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Weekend reading: How high property prices are making many of us relatively poorer

Weekend reading: How high property prices are making many of us relatively poorer post image

Good reads from around the Web.

I think we’re nearly all agreed now that UK property prices are too high, and in the South East at historically stretched levels compared to rents or incomes.

(Okay, so my mum is a holdout. She rightly views my housing sob story as leavened by a substantial dollop of my own personal failings… I think she also wants to see a granny annex in her future!)

You do still hear from the odd Barry Blimp who says that it was just as difficult to buy in his day, when he bought a three-bedroom house in Zone 2 in London aged 25-years old on his graduate salary – and that he managed it because he didn’t own an iPhone.

But even most naysayers have shifted to tell you that fine, yes, house prices are absurd, but what’s so bad about renting anyway?

This view is invariably advanced by people who haven’t rented for decades, and often as not who’s only recent contact with a tenancy contract is the one they just got signed for their latest buy-to-let.

Down and out in London and Bristol and Oxford and…

Meanwhile people who feel locked out of the property market know that it’s not just a matter of being allowed to bang nails into the walls to put up their own IKEA pics.

They can see how not owning housing – geared up via a mortgage to lottery-level winnings for older generations – has left them floundering in the wake.

I see this illustrated all the time with my 40-something London friends.

The majority who bought in their 20s never stop taking holidays, eating out, and buying fancy bits and bobs.

The few who didn’t even avoid having too many Sunday lunches in the local gastropub – or go the other way, throw in the towel, and spend their large yet useless deposits on year-long hedonistic benders. (i.e. A bit of travel).

As for my 20-something friends, they live from paycheck to paycheck and imagine owning a one-bed flat with the same sense of wonder with which the Baby Boomers viewed the moon landings.

Before anyone gets out their tiny violins, I’m not talking about me. My lifetime savings rate has been very high, and my investment returns above average. As a result I’ve amassed a chunky warchest. I could buy, but I don’t.

However I don’t think it’s reasonable to expect an entire generation of bright young people to turn themselves into a Scroogier version of Warren Buffet just to do what their parents did as a matter of course.

Fine, perhaps this is the way the market will be for the foreseeable future. But if we’re being pragmatic then we should at least acknowledge the strain it is putting on social norms.

The return of feudalism

In particular young people – who also face student debts, high rents, low wages, unfunded pensions, and no chance of a BTL windfall – will get relatively poorer even if they do the right thing, unless some sort of action is taken.

Business Insider recapped a Resolution Foundation paper this week that shows how property ownership in the UK is driving inequality.

It notes that:

Britain has changed since 1998.

Back then, it only took workers about three years to save enough money for a down-payment on a house.

Now it takes 20 years, on average.

(Sure Barry, it was just as hard in your day. The kids should shut up and stop drinking cappuccinos, right?)

This graph shows how property ownership is now the major driver of inequality:

Note the divergence on the right hand side (Click to enlarge)

Source: BI/Resolution Foundation

The key is to look at how the lines used to be close together, and now aren’t. It was not ever-thus, in short. Not owning a home didn’t put you on a downward escalator for life.

Raising the White Paper flag

Like most, I don’t see much in the Housing White Paper that looks likely to address the under-supply of new homes in the UK.

Perhaps recent political events might if they curb migration and hence population growth – but then lower immigration could also reduce supply by depleting the workforce. (House builders are already complaining about a skills gap).

Maybe it’s time to think differently. If we can’t build enough extra houses, then perhaps those without houses could get a different kind of tax break, for instance.

It irks me enormously that friends see 10-20% capital gains tax-free growth each and every year on their homes while I face a huge bill if I sell various un-sheltered legacy holdings.

Shouldn’t investments be fungible, especially nowadays when it is so much harder to buy property? Maybe if you don’t own your home you should get a six-figure CGT allowance?

Okay, that’s an aspiring 1%-ers problem. The vast majority of millennials will struggle to even make a dent into the new £20,000 annual ISA allowance that’s coming in April.

Maybe renters could deduct their rent from their income tax bill? It sounds insane, but then crazy ailments may require outlandish treatments.

What the government should not do is row back on the tax changes hitting BTL. If anything it should speed them up. There’s no justification for a policy that actively encourages a minority to get richer, as per the inequality graphs above, while other citizens are locked out.

Oh, and before someone says it, I don’t think inheriting property wealth is the ideal solution. That just compounds the new feudalism of a property owning class and a rootless peasantry that we seem to be sleepwalking into.

Unless like me you want to start taxing inheritances at 90% or similar. And I know very few of you want to do that. 🙂

Here’s a few more property stories from this week:

  • Property owners get richer while everyone else gets poorer – Business Insider
  • How to own a home by the age of 25 – BBC
  • The 30-somethings fleeing London’s property prices – The Guardian
  • Can the Government’s Housing White Paper fix the “broken” market? – Telegraph
  • Buy-to-let landlords face remortgage crunch [Search result]FT
  • You could buy builders for their high dividends instead of BTL – ThisIsMoney

Have a great weekend!

From the blogs

Making good use of the things that we find…

Passive investing

Active investing

Other articles

Product of the week: Reports of the demise of the sub-1% mortgage rate were exaggerated, The Telegraph reports. Santander is out with a new 0.99% fixed rate mortgage. It’s good for 18 months, but you’ll need a 40% deposit to get it. You can also still get 0.98% from the Yorkshire Building Society. That’s a tracker though, not a fixed rate product, so you’ll be at the mercy of – ahem – soaring interest rates.

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

  • Why the Bogle model beats the Yale model – MarketWatch
  • How to make money in the ETF business – ETF.com
  • Passivity is the new activity – Dealbreaker
  • Larry Swedroe: How survivorship bias happens – ETF.com

Active investing

  • Why shorting is so hard – Morningstar
  • The case for emerging markets [Podcast]ThisIsMoney
  • Hedge funds face a Doomsday scenario – Value Walk
  • The market tends to sniff out profit warnings in advance – Bloomberg
  • Summary of Seth Klarman’s latest much-discussed letter – Dealbreaker

A word from a broker

Other stuff worth reading

  • The elderly, cognitive decline, and banking [Search result]The Economist
  • 15 ways to reduce your tax bill [Search result]FT
  • Yes, *in general*, Remain voters really are much better educated – BBC
  • Premium bond prize cuts are coming in May 2017 – The Telegraph
  • Merryn: Buying a new car drove me around the bend [Search result]FT
  • Passion investing and your portfolio – The New York Times
  • The importance of bubbles that did not burst [Search result]FT
  • The rising significance of inheritances – Accountancy Age

Book of the week: I missed The World According to Star Wars when it was published last year. But I heard an interview with the author Cass Sunstein this week, which piqued my interest. His book recaps the movies’ success, before exploring how we can apply its lessons to everything from law to parenting. Sunstein is a Harvard professor who wrote the influential Nudge, and his new book also has a serious intent. Another one for the pile.

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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{ 74 comments… add one }
  • 51 Brendan February 12, 2017, 6:43 pm

    There have been a lot of interesting comments regarding house prices. In particular: house prices have increased so rapidly in value, and interest rates have come down – this is by no means unrelated. But the deposit is still 5% of the cost of the house as a minimum. It should be clear that this deposit really should be coming down with interest rates, but isn’t for a fundamental reason: while affordability of mortgages might be coming down, the risk associated with them has no. In fact, if anything it’s causing more 95% mortgages, which is yet more risk to the financial sector.

    This might be the big flaw in how low interest rates can spur on a housing market. You can make leverage cheaper, but you can’t make it less risky (and you probably make it more risky). The result is what we’re seeing now.

  • 52 MrMoneyBanks February 12, 2017, 7:17 pm

    Your idea to allow rental expenditure to be income tax deductible is interesting. However, the idea is possibly flawed. I’m concerned that such a policy would encourage millennials to go for the most expensive rental properties that they can afford under the misapprehension that to pay the least tax possible would be a good goal rather than to get the most affordable property in order that they could save more. Generally, such a policy would encourage people to live in properties that they wouldn’t have ordinarily afforded. Ironically, this would lead to more money going into the pockets of buy-to-let landlords and increasing property prices to even more unaffordable levels. Thoughts?

  • 53 PC February 12, 2017, 7:31 pm

    What worries me about the housing market is the amount of leverage and low inflation rate (other than in the housing market). Back in the day, my first mortgage was in 1981, inflation was so much higher, and the risk you took rapidly diminished.

    I’ve a lot of sympathy with @TI’s view and it’s always prevented me from doing anything more than buying a place to live in. It often feels like I’m the only one, amongst people I work with, that doesn’t have at least one BTL. I take heart from this – I remember being the only person I knew who had a repayment mortgage instead of an endowment.

  • 54 easydoesit February 12, 2017, 8:27 pm

    There are so many problems with housing. My biggest concern is the new class division that’s being created: one, those who can buy homes, often with the help of the bank of mum and dad, and who who in later life will likely inherit their parents’ property which will enable them to become landlords; the other, the new underclass, who have no path or means to ever move into the property-owning class enjoyed by the majority.

    The only realistic answer seems to be high levels of inheritance tax. Instead IT has now effectively been abolished for most and is voluntary for the rest. The problem can only get worse and lead us to somewhere we shouldn’t want to be.

    I’m also very sympathetic who are excluded from getting a home in the area where they grew up. That’s a problem in tourist areas like Cornwall and fashionable towns and villages, but most significantly in London. There, people doing ordinary but essential jobs like bus drivers and ambulance staff, have no chance of ever owning their own homes. I know a young couple both born in London who have had to move to the north east of England where they have no connection, as the only way they could ever buy a home .

    I’ve *slightly* less sympathy for those who move to London to get a better paid job and then complain that they can’t afford to buy a home here. They have similarities with those who complain that they can’t send their children to their first choice of school or with the drivers who clog the M25 to drive to a job on the other side of London and then moan about the M25 being clogged. They are, I’m afraid, part of the problem though few see it that way.

    Still more annoying are those who move to London then bitch that they can’t buy somewhere in central London zones 1 or 2 and wouldn’t consider buying somewhere in the outer reaches of Middx or Kent in the way that so many of those born in central London have been forced to do. The rules of the game are that those with the deepest pockets can outbid the competion. Those with shallower pockets who seek to outbid those with still shallower pockets can hardly complain.

  • 55 Grumpy February 12, 2017, 11:25 pm

    Wrt to restrictive planning policies…

    I recently met with a local labour run council/planning dept about a site we were looking at building 8 houses and 5 flats on.

    The planning officer wanted £180k “backhander” other wise known as a section106 bribe before they would grant PP.

    He kindly said they would “..allow us 10% profit” on the development before collecting the S106 “fee” at a rate of £50k for every £100k profit we made.

    When I pointed out this was effectively a corporation tax of approaching 70% and hence not worth the risk of me borrowing £1m to build the scheme, he shrugged.

    The site remains empty and no houses are being built.

  • 56 FIRE v London February 13, 2017, 1:44 am

    Excellent discussion, thanks @TI for kicking it off.

    A few additional points that strike me, with my usual London perspective.

    First of all I think behind the increases over the last couple of decades there are more factors at work than just lower interest rates. For example:
    – dual incomes. I think the stats about occupancy are missing the stats about workforce participation. Back in the mid 1990s, it used to be possible in London to rent 2 bed places off one income. These days at least one income per bedroom is required, and I will wager that far more rented bedrooms have cohabiting dual earners than did 20+ years ago. Childcare has improved, part-time work has improved, the gig economy has come along – all in all this pushes up house prices in a world of constrained (ish) supply.
    – transport. London’s transport has got a lot better in the last 20 years. Buses, the London Overground, Boris bikes and Uber have opened up entire swathes e.g. Hoxton/Shoreditch/further out that were No Go areas in the 1990s and are now £1000+ per sq foot. 20 somethings in my office are paying similar headline rent to what I paid in my 20s, but they are commuting from a lot further away (pretty quickly/flexibly).

    Secondly, re supply vs demand. I side with the view that says prices are set by the intersection of supply and demand, and notably by the marginal buyer on that curve. If marginal buyers are even just a few Xi-fleeing price-agnostic people then the elasticity will be very low and *everybody’s* price goes up quickly. In my thought experiment of allowing Ireland-style 5m homes to be built in 5 years (somehow within zones 1-3 of London, ahem), prices fall quite quickly.

    Moreover, in the USA average house prices since 1980 have roughly tripled, from ~$80k to ~$270k. In limited-supply areas like central Boston, San Francisco, South Beach etc prices have risen far faster. But overall the ‘large country, lots of land, barely any planning rules’ factor has kept a lid on prices. In the UK average house prices since 1980 have increased *ten fold*, from ~£24k to >£250k. London/Oxbridge/etc look similar to South Beach/NYC/San Francisco/etc – the difference is for everybody else. Goldman Sachs guys pay the same for houses in both countries, but Trump voters pay a lot less than Brexit voters for their houses.

    Next, foreign buyers. There is something to be said for the Australian system. In Australia, foreigners need permission to buy. This permission is pretty much always forthcoming, but it costs money (<1% of purchase price, on top of ~5% stamp duty), and foreigners can (roughly speaking) only buy new builds. So in theory foreigners are funding new capacity but not competing with locals to push prices up. This type of red tape policy is not very British but it would surely get a lot more support from the redtops than concreting over the greenbelt would.

    Lastly, taxes. Much as we all hate high stamp duty costs, the 'rational' alternative is to go for annual real estate taxes. These are unavoidable, can easily meet political objectives (of taxing the rich more), are far more predictable than transaction taxes, and would stimulate labour mobility; the Torygraph critique about aged grannies going broke paying them is easily dealt with. A move to such taxes would leave most readers of this blog materially worse off….

  • 57 John B February 13, 2017, 9:00 am

    The move to increase council tax rather than income tax does that, but only redistributes wealth within a borough, not nationally, which is what is needed. I suspect we do need to tax assets more and income/expenditure less.

    Removal of stamp duty would help the young, who move more for career and as family sizes change. But its generally not stamp-duty that stops pensioners moving, its the aggravation, see a recent Money Box Live. I can’t see a good way of persuading them to downsize.

  • 58 dearieme February 13, 2017, 12:16 pm

    Scrap many of the planning restrictions that apply to housing, both new build and change of use.

    Bring back Schedule A, the income tax on imputed rent. That reverses a decision by those naughty Conservatives to scrap it.

    Apply CGT only to post-inflation gains. Then extend it to owner-occupied housing with a base value attributed to (say) 6/4/21 (or would 6/4/16 be better?) or to any value established by an free-market sale after that date. That reverses a decision by those effing socialists to exempt owner-occupied housing from CGT.

    Scrap stamp duty.

    Scrap the IHT advantage of owner-occupied property.

    Pay no attention whatever to hysterical ranting and witch-hunting on the subject: apply rational economic analysis. Thus the purpose would be to equalise the tax treatment of owner-occupiers and tenants, leaving the buy-or-rent decision to depend on the person’s circumstances and feelings, not on tax advantages.

    There you are; what could be easier? Naturally there would need to be many other bits of legislation e.g. scrap the recently introduced tax changes on rental landlords, a lunatic scheme that will result in increased rents for tenants.

    As for London itself: move nogoodnik subsidised tenants out of London to cheaper housing elsewhere, releasing the housing they presently occupy for purchase or rent by workers. Make commuting more reliable by ejecting trades unions from monopoly employers e.g. the railways, London Transport etc. Correct any shortage of labour in those and other industries by increasing wages, increasing automation, abolishing restrictive practices, etc.

    See? Easy-peasy.

  • 59 Marked February 13, 2017, 12:58 pm

    @grumpy

    You S106 is probably out of date. Councils do CIL and affordable housing. You are entitled to make 20% profit and the council know it. No bank will loan to you with a 10% margin. The safety valve in all this is take the planning and appeal the S106 and/or affordable housing to the Planning Inspectorate. If they keep on saying 10% is acceptable in writing then go for costs of Appeal too. Yes, it will take time but appeal inspector s tend to allow 17 to 20%. Lots of prior art in this field.

    They are actually stopping schemes coming to fruition so they will be drubbed by the Inspector.

  • 60 The Austrian February 13, 2017, 2:03 pm

    There are so many strands to this debate, nearly all valid, but I instinctively never think more govt fiddling and tax is really the answer. Increasing IHT? Taxes on capital? That’s all tackling the symptoms not the causes, which include interest rates suppressed 80% or more below where a market would set them, and highly controlled planning / building regs – there’s famously more of Surrey under golf courses than houses.

    One reason people continue to leverage to the eyebrows in the property casino is the lack of renters’ rights, such that you can rarely consider a rental a home – you would not want to ‘invest’ in it by installing new stuff, you can be turfed out on short notice, and there’s a whole class of useless private punter landlords that try to do / spend as little as possible on making a place habitable. Yet rent controls have failed everywhere they have been used. So given the demand for such security of tenancy and also the global demand for long term steady yields, if the State must intervene can’t it set up a self-contained corporation to use the State’s borrowing power? Buy a portfolio of existing residential property UK wide, issue bonds with a guaranteed but low yield, maintain the properties at a good level, and offer 5- or 10-year-plus tenancies with rent reviews only every 3 or 4 years? And on the tenant’s side, require a significant deposit so they are deterred from rent defaults or ruining the place (which does happen). Who knows, it could even make a profit. One problem I guess is that means ‘discrimination’ – you could realistically only offer such rentals to ‘good’ tenants with a large deposit and a steady income..… so it is likely politically impossible.

  • 61 Gordon February 13, 2017, 4:34 pm

    I’m sure when we leave the EU house prices will go down as EU migrants leave.

    Surely a good thing 🙂

  • 62 Fremantle February 13, 2017, 6:19 pm

    Brexit is likely to result in British citizens returning whilst settled EU citizens stay. I applaud the Lord’s amendment to the Article 50 legislation to secure the residency of EU citizens who moved to the UK.

    I don’t trust the likes of Spain to reciprocate.

    Returning Brits will likely push regional prices up for both rent and house prices since for many they’ll have been priced out of their previous home regions due to unequal house price appreciation and a fallen pound.

    Will also likely put a lot more pressure on the NHS.

  • 63 Martyn February 13, 2017, 11:58 pm

    “I don’t trust the likes of Spain to reciprocate.”

    I agree, the only hope those expats stand of being allowed to stay is implied retribution, ie a tit for tat response. So I don’t applaud the Lords meddling, there are lot of people who must be very worried currently.

    In other news it’s looking like the PRA has called time on the Co-op bank. (I used to hold Co-op prefs, now group bonds, so keep an eye on them, joint pension being the worry). Anyone who has followed events there knows that there have been many failings. However they say that the sustained very low interest rates have made it very difficult to make any profit, hence the balance sheet has weakened year on year. This is common to all the banks. Not only has very low interest rates contributed to a housing bubble it has also seriously weakened all the banks (mind the UK ones are in rude health compared to their European cousins, the Italian banks are basket cases.)

  • 64 Fremantle February 14, 2017, 10:11 am

    @Martyn

    The EU diaspora chose to voluntarily leave their home nations and therefore face the risk of foreign legal systems. The risk seems low in the Francis Fukuyama “End of History” sense, but historically European nations have not treated foreign residents very well.

    Brits moving to countries like Spain face a raft of legal obligations to formally settle, which many have chosen to ignore in a very British way since the concept of registering as resident seems very un-British. This may well come to haunt them in similar ways to the problems that EU residents are facing in the UK trying to obtain indefinite leave to remain.

    Not only that, but many British have faced significant legal problems with regards to property ownership and unclear property law, with competing administration departments at local and national level that are very difficult to navigate. New builds being forced to be demolished etc. etc.

    I believe that the UK legal system is superior to many continental ones with much clearer roles and responsibilities, and clearer avenues to legal redress. I also believe that the UK has a generally positive history of welcoming immigrants, from the French Huguenots, the Ugandan South Asians, the West Indians, despite more difficult recent cases of the Gurkhas and Hong Kong. Unilateral granting of EU residents with indefinite leave to Remain is the only moral path and would also show to the EU that Britain is serious about leaving (and keeping their brightest and best hard working citizens to boot).

  • 65 McBenthy February 14, 2017, 10:12 am

    Hey – I love the blog and been a long time reader but I have one minor criticism – INTRODUCE YOUR ACRONYMS. Gini and LCF have had me stuck for hours today trying to figure them out 🙁

  • 66 SemiPassive February 14, 2017, 10:31 am

    Grumpy, I was talking to a developer about section 106 a while ago, its almost like charity work. No wonder they don’t get built unless you get the land virtually free. Meanwhile the same councils that talk of a shortage of affordable local homes for local people grant permission for holiday homes, sometime big estates of holiday homes, on an epic basis.
    Hopefully remoaners can take solace that reduced immigration post Brexit may eventually take some pressure off the demand side, but I can’t see a house price crash while rates are near zero and also near full employment. And if there is a crash then developers just stop building.

    Commuter belt houses predicted to go up another 20% over next 5 years as people move out of their no-longer-rocketing London flats.

  • 67 TahiPanas February 14, 2017, 10:41 am

    Fremantle,
    You referred to difficulties with the Ghurkhas and Hong Kong.
    It was very amusing immediately prior to the handover of Hong Kong to China in 1997 to read sensational stories in much of the UK press about Hong Kong Chinese potentially flooding into the UK. Many of the stories sounded remarkably familiar. Hong Kong people would take people’s jobs, reduce wages, overwhelm the social services etc.

    It was debated in parliament. Finally, it was decided to give passports only to people who had served the British in sensitive posts and grant only a few thousand passports to qualified applicants.

    Humiliatingly, there were insufficient applicants and the full quota was unused. Intensely practical Hong Kong Chinese thought their prospects in the USA, Canada and Australia were much better.

  • 68 Financial Samurai February 14, 2017, 4:33 pm

    Your comment is the reason why I’m going to spend a lot of money buying in the heartland of America. I don’t want to wake up in 10 to 20 years and take myself for not participating in what I think is the most obvious real estate investment opportunity in America.

  • 69 Financial Samurai February 14, 2017, 4:36 pm

    Rental expenditure is already tax deductible here in America.

    We basically pay zero income taxes on rental income because of amortization, depreciation, and other expenses. It is a no-brainer to become a landlord here because not only will you Earn tax advantageous income, your property and will likely at least increase with inflation overtime as well.

    Sam

  • 70 Financial Samurai February 14, 2017, 4:38 pm

    What about the young folks just simply relocating to it cheaper part of the country or cheaper part of the continent?

    Here in the United States, people are fleeing the coastal cities and moving into the heartland of America. For example, Austin Texas is about one third the price of San Francisco and they are seeing a huge network effect of start up companies grow there.

    Sam

  • 71 Martyn February 14, 2017, 5:57 pm

    My views on property rights in the EU are on record – essentially there isn’t any. It is one of the reasons I was (and am) quite sanguine about the legal situation of the UK when it comes to paying to leave the EU. Laws are what governments choose them to be. We can make and change them as suits, don’t think a deal is fair then . Which brings me to the EU and property rights. In Ireland when the banksystem imploded the Government initially tried to use national pension funds to plug the hole by buying shares, when this failed, they upended the seniority of assets in an arbitary manner to save their pensioners. When the ECB started to buy distressed debt it effectively changed the terms and conditions of that debt, it could own the same bond as you or I but it would not take a hair cut.

    Ownership in the EU can and was changed whenever and to whatever suited.

    Contrast this with the UK. Greek debt was underwritten in London and on the continent. Debt written in London where the owner did not ‘volunteer’ for a haircit paid out at par and sharp hedge funds made a fortune. The debt that was given a hair cut and exchanged for new debt was ALL written in London because the creditors did not trust the EU or the ECB to protect their property rights.

    After Ireland I’ve not bought a bond written under EU law and think anyone who does is mad.

    Houses and bonds are simply different asset classes and could easily be treated the same way.

  • 72 The Investor February 14, 2017, 9:06 pm

    My views on property rights in the EU are on record – essentially there isn’t any.

    @Martyn — I am trying to tolerate your Brexit views on the grounds that we shouldn’t all live in echo chambers, but my patience has limits.

    Countries in the European Union follow the rule of law. Give it a break.

  • 73 FIRE v London February 17, 2017, 2:24 am

    @TI – you know I am in your echo chamber 😉 but @Martyn makes a reasonable point. Following rule of law is one thing to some people and another to others. Ireland, Cyprus, Luxembourg, France, Spain have all got recent cases in point to support @Martyn’s argument.

    Property rights are part of the argument. Undisputed land ownership, clear accurate price records, relatively open markets, unbiased access to professional services – these are far easier to find in e.g. Cambridge/London/etc than e.g. Florence, Cork, Amsterdam, Budapest, Leipzig, Venice.

    Another part of the argument is the chance of unexpected regulatory fiat. E.g. ‘mansion taxes’, confiscation, eminent domain, retrospective legislation. The UK is widely trusted for its stable predictable consistent approach on such matters, and rightly so. Transaction taxes have gone haywire and non-doms have some grumbling to do but the regime still compares well with many continental equivalents. Even the recent attack on buy-to-let taxation have been phased in over 4 years – which other countries would have done that?

  • 74 The Investor February 17, 2017, 10:08 am

    @FireVL — Hi, yes I’d have no argument with “the UK has one of the most trusted legal frameworks in the world” or similar. I well remember the yield spread difference between bonds government by UK laws versus Euro laws back in the financial crisis, for example. But to say “there aren’t any” property rights in Europe is just pointlessly inflammatory. Clearly they are. Also, while there may be more instances of debate in Europe, I know there are at least some in the UK and I’m no expert. (E.g. See the recent private shareholder complaints over how they were treated with Lloyds ECNs.)

    A one-off bit of hyperbole is a lapse we’re all guilty of, me definitely included, but Martyn is a fully paid-up member of the Brexit hyperbole club (e.g. recently he opined that Remain voters were voting for a “re-run of the Soviet Union”) and eventually it grates. He’s obviously an informed sort of chap on many matters (and of course he’s entitled to his view on Brexit, it’s the relentless posturing I object to).

    To the extent there’s signal in the noise that’s being missed because of the rhetorical stance he takes, I’m sure some would say I’m guilty of the same on the other side of the argument. But I don’t turn up at Martyn’s house ranting about Remaining at every meal. 🙂

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