When will Government wake up to the damage it has done to the industry?

The latest Stamp Duty Land Tax figures are out and yet again the Treasury will be rubbing their hands.

However, if you remove the take from the additional 3% surcharge, they show a tax tottering on the edge of a flat period and looking set to fall off a cliff.

The irritation is that this hasn’t happened yet and that the pip-squeezers in the Treasury still think they can continue to get away with it.

The fact is they won’t, and the only people cheering them on are buying agents looking to leverage any possible negative piece of political or economic data to press selling agents to take lower offers.

To be fair to them, there’s been plenty of that negative information floating around..

Further irritation is generated as it’s obvious to anyone with half a brain that the damage to UK Property PLC has already been done.

Like a supertanker, it will take ages to turn things around and persuade people that a Tory Government really isn’t doing its best to smash a carefully won reputation for welcoming inward investment from overseas.

As if misguided elections and referendums weren’t enough, there still seems to be a determination to completely ignore those active in the market and plough a fiscal furrow that clearly ignores the needs of both consumers and property professionals.

Yet again we have another housing minister (OK, this time there was little choice due to an administrative ****-up otherwise known as a General Election) who doesn’t sit in Cabinet and doesn’t seem particularly keen to interact with the industry.

My view of the market has come from almost two generations of working in London, and the damage is clear and exacerbated by the Government’s compete ignorance as to what drives the market in the capital.

I’ve said it before, and hope someone reads this – the bits of London that bring in huge investment are not driven by the increasing size of families but by a desire to be seen to be living in a smarter area by their peers.

People don’t move from Fulham to Chelsea to buy a bigger house, but because it makes them feel good – and IF you choke off the top end of the market, seen as a target with few vote losses by a procession of misguided Chancellors, you clog up the market further down and people simply stop moving.

To anyone working in the market, this is blindingly obvious. This mechanism may be counter-intuitive BUT it is very much the way the top end of the London market works.

No one in charge seems to want to understand this and by the time receipts fall it’ll be too late and combined with Brexit will demote London to a second tier global city.

It’s too late for me to be overly bothered, but for those a generation down it’s a real pity – and could so easily have been avoided.

The Treasury may have thought it a win/win, but I’ve little doubt it’ll be a lose/lose situation very shortly.

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13 Comments

  1. JMK

    An excellent article all-round Ed.

    I’d add another angle to it if I may….

    I don’t believe our former Chancellor is half as clever as he is made out to be and he was manipulated to mount the various attacks on the PRS.  I’d suggest that it would be fair to expect senior Treasury officials to have great influence over monetary policy and taxation.  Various officials may well have had a hand in Osborne’s reign of ill-advised assaults but one of the senior ones at the time was John Kingman (now Sir John as Cameron knighted him on leaving No 10).

    Sir John has moved on and is now Group Chairman of L&G who are moving into the Build-To-Rent sector in a big way.  They will benefit from rising rents and evictions that Section 24 of the 2015 Finance Act is already causing and will ramp up steadily as the restriction of mortgage interest relief bites further.  L&G being a corporate will of course not directly be affected by S24.

    You’d think that the housing charities might have more to say against the legislation that is already hurting those that they are in existence to protect.  You might also expect them to condemn L&G who only this last week or so unveiled their one bed ‘flats’ that are only 70% of the legal minimum size (as reported by the Guardian).

    Curiously Shelter are in support of S24 and come out with the weirdest and most irrational reasoning for it.  They haven’t, as far as I’m aware, made any negative statements about the L&G rabbit hutches.  However if you look at Shelter’s corporate sponsor page (or as they like to call them ‘partners’) you will see that L&G feature there.

    Under the title of PARTNERS, Shelter say… “We believe a partnership should be exactly that. Our corporate partners are much more than a sponsor.
    Instead, our corporate partners each play a role in helping us influence change, as we work to ensure safe, secure, affordable homes for everyone”.
    Is all this coincidence???  You decide.

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    1. Rickman2154

      Ed, I hope the government are waking up, when you lose the safe Blue seat in The Royal Borough of Kensington & Chelsea to a Red one!! you just cant watch that and do nothing? One can only hope.

      Good article

       

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    2. Barry20

      The hypocrisy of Shelter is only surpassed by George Osborne/HM Treasury  who stated that “Restrictions on Mortgage Interest Relief” aka Sec.24 aka #TenantTax  that:

      1. it would level the playing field with First Buyers – LIE

      2. it would only affect the wealthiest Landlords – LIE

      3. it would make the taxation of LAndlroodsfairerr – LIE

      4. rents will not rise – LIE

      Sadly the effects  Sheltersers hypocrisy will be massive rent rises and soaring homelessness.

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      1. The_Maluka

        Oh, what a tangled web George wove. When first he practised to deceive!  With apologies to Sir Walter Scott.  But please Barry you cannot accuse an MP of telling lies, MP’s tell terminological inexactitudes, (Sir Winston Churchill).

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  2. RosBeck73

    Yes, JMK.

    Shelter has even just referred to the policies against landlords as ‘mild’ and as unlikely to have had any effect on landlords leaving the market. They say landlords leave the market because they’re old and always planned to leave. In fact, as actual landlords know, our businesses are often our pensions so why would we get out of the market at the point when we need the income most? It is supremely irritating that they have tried to portray themselves this week as knowing anything about landlords.

    As stated in the article, the Government has to stop all this meddling. The reputation of the Treasury must be at an all-time low. Many of us have a whole ream of emails from them packed with lies and errors. It’s a disgrace.

     

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    1. Barry20

      With the average age of Treasury workers being 27  and therefore probably renting, and probably wanting to buy. Is it any wonder that policies coming from them are biased when such vested interests are at play?

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    2. JMK

      A big issue is coming Ros.  One that Ed is perhaps forecasting but has not stated specifically.

      The English Housing Survey (as issued by the DCLG) stated that the additions to usable units of housing stock was an eye-watering 83% during the years of 1998 to 2013.  This doesn’t just refer to new houses but also to all the other landlord activities of conversions of various inefficient buildings (resi and commercial), plus the re-introduction of disused housing.  So if landlords have been attributed with such easing of the housing crisis, then it makes zero sense to attack them and thus discourage further such investment.

      The Government is doing nothing of consequence to resolve the housing shortage but is actively attacking those that do.  Eventually people will wake up to this but as Ed says it’ll be too late.  Many experienced and competent people will have moved on.

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      1. RosBeck73

        In a ridiculous article this week a freelance journalist in the Guardian suggested that discouraging landlords will help alleviate the housing crisis. What a cretin.

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  3. Deltic2130

    Couldn’t put any of this better.

    JMK – be careful, the Shelter Thought Police are out to get you! I and several others were banned from the Shelter FB page this week whilst making the connection between L&G and Shelter’s role in helping to create high rents and homelessness. They are also extremely sensitive to anyone mentioning that their new CEO is Polly Neate – is compromises her safety, apparently!

    Shelter’s role in supporting S24 causing landlords to raise rents and increase homelessness, whilst working with an organisation breaking minimum space rules and raising rents to ‘maximise shareholder returns’ is a shambolic, hypocritical disgrace. How will Shelter react when future tenants in L&G rabbit hutches complain of cramped conditions?! How this is not being investigated is a mystery.

    This govt has utterly ruined a healthy sector of the economy chasing votes that never materialised. They are idiots. They deserve their election losses.

     

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    1. The_Maluka

      Whilst mentioning Shelter it is worthy of note that Sir Derek Myers and Tony Rice both resigned as trustees immediately after the Grenfell fire.  I am sure that such upright people were not involved in any shady deals but mud sticks to both the two who have resigned and Shelter.

      Likewise I am sure that the connection to Legal and General has no influence on Shelter’s policy.

      The remainder of the trustees, which for some peculiar reason Shelter do not wish to be named are:-

      Senior Management Team

      Graeme Brown – Interim Chief Executive

      Anne Baxendale – Interim Director of Communications, Policy and Campaigns

      Alison Mohammed – Director of Services

      Helen Calder – Interim Director of Fundraising

      David Evans – Director for People

      Board of Trustees

      Ros Micklem – Chair

      Ruth Hunt – Vice Chair

      Nigel Chapman –

      Joanna Simons CBE –

      Kamena Dorling –

      Jonathan Simmons –

      Rob Hayward –

      Antoinette Byrne –

      I believe that they are jointly and severally guilty of supporting policies which will lead to major rent increases within the private sector.  If that is what they set out to achieve then they have performed well.

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  4. Home Provider

    Section 24 is much more disastrous than the extra stamp duty.  It was born out of a lie by David Kingman, was announced by George Osborne with a lie, and has been defended by government lies ever since. When David Kingman, Geography graduate, was writing to the Treasury and writing his propaganda, a certain John Kingman, History graduate, was the Treasury’s second most senior civil servant.  He was Second Permanent Secretary to HM Treasury from 2012 until 2016.  In October 2016 he became chairman of Legal & General, sponsors of Shelter and producer of Build-to-Rent modular homes designed to compete with individual landlords. For more details see the comment posted by Appalled Landlord halfway down: https://www.property118.com/iain-duncan-smith-spoken-landlords/comment-page-10/#comments

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    1. avrillo54

      Hi Ed. Well put. The fact that stamp duty so obviously needs changing makes it even more frustrating. I can’t work it out. Is the Government turning a blind eye, or don’t they just get it?  I think a bit of both, but mostly the former. Short term band aid repairs. That’s all the last few governments have done. Ooops, I should’nt refer to band aid, they might just think of asking Sir Bob to put on a special concert in aid of the housing market.

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    2. avrillo54

      Hi Ed. Well put. The fact that stamp duty so obviously needs changing makes it even more frustrating. I can’t work it out. Is the Government turning a blind eye, or don’t they just get it?  I think a bit of both, but mostly the former. Short term band aid repairs. That’s all the last few governments have done. Let’s hope their next effort is not to be asking Sir Bob to put on a special concert in aid of the housing market. Still it’s better than their current lack of creative ideas!

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