![\"\"](\"https:\/\/www.glentree.co.uk\/blog\/wp-content\/uploads\/2024\/09\/bernd-dittrich-Acr6jUwpcvs-unsplash-300x156.jpg\")
<\/p>\n<\/p>\n
In a rising property market, the sun is always shining, and although I can\u2019t say that transactions are not happening, there is still life out there and according to the Royal Institution of Chartered Surveyors (RICS), we may be in positive territory for the first time since October 2022.1<\/sup><\/p>\n It\u2019s interesting to note that throughout the Election and beyond, trading in residential property was oblivious to the change from the political livery of Blue to Red, probably because the result was a self-fulfilling prophecy on the part of the Electorate.<\/p>\n <\/p>\n Summer on their superyachts<\/strong><\/p>\n The full effects of a Labour regime are beginning to be felt though, and one does not need Tarot cards and a \u2018Familiar\u2019 to anticipate the full ramifications of the non-dom changes. Our wealthy international brethren are still soaking up the last rays of summer on their superyachts, before the \u2018grand reveal\u2019 of October 30th\u2019s budget when their association with the UK will be determined.<\/p>\n Dubai, Monaco, and the Bahamas<\/strong><\/p>\n The whispers about billionaires leaving the UK have now turned into a shout, as they shut the gilded door behind them. Much as these wealth creators like living in this wonderful country, the current political Labour regime appears to be getting increasingly hostile to them so that the attractions of Dubai, Monaco, Bahamas, and other recently created tax shelters in Europe, are beckoning.<\/p>\n Turn this trickle into a proverbial torrent<\/strong><\/p>\n As far back as July 2024, wealth advisors – Henley & Partners – stated that millionaires were fleeing these shores due to our high-tax climate. The UK is expected to see an unprecedented net loss of 9,500 millionaires in 2024 \u2013 second only to China worldwide and more than double the 4,200 who left the country last year. A Labour government is going to turn this trickle into a proverbial torrent.<\/p>\n \u00a0<\/strong><\/p>\n Talk to the wealthy Californians<\/strong><\/p>\n Listening to their rhetoric, you would think that these non-doms cost this country money, but you\u2019d be mistaken.\u00a0 We happily earn at least \u00a36billion per annum from them, quite apart from the employment they create and the multiplying effect of their spending. These valuable foreign earnings are pocket money to the oligarchs, yet even their crumbs from the table are invaluable to the UK economy, which is looking a little threadbare at the moment.<\/p>\n There is even talk of an \u2018Exit Tax.\u2019 This is always the sign of a desperate government and any country that resorts to these measures really needs to look again existentially at their over-all tax regime, since incentives to invest in a country, rather than penalties to exit, are far more preferable. If you are in any doubt, talk to the wealthy Californians who want to leave their native state.<\/p>\n It is like an incompetent hotel manager deciding to lock the guests in their rooms when they become disgruntled and want to leave.\u00a0 I say, improve the service so that instead, they are knocking the door down to book more rooms in the establishment.<\/p>\n More doctors and nurses<\/strong><\/p>\n As the myopia of the Labour Party blinds them with political dogma, effectively the loss to this country could be considerable and unaffordable. They talk about raising money from eliminating the non-doms to pay for more doctors and nurses but, in practice, who will fund the deficit that these foolhardy changes in the tax regime will undoubtedly create?<\/p>\n <\/p>\n Whilst on the subject of self-flagellation, the changes to VAT on schools are causing consternation amongst the middle classes who cannot afford this penal tariff and by the looks of things, the State schools are totally unprepared for the avalanche of displaced students from the private sector which will be generated by this decree. Chaos reigns!<\/p>\n Gives us all d\u00e9j\u00e0 vu and reflux<\/strong><\/p>\n Education is the wealth of the nation, and the mayhem created by previous Labour regimes by their insistence on eliminating grammar schools in favour of comprehensive ones, will give us all d\u00e9j\u00e0 vu and reflux at the same time. When governments interfere with these important matters, invariably they end up with a far worse result.\u00a0 They will not earn a penny from these changes but if they do have spare cash from other sources, why not put the investment into State schools so there isn\u2019t such a yawning difference between these and the private sector.<\/p>\n <\/p>\n Depriving pensioners, who have paid into the system for years, of their winter fuel payment, has been an unmitigated disaster for the government, demonstrated by the number of rebels in the recent vote. Let\u2019s see if this mendacious legislation makes it to the Finance Act without amendment.<\/p>\n Methinks, that because the \u2018grey\u2019 vote normally favours the Tories, they have nothing to lose by this inanity.<\/p>\n Sugar daddy payments for Kier\u2019s spectacles and Vicky\u2019s dresses<\/strong><\/p>\n When you take into consideration the billions consumed in the pay settlements of the rail workers and the doctors, that are well above inflation, Starmer and Reeves are looking less like the \u2018Dynamic Duo\u2019 and more like \u2018Team Laurel and Hardy\u2019 and this is before we even mention about cronyism and the unregistered \u2018sugar daddy payments\u2019 for Keir\u2019s spectacles and Vicky\u2019s dresses. Poor lambs.<\/p>\n <\/p>\n The Budget on October 30th will be a watershed moment, threatening to send shockwaves through every stratum of the property market. Although the Labour manifesto excludes changes to the main sources of taxes in this electoral cycle, it leaves the Chancellor only the following; Capital Gains Tax, Inheritance Tax, Private Pensions, Mansion Tax, Council Tax, Wealth Tax, Development Land Tax and rent reforms, to play with.<\/p>\n She is on course for an ideological collision with the middle and upper classes, who were already feeling the pressure of previous tax-and-spend Tory governments.<\/p>\n Labour\u2019s modus operandi is to spend like a drunkard when it comes to the unions and public sector, thus guaranteeing a bought-and-paid-for voter base.<\/p>\n Reevenomic theory tells us<\/strong><\/p>\n The \u2018marzipan layer\u2019 of middle and upper classes will be squeezed until they can barely breathe. In Labour\u2019s calculations, they vote Conservative anyway, so they\u2019re expendable. Reevenomic theory tells us that there was a \u2018black hole\u2019 in the country\u2019s finances when Labour took power, even though interest rates and inflation are coming down, and employment and growth are rising, as we speak. \u00a0A Tory legacy for them.<\/p>\n <\/p>\n There is good news on interest rates. On 1 August the Old Lady of Threadneedle Street delivered, going from 5.25% to 5%. Lending institutions caught the wave and there are some attractive long-term fixed-rate offers priced from 4.08%, while the best three- and five-year deals at 4.14% and 3.81% respectively, which will console property owners in the residential market in the \u00a31\u20133 million brackets.<\/p>\n Two years ago, the markets were absolutely buzzing, and that sparkle has now fizzled away \u2013 there are fewer buyers around, particularly those without a chain.\u00a0 The key factor in determining this trajectory is the supply of new properties coming on to the market in relation to the overall demand.\u00a0 If this remains in kilter (as it is at present) then values will do the tango sideways.<\/p>\n The main difference in the current markets is enhanced price sensitivity. If the asking prices exceed underlying value by more than 5%, your property will languish on the shelf and collect dust for many years.<\/p>\n The main drama is now in the rental market. Years of tinkering by well-meaning but short-sighted Chancellors means that some landlords are selling their buy-to-let investments, not just because of the adverse changes in the tax arrangements introduced by the last government, but for fear that the next Budget will give more rights to tenants, even if they don\u2019t pay their rent.<\/p>\n Hellish tenants<\/strong><\/p>\n While there are some \u2018dodgy landlords\u2019 there are also \u2018hellish\u2019 tenants, who \u2018know their rights\u2019 but strangely, in some cases, ignore their responsibility to pay rent but still want occupation.<\/p>\n <\/p>\n As long as governments and councils rely mainly on Housing Associations to build affordable housing, they need to encourage (not discourage) the partnership with private landlords who, let\u2019s face it, provide most of the rental supply in the UK. Lest we forget, the less properties available, the higher the values and the more disenfranchised the vulnerable renters will be.<\/p>\n <\/p>\n By contrast, the dizzy heights of the uber-rental market are ablaze with activity. This is a speciality for Glentree, and we are achieving stratospheric levels of business with those fortunate enough to rent at levels up to \u00a350,000 per week. Luckily, we have a range of incredible properties that justify this astonishing rate.<\/p>\n Clutches of HMRC<\/strong><\/p>\n At the heart of all this is a government determined to mess with the markets whilst ignoring our favourite law of \u2018unintended consequences.\u2019<\/p>\n <\/p>\n By renting rather than buying, tenants who are already \u2018wadded to the hilt\u2019 ensure that a hefty 20% is kept away from the clutches of HMRC, which would otherwise be owed in the malign Stamp Duty payments etc. This gives the tenants four to five years rent free, courtesy of His Majesty\u2019s government. They know full well that the landlords are obliged to pay for the amenities of the property and such tenants enjoy these super-luxury mansions and apartments to the fullest extent, safe in the knowledge that their real wealth is far away from the clutches of the Chancellor in one or other of the tax havens.<\/p>\n Swerved to the left<\/strong><\/p>\n I was hoping for nu-Labour grandees, Tony Blair and Peter Mandelson, \u2018having a word\u2019 in Starmer\u2019s \u2018shell-like\u2019, and steering him towards the political center. Instead, our great leader appears to have swerved to the left, possibly ambushed by the left-wing factions in his party (did I mention Angela Rayner\u2019s name?) looking to exert retribution against the middle\/upper middle classes who, historically, have not voted for them.<\/p>\n Crossing the road to slip on a banana skin<\/strong><\/p>\n The honeymoon period for the government has been abruptly brought to an end \u00a0in an untimely fashion and it does look, at the moment, like the High Command \u2018is crossing the road, to slip on a banana skin!\u2019\u00a0 Oh dear!<\/p>\n","protected":false},"excerpt":{"rendered":" In a rising property market, the sun is always shining, and although I can\u2019t say that transactions are not happening, there is still life out there and according to the Royal Institution of Chartered Surveyors (RICS), we may be in … Continue reading