’ve wrecked it for everyone else.

With the stamp duty increase and withdrawal of tax relief, the Tories have ‘killed buy-to-let for the middle-classes’.

Rarely has the esprit de Telegraph been so transparent as it now is over property.

The paper seemingly wants a readership of buy-to-let landlords who can pass on their property wealth via big inheritance tax breaks to enable their own kids to buy their own homes, while everyone outside of the land-owning circle rents and lives on the whims of their landlords.

Because the Medieval Times were such a blast, right?

Home is where the heart is

The extra housing Osborne claims he’s going to get built could help arrest the endless march higher in prices, too, provided they’re built in London and the South East.

There are certainly reasons to be skeptical of any immediate acceleration – planning restrictions and rising labour costs for starters – but this is the biggest declaration of intent yet by the Government to get things moving.

Of course, it wouldn’t be a political love affair without some short-term silliness – those mixed messages don’t just mix themselves.

In particular the London Help to Buy scheme looks like oil loaded into a crop duster ready to be sprayed liberally over Zone 3, helping prices grow still higher.

In addition, the four-month delay before the 3% additional duty kicks in could lead to a “ballistic” rally before April, according to one mortgage broker.

Perhaps the idea is all this will offset the landlord money that eventually leaves the sector, keeping prices stable?

Perhaps. Anything is possible in the world of barmy London property these days.

Indeed, this fantasy world aspect to housing in the South East is I think Osborne’s biggest problem.

It’s why he continually finds himself going around in circles to keep the show on the road, while more recently making some effort not to disenfranchise the entire younger generation in doing so.

Make up or break up

If you went back in a time machine even 20 years and tried to explain today’s economic situation – homes costing up to 12 times average salaries (compared to 3-4 times in the old days), interest rates near 0%, and amateur landlords buying London apartments on 2% yields – your listener would assume the UK had turned into a futuristic dystopia.

Someone will probably tell us in the comments below that it has.

But what’s more surprising is that it hasn’t.

Employment is at an all-time high, the economy is growing, the national finances are at last on a path to sustainability (albeit a slow one), and those short-term damaging tax credit changes were diverted.

All this is threatened, however, by the timebomb that is the housing market.

If Osborne looks like a figure in a love triangle desperately trying to engineer a bit more time, that’s because it’s exactly what he is.

If he can achieve a decade of stagnant prices, he might just see off a slump.

A boom without a bust?

We’ll see…

p.s. It seems next year’s ISA subscription limit will be held at £15,240 (see page 117 of the Statement), rather than rising with inflation. The thin end of the wedge for changes to come to our fabulous tax shelter?

From the blogs

Making good use of the things that we find…

Passive investing

Active investing

  • Mega deals are a mega warning for investors – The Value Perspective
  • An interview with author/fund manager Guy Spier [Podcast]Hsu Untied
  • DIY Income Investor has updated his portfolio page – DIY Income Investor
  • Frothy growth stocks often keep growing (for a while) – Dana Lyons
  • Lots of dough at Finsbury Food’s AGM, but also concerns – Richard Beddard
  • Better to buy Berkshire Hathaway or Buffett’s stock picks? – Meb Faber

Other articles

Product of the week: The first Help to Buy ISA rates have been announced. ThisIsMoney trumpeted the 2% offering from NatWest as a table-topper but it was bested overnight by a 4% offer from the Halifax, which ThisIsMoney also explores. Both articles recap how the new ISAs will work.

Mainstream media money

Some links are Google search results – in PC/desktop view these enable you to click through to read the piece without being a paid subscriber of that site.1

Passive investing

  • Don’t swap bonds for stocks [US but relevant]AARP

Active investing

  • Corporate insiders are selling stock at a fast clip – CNBC
  • Beware the surge in UK profit warnings – Interactive Investor
  • China killed the commodity super-cycle. The Fed will bury it – Bloomberg

A word from a broker

Other stuff worth reading

  • The Autumn Statement in summary – Telegraph
  • The full statement for your studying pleasure [PDF]UK Treasury
  • Tax dabbling can’t disguise the mess of public finances [Search result]FT
  • Top up your pension before April [Search result]FT
  • Essex has the biggest pension pots – ThisIsMoney
  • Self-help books can be more helpful than you think – aeon

Book related item of the week: You can buy a 7″, 8GB wi-fi enabled Kindle Fire for just £34.99 from Amazon – a saving of £15. A Kindle is especially perfect if you live in the South East where the crazy property boom means you can’t afford a big enough house to keep books in.

Like these links? Subscribe to get them every week!

  1. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”. []

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{ 42 comments… add one }
  • 1 Underscored November 28, 2015, 12:13 pm

    Homeowners vote tory, renters vote Labour. Simple.

  • 2 David November 28, 2015, 1:13 pm

    Stamp duty on a £300k BTL investment was £9,000 up until the last round of tinkering. The extra £5,000 payable on new purchases after next April will be dwarfed by the extra capital growth which will accrue as a result of the various inflationary help to buy measures. And stamp duty can be offset against capital gains anyway.

    So very little impact on owner occupier levels but a useful tax grab to cover the tax credits fiasco.

  • 3 The Investor November 28, 2015, 1:22 pm

    @David — Yes, I agree it’s tax grab, too. Had a whole paragraph on that but I yanked it to try to keep the focus.

    I disagree though in that I suspect all this *will* have an impact on where buy-to-let would go in its absence, but it’ll certainly be very difficult to tell exactly what, given the obvious lack of counterfactuals and the great scope for unintended consequences.

  • 4 Matty November 28, 2015, 2:38 pm

    These changes are bad news for me – help to buy doesn’t cover a high enough amount for London zone 2 and my household earns just over £90k so cannot take advantage of other schemes. We have only had this salary for a short time so need at least another 3 years to save for a deposit, by such a point the market will have shot above our heads. In London there are a lot of people who are income rich but don’t have the £150k plus needed for a good deposit and cannot save enough to keep up with prices rising. So it is wealth not income that should be targeted when judging eligibility in my opinion (we don’t have rich family who can just give us a deposit)

  • 5 The Investor November 28, 2015, 2:46 pm

    @matty — I sympathise, that’s the trouble with these targeted schemes. That said when I rocked up at a Help to Buy scheme a few years ago and made some (mostly academic) enquiries I was told my substantial savings would need to be declared and would disqualify me from HTB (I didn’t want to realise them for various reasons, including capital gains tax plus still plenty of value in equities back then.

    Tiny violins I know but in the other hand I’ve worked, saved and invested for every penny, paid taxes etc and my income was too low (not even higher rate back then, albeit partly due to pension contribs). Hard not to feel you’re not getting your ‘share’, when it comes to government handouts, whoever you are and wherever you sit. Which is of course yet another reason to be generally against them, versus markets etc.

  • 6 Ben November 28, 2015, 3:01 pm

    Matty – leave London and probably the UK.

  • 7 Mathmo November 28, 2015, 5:50 pm

    Always good to see TI in full-on property rant.

    The issue for humans is not house prices but rent costs: we all have to live somewhere, we don’t have to own something to do so. (I suppose I’m pointing at the “most of us want to own our own home” statement).

    Sure — it’s nicer to own as you get some more security, but it’s generally quite hard (and quite undesirable) to chuck out well-behaved tenants. Ownership brings risks and costs of maintenance and permanence, illiquidity and inflexibility. From a personal finance point of view, house ownership terribly unbalances your portfolio towards a really large lump of bricks and mortar, but it also provides the easiest and cheapest form of leverage available.

    House prices are rents divided by yields. Rents are driven by scarcity of housing stock and we live in a low yield world. So prices are high. No shocks there. Any statements about how many more times earned income that house prices are is simply a restatement of “golly look! interest rates are down a bit right now”. Indeed they are. Rents are up as well as more people cram into housing stock which is expanding but not as fast as demand (population, lower occupancy) requires.

    What do we achieve by tinkering? Well we’ll increase complexity and we’ll change behaviour. Suddenly buy-to-let landlords will move house lots and lots of times to avoid additional stamp duty, and grab a bit of capital gains tax relief pn their way through. Rents will rise to take into account the increased costs to the landlords. It’s like someone waving a flag at all landlords and shouting “time to put it up 10%, lads” — the Chancellor is acting as the OPEC for landlords. Thanks, George. Without coordination like this, the landlords would be too scared of having to compete on price with one another to go for a big price hike.

    If he really wants to grab tax and level the playing field, it’s PPR relief that he needs to consider scrapping. Have people pay for their ill-gotten gains on their homes and there’ll be less need to poke the heroic providers of rented accommodation to the people.

    Would be one point of view.

  • 8 Paul November 28, 2015, 5:50 pm

    Property businesses will probably be exempt from this stamp duty rise and I would welcome that. I want the government to encourage big players into the residential rental market who can use economies of scale to drive down rents. The small private landlords are inefficient and pass on their high costs to tenants.
    I’m a renter who puts his capital into the stock market instead because the dividends from my shares are higher than the rent on where I live. Anyway, I’m probably a rare example of a right leaning voter who doesn’t own a house so I welcome this move from the chancellor.

  • 9 The rhino November 28, 2015, 8:17 pm

    Do you think middle class buy to letters with kids are going to move in and out of their properties to bypass stamp duty? I don’t. Too much hassle.

    My feeling is that no amateur landlord actually wants to be in the game. They just feel like they can’t afford not to be.

    I reckon scrapping the hrt relief on mortgage interest and the additional 3% on the way in will go a long way to killing off the amateur scene. Whether this makes much difference to the overall problem remains to be seen

    Conservatives are never going to touch ppr

  • 10 eagleuk November 28, 2015, 8:30 pm

    It is a tripple whammy tax on the landlords.The tax has to be paid on whole rental income,dividends allowance reduced and now this stamp duty .Even if somebody goes limited then probably higher business interest rate on mortgage which discourages somebody to own a rental business.Most probably rents will go up.

  • 11 David November 28, 2015, 8:44 pm

    Talk of accidental landlords faking it is probably not relevant as the proposed legislation mentions any purchase of “additional residential properties”. So I’m guessing the stamp duty form would include a question about whether you already own another residential property, irrespective of where you are actually living. Presumably you would not be charged if you were selling another property at the same time.

    Whether the extra 3% stamp duty is enough to discourage investment depends on how investors calculate their ROCE (or its emotionally-based equivalent). The changes to mortgage interest relief will only put the highly leveraged under water, and even then only if rates rise considerably. To make a real difference to owner occupier levels in cities with no new development land available you would need to target existing landlords in a meaningful way, including the ones who are mortgage free.

  • 12 John B November 28, 2015, 9:29 pm

    A unit trust with a 3% spread would be high, but a long term investor could swallow what might be a year’s dividends.

    Similarly 3% stamp duty might only equate to a year’s rent, but the difference is the leverage of many BTL mortgages when it looms large compared with deposit and fit-out costs. So it should stop amateurs and leave professional investment companies, which is how I think things should be.

  • 13 theRhino November 28, 2015, 9:59 pm

    hey the broker comparison page has gone, anyone else (not) seeing the same issue?

  • 14 TimG November 29, 2015, 1:10 am

    Yes – the broker table is missing for me too!

  • 15 The Investor November 29, 2015, 1:32 am

    Hmmm, TA was updating it today. Worrying development. I’m currently out living the high life in our capital city but will investigate anon!

  • 16 The Investor November 29, 2015, 3:28 am

    @mathmo — Spoken like a true home owner (I’m guessing 😉 )

  • 17 LadsDad November 29, 2015, 10:02 am

    @TI Maybe ISA limits have been kept flat due to very low levels of inflation? Or is that just wishful thinking?!

    Great article as always

  • 18 Neverland November 29, 2015, 11:52 am

    I was just thinking of Help To Buy London and wondering how it was any different to the American government insured mortgages that led to the last financial crisis

    With Help To Buy London it’s the asset price that is pumped up with taxpayer money

    With Fannie Mae et al it was the borrowers who were bad credit risks and the properties that were overpriced

    Does anyone think it makes a difference?

  • 19 Jim McG November 29, 2015, 11:59 am

    Anyone else live through the last property collapse, houses dropping 40% of their value, negative equity and all the rest? Wasn’t so long ago. Of course, that will never happen again.

  • 20 Mathmo November 29, 2015, 12:32 pm

    @TI – awww — and I was doing my very best not to go ad hominem on your renter status. 😉

    I do find this stuff fascinating — housing is such a big lumpy thing that we’re all over- or under-exposed to the stuff depending on our o-o status. And the thing about being wrong-exposed is that it does tend to ramp up the extreme arguments. cf gold-bugs or gold-naysayers.

    Houses are also absolutely fantastic tax targets: there’s a good register of them, and they’re so very hard to take off-shore. The only issue is that lots of voters own one. Bring down home ownership rates and you can tax the property magnates until their pips squeak. Or something.

  • 21 The Investor November 29, 2015, 1:08 pm

    @mathmo — Hah, fair cop. 🙂 It’s just that after over a decade debating house prices I’m always amazed how those who defend the joys of renting are *overwhelmingly* home owners. In other contexts it’d be quite amusing (doctors praising leeches but using antibiotics themselves etc..)

    In terms of your points I agree with most of what you say — as a general rule I like to let people say their things in the comments though rather than engaging too much — I’ve already had my waffle rant space above! 🙂

  • 22 Mathmo November 29, 2015, 1:20 pm

    Thanks for the article as ever, TI. (If you need a place to stay, I’m sure I can turf one of the serfs of the estate).

  • 23 SHAMUS November 29, 2015, 2:34 pm

    I stumbled on MONEVATOR a few months ago and find it inspirational. I wish it had been about 40 years ago. I might now be “The millionaire Next door” if it had. By anyone’s standards I’m far from destitute. Retired. No debts. Kids off hand. Own the house. Good defined benefits pension backed by a large prosperous company. And last but not least a decent sum in “savings”. So what am I doing here? Well searching for a practical scheme to generate income from my savings. My concern is potential long term care costs. So I’m anxious to hold on to what I have and increase it in case it becomes necessary. Long term care (if needed) is not expensive; its way beyond that. A couple of years funding care wipes out a “decent” sum and no one wants a sharp reduction in living standards in God’s waiting room if it can be avoided. Long term care insurance never took off as not enough could or would afford it I suppose. So my “Holy Grail” would be sufficient income to top up my pension to pay the care fees and support my dependant spouse.
    Despite a good grounding in frugality in my youth (my parents were children of the depression) I’ve been (with the benefit of hindsight) a not very good investor. My first attempt at it was with Investors Overseas Services (anyone remember Bernie Cornfeld?) who went bust and paid me out 15 cents on the Dollar. Not a great start and definitely not a confidence builder. After that, knowing no better, I stuck with Building Society and Insurance Company products which caused me neither headaches nor losses but hardly made me a fortune. I was enticed into Unit Trusts by the “money” supplements in the week end newspapers leading up to the DOT.COM boom and bust. That drove me back to the high fees pedestrian Insurance Company vehicles and eventually into the clutches of a well known Wealth Management company who seemed to make more money from my pot than I did and who, over the past 10 years, have not delivered the “sales spiel” of 5% average income on cost.
    So I recently decided to build a DIY High Yield Portfolio. Capital Gain is not an aim but a reasonably reliable and increasing income. I’ve shied away from Bonds as they seem particularly expensive at present. Index trackers do not seem to be very good at generating income and Investment Trusts carry high charges and seem no less risky than holding a well diversified portfolio of 20 high yielding high cap shares in established profitable companies.
    With my finely tuned sense timing (see IOS earlier) I bought in just before the commodities collapse (a significant number of high cap companies in the FTSE100 are commodity companies) and I am now sitting on an 8.3% fall in value albeit against an income of 5.5% on cost. Am I panicking? – perhaps mildly; but I keep reminding myself that income is what I seek and now might be just the time to reinvest the “income”. Unless we are approaching a financial meltdown; years of printing money (read Q.E.) will eventually have to be paid for and the only ones who can are the ones with “savings”. The $64 question is – WHEN? This year or next? I’m tempted to start stuffing the mattress with used fivers so that when the banks collapse again (as I think they must) I’ll have something to pay for the groceries.
    You’ll see from this that I can safely be categorised as “Confused from Middle Earth”. Thank you for the blog it is helping.

  • 24 Mathmo November 29, 2015, 3:03 pm

    Shamus — Welcome.

    Phase 1: Keep calm. Write down a plan. Stick to it.
    Phase 2: There is no phase 2. Stick to the plan.

    PS a bad plan is good enough, but don’t chase yield.

  • 25 John November 29, 2015, 3:53 pm

    On the ISA allowance – this is usually increased in line with CPI to the September of the previous year, and then rounded (usually up) to the nearest £120. CPI was -0.1% to September 2015, so the ISA allowance for 2016/17 having being frozen is consistent with that.

  • 26 The rhino November 29, 2015, 4:21 pm

    And in a way, making the 1st X pounds of interest and dividends tax free has sort of increased the ISA allowances by tens if not hundred thousand pounds?

  • 27 magneto November 29, 2015, 5:29 pm

    We are all experts when it comes to housing aren’t we!
    Recently sent the following letter to ‘The Times’ :-

    “The British Infatuation with Housing

    How we all sympathise with the views expressed by Ian King in ‘It’s time to uncloak the impressive benefits of workplace pensions’ in The Times Monday 16th November, 2015.
    As Ian highlights, we are inundated with TV programmes about housing, but zero about pensions.

    If only the figures over ten years in the article were correct!
    60% for average balanced fund
    28% for UK housing

    One thing missing : the rental income!

    Chuck in net rental income of 5% per year and the figures become :-
    60% for average balanced fund
    78% plus compounding for UK housing

    When one considers the FTSE 100 is still below Dec 1999 level and about 40% below in inflation adjusted/purchasing power terms, that balanced fund has done extemely well with the benefit of accumulated dividends and rebalancing, but still not as well as Bricks and Mortar.

    Maybe the great British public are not so misinformed?”

    Unsurprisingly the letter was not printed.
    How we all wish the British infatuation with housing would fade, and first time buyers could then find a home.

  • 28 magneto November 29, 2015, 5:45 pm

    ” Index trackers do not seem to be very good at generating income and Investment Trusts carry high charges and seem no less risky than holding a well diversified portfolio of 20 high yielding high cap shares in established profitable companies.”

    Bear in mind that greater minds than us are also searching for income in this difficult environment, and ask whether we really may have spotted something advantageous in twenty stocks that others have missed?
    For the record : my wife and I, both in retirement; hold a mix of broad market trackers and investment trusts, the latter targeting dividend growth (not pure income alone).
    The rebalancing opportunities between these investments then abound.

    Trust we will discuss again in any future relevant threads.
    Good Luck
    P.S. You have found an invaluable source of investment information at Monevator.

  • 29 magneto November 29, 2015, 6:40 pm

    Just to clarify.
    The above investments relate to stocks only.
    We also hold substantial fixed income (bonds and cash) as dry powder.
    Our aim : ‘A Well Balanced Portfolio’.
    With ‘A Well Balanced Portfolio’ whether stocks rise or fall does not then matter one jot. Whatever happens we move into action in accordance with our ‘Investment Policy Statement’, a pre-determined written plan, thought out well in advance of events, reviewed and if necessary fine tuned annually. The IPS endeavours to cater for all eventualities in the markets, good, bad or indifferent.
    Note : this is not original thinking, merely wisdom gleaned from others.

  • 30 Learner November 30, 2015, 12:21 am

    I’d like to see someone in charge acknowledge that a healthy housing market isn’t necessarily one where prices are rising, it’s one where humans are housed, while having their other needs met, at every stage and age in their lives. Instead we are constantly reminded that a “strong” housing market is a growing one.

  • 31 Mathmo November 30, 2015, 1:33 pm

    Apart from the wonderful idea that there is actually someone in charge, I agree that the core thing is ensuring there is sufficient housing for everyone to live in.

    In a world of falling prices do you think people will build more of it?

  • 32 Fremantle November 30, 2015, 2:14 pm

    A few thoughts on housing…

    All other businesses are able to deduct interest on loans as an expense, why are landlords any different?

    Until there are tent cities of employed people dotted around our cities and towns, the UK can’t be described as having a housing shortage.

    The fastest way to increase the housing supply would be deregulation, including lower stamp duty and planning. Stamp duty is a consumption tax on housing. Have you ever heard of a consumption tax increasing consumption? Consumption can only be increased by increasing supply. Removing stamp duty would increase the profitability of housing vendors and would increase the number of vendors seeking high profits. This would attract both new builds and downsizers, increasing the number of properties on the market. Higher turnover has a tendency to reduce prices for everyone, rarity leads to bubbles. The government should stop getting in the way of the housing market and we should all stop worrying about home owners getting lucky with capital gains tax-free profits from the family home.

    Further, if amateur landlords cost base is so much higher and their returns so poor, why isn’t private capital moving into letting and pushing out private landlords through lower rents?

  • 33 John B November 30, 2015, 3:12 pm

    Removing stamp duty would be good in encouraging churn and house supply.

    But what is really needed is to remove all CGT exemptions on housing, main or investment property, to level the playing field compared with other asset classes. That would raise vastly more than stamp duty, and give a more realistic value to the asset. But it would be hugely unpopular, and for such an illiquid and unsplittable asset, would need the rollover of CGT allowances to ever work. And it should be done at the start of a bubble, not the top.

    Many people’s houses earn more than they do, they should be taxed appropriately.

  • 34 Fremantle November 30, 2015, 4:34 pm

    @John B

    Wouldn’t CGT on housing negate any benefit from removing stamp duty? Extending CGT to private housing would reduce turnover.

    I’d prefer to see a land tax applied to the undeveloped value of land, no matter what it is being used for. All categories of land are limited in supply, and whilst we can can create more of a category of land at the expense of another or through reclamation, it is expensive to do so.

    The beauty of land tax is that it would be due over the lifetime of ownership. Make land tax high enough and we could reduce income tax and encourage turnover. The retired would be encouraged to downsize on the basis that land tax would still be due on their family sized homes, even though they aren’t working. If income tax was abolished, many renters would be removed from the tax system altogether, although they would indirectly pay the land tax through their rent. Beneficiaries of large property inheritances would either need to use the land profitably to pay the land tax or pay for the privilege of land ownership.

    We could even remove CGT on financial assets altogether. Tax physically constrained resources like land, not capital creation, which is only constrained by human endeavour.

    Owning land would become a liability, not an asset, just like having a lease is.

    You lease a shop, you better make it work, because the landlord expects to be paid. If you fail, someone else takes on the lease and has an opportunity to succeed.

    You own land, you better make it work, because the tax man expects to be paid. If you fail, someone else takes on the land and has an opportunity to succeed.

  • 35 SemiPassive November 30, 2015, 8:05 pm

    The party of big business, small fry BTL landlords don’t make big party donations, just like IT contractors don’t compared to big IT consultancies that offshore jobs to India. Its also a cross-party HMRC wish to have everyone taxed as an employee and as much government control over the taxation of their retirement vehicles as possible.

    I’ve no particular axe to grind on BTL as I don’t own any, and my tax situation already makes SIPPs and ISAs the preferred route, even more so now. So I have no disagreement with the tax or stamp duty changes for BTL, unlike many previously smug colleagues.
    But will be interesting to see if they screw up pensions as well (for 40% tax payers) come April under the guise of fairness.

    Some traditional Conservative voters are facing an all out assault on about 3 separate fronts. They must be wondering why they voted for them.
    But CGT on main residence must surely be a bridge too far for them. The “family home” is sacred as the IHT changes show.

  • 36 Learner November 30, 2015, 8:41 pm

    @Mathmo indeed, I should have said “policy makers”.

    Personally, I’m getting on a plane tomorrow and leaving the UK for the foreseeable; finances being one of several reasons. It’ll be some relief to view this situation from afar (as it was to observe my home country some years ago) though no doubt the new city will offer it’s own frustrations amongst opportunities!

  • 37 Topman December 1, 2015, 11:42 am


    Good luck in your new base. My own view, expressed here before, is that over-population is the cause of the “housing shortage”. My forecast is that there will consequently be a net people drain from the UK to continental Europe in the foreseeable future. The sooner the better please!

  • 38 The Rhino December 1, 2015, 11:43 am

    @Learner – whats the destination?

    On a tangent, UTMT seems to have gone the way of Mr. Squirrel.

  • 39 Jane December 1, 2015, 7:14 pm

    Osborne is of course also causing headaches for housing associations who are likely to have to sell off part of their stock under the new right to buy, and also to cut rents from 2016. This is causing havoc with their forward projections and cashflow and as a consequence they will probably have to cut back on what they build. Presumably not what the Chancellor intended?

  • 40 Learner December 3, 2015, 4:02 am

    @Rhino, currently in California, aiming for Portland, Oregon in January. Final destination depends on work but likely somewhere in PNW.

    I’ll be keeping Monevator in the reading list, still much to learn.

  • 41 Ken December 3, 2015, 9:07 pm

    As ‘right-to-buy’ is to be given to housing association tenants, we should be pushing for the same to apply to private tenants, with an enforced maximum selling price (some %age under market value.) This would enable renters to get a foot on the property ladder, whilst increasing supply in the market thus reducing prices, and will make buy-to-let a less attractive proposition, so further reducing prices.

  • 42 Financial Samurai December 6, 2015, 8:09 pm

    Thanks for the shoutout! I missed this one. Cheers

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