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Economic "bounce" and Budget thread


spunko

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Now that Boris has likely secured at least 5 years, perhaps even 10 years of being PM, what are DOSBODers predictions for the long term economy and, specifically the imminent early 2020 Budget?

I am assuming it will be more of what we've seen, stagnation and low growth, a few bungs to the building sector, and probable axing of IHT (to be rebranded as something else no doubt).

I spotted this strange piece on the Guardian: https://www.theguardian.com/business/2019/dec/13/super-rich-family-buy-65m-house-to-celebrate-johnsons-victory . It has all the usual Guardian stuff: rich overseas buyer brings forward purchase now that Corbyn has been ruled out. What the article fails to mention, as reported also by the Graun a few months ago, is that the Tories are mooting an extra 3% SDLT on foreign buyers... I suspect that's why they brought it forward.

 

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Medium term I think big economic growth because so many big corporate investments have been put on hold awaiting certainty.

I have done several, well ok two, papers for my board and said that the issue is not Brexit but Brexit uncertainty.

Now that we know where we are the money tap can be turned on again and projects can be started.

I have noted elsewhwere that my VCT dividends, dependent as they are upon successful flotations / sales of emerging companies, have really fallen off this last couple of years for exactly the same reason.

Whilst we're not quite there yet we have gone from:

No Brexit / BRINO / Decent Deal / No Deal

to (IMO)

Decent Deal within the next year

It takes the shackles off IMO and businesses can start investing again.

The problem for business was never Brexit it was the huge gelatanous swamp into which the useless and divisive Treason May had dragged us.

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2 hours ago, spunko said:

Now that Boris has likely secured at least 5 years, perhaps even 10 years of being PM, what are DOSBODers predictions for the long term economy and, specifically the imminent early 2020 Budget?

I am assuming it will be more of what we've seen, stagnation and low growth, a few bungs to the building sector, and probable axing of IHT (to be rebranded as something else no doubt).

I spotted this strange piece on the Guardian: https://www.theguardian.com/business/2019/dec/13/super-rich-family-buy-65m-house-to-celebrate-johnsons-victory . It has all the usual Guardian stuff: rich overseas buyer brings forward purchase now that Corbyn has been ruled out. What the article fails to mention, as reported also by the Graun a few months ago, is that the Tories are mooting an extra 3% SDLT on foreign buyers... I suspect that's why they brought it forward.

 

The email I got from Savills suggested similar. A six month selling opportunity, followed by stagnation when the extra tax on overseas buyers kicks in.

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3 hours ago, Frank Hovis said:

Medium term I think big economic growth because so many big corporate investments have been put on hold awaiting certainty.

I have done several, well ok two, papers for my board and said that the issue is not Brexit but Brexit uncertainty.

Now that we know where we are the money tap can be turned on again and projects can be started.

I have noted elsewhwere that my VCT dividends, dependent as they are upon successful flotations / sales of emerging companies, have really fallen off this last couple of years for exactly the same reason.

Whilst we're not quite there yet we have gone from:

No Brexit / BRINO / Decent Deal / No Deal

to (IMO)

Decent Deal within the next year

It takes the shackles off IMO and businesses can start investing again.

The problem for business was never Brexit it was the huge gelatanous swamp into which the useless and divisive Treason May had dragged us.

Really well said.Have heard the same from several people in corporations.

In asnwer to the original questions,we'll carry on down the consumer/fiscal deficit driven path of growth we're on until the issues discussed in the deflation thread rear their head.I have no idea for sure when that will be but it's patently clear that the monetary tool box available to the CB's post 2008 isn't avaialble now.

The issues facing Boris further down the line are beyond his control.

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3 hours ago, spunko said:

Now that Boris has likely secured at least 5 years, perhaps even 10 years of being PM, what are DOSBODers predictions for the long term economy and, specifically the imminent early 2020 Budget?

I am assuming it will be more of what we've seen, stagnation and low growth, a few bungs to the building sector, and probable axing of IHT (to be rebranded as something else no doubt).

I spotted this strange piece on the Guardian: https://www.theguardian.com/business/2019/dec/13/super-rich-family-buy-65m-house-to-celebrate-johnsons-victory . It has all the usual Guardian stuff: rich overseas buyer brings forward purchase now that Corbyn has been ruled out. What the article fails to mention, as reported also by the Graun a few months ago, is that the Tories are mooting an extra 3% SDLT on foreign buyers... I suspect that's why they brought it forward.

 

Sounds very logical and borne out by the rise in the builders shares friday

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Chewing Grass

Hardly worth having overseas buyers then if they are that strapped for cash they can't afford an extra 3% to live in blighty.

Not a problem if you come in on a black Chinese made inflatable dingy tho'.

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5 hours ago, Tdog said:

3% extra to wash their money is nothing, i bet theyd still be buying if it was 25% (picks number from sky).

Better to have 75% of something that 100% of nothing.

Hong Kong charges 15% to non chinese.  Never seemed to dissaude people.  

 

Riots in the streets did.

 

Any government not full of idiots should be charging non citizens 10-20% extra to invest into a stable, fairly non corrupt asset market

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I read an interesting article which suggested that Boris will need to raise some taxes, and they suggested that reforming council tax so that it more accurately reflects the value of the house was a real possibility.

It’s something that should have been done years ago really. It will be interesting if they did go ahead with it. The Metroploitan elite who invariably vote Labour will by far be hit hardest.

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1 hour ago, Castlevania said:

I read an interesting article which suggested that Boris will need to raise some taxes, and they suggested that reforming council tax so that it more accurately reflects the value of the house was a real possibility.

It’s something that should have been done years ago really. It will be interesting if they did go ahead with it. The Metroploitan elite who invariably vote Labour will by far be hit hardest.

The complication with that is that the extra cash would go to the local authority.

The solution would be to have a graded property tax (as a proxy for a wealth tax) going to central coffers + a poll tax (ie, the same for every person) going to the council. This would make more sense as there's a mad negative correlation for house size vs the community needs (ie, the more people in vast houses, the less money required for local authority services) -- it could very easily be 'sold' as a redistribute solution (ie, wealthy areas pay for poor areas), even though it is in reality just a tax.

[I think I'm in favour of having most taxes split in this way, in theory -- the trouble is that 'in practice' local councils just spend money, and if you give them a chance to get more money they'll spunk it on some crap redevelopment or something, so it is probably best to have central tax collection and a constrained budget given to local authorities]

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21 hours ago, Frank Hovis said:

Medium term I think big economic growth because so many big corporate investments have been put on hold awaiting certainty.

I have done several, well ok two, papers for my board and said that the issue is not Brexit but Brexit uncertainty.

Now that we know where we are the money tap can be turned on again and projects can be started.

I have noted elsewhwere that my VCT dividends, dependent as they are upon successful flotations / sales of emerging companies, have really fallen off this last couple of years for exactly the same reason.

Whilst we're not quite there yet we have gone from:

No Brexit / BRINO / Decent Deal / No Deal

to (IMO)

Decent Deal within the next year

It takes the shackles off IMO and businesses can start investing again.

The problem for business was never Brexit it was the huge gelatanous swamp into which the useless and divisive Treason May had dragged us.

Are you making any changes to your retirement investments in response to the Conservative win?

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1 minute ago, JoeDavola said:

Are you making any changes to your retirement investments in response to the Conservative win?

Nothing major but now that the pound has strengthened I may shift more into my developed economies excluding UK tracker as it will be better value.  Possibly I will go for a particular US tracker as I think the EU economies are going nowhere for the next few years so will drag down the whole world one.

VCTs are always the long game and I have had some spectacular dividends over the years but their investments only come to market when it's running high; which is absolutely how it should be.

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9 hours ago, Tdog said:

My brother has just started to rent there and for what looks like a 60m2 2 bed flat it is £60,000 per year. Paid for by the company.

Chunking Mansions, £8 a night, job done.

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1 hour ago, Calcutta said:

Chunking Mansions, £8 a night, job done.

Would imagine it costs a bit more than £8 nowadays.

I stayed in a “guest house” in Chunking Mansions the first time I visited Hong Kong. I had a room little bigger than a cupboard with a window which opened up to a wall. 

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On 15/12/2019 at 04:34, wherebee said:

Any government not full of idiots should be charging non citizens 10-20% extra to invest into a stable, fairly non corrupt asset market

Ah, I think you may have found the issue...when is the next election?! :-)

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18 hours ago, Castlevania said:

I read an interesting article which suggested that Boris will need to raise some taxes, and they suggested that reforming council tax so that it more accurately reflects the value of the house was a real possibility.

It’s something that should have been done years ago really. It will be interesting if they did go ahead with it. The Metroploitan elite who invariably vote Labour will by far be hit hardest.

This would `tie-in` nicely with his policy to develop ex-London....get an unpopular (it will be) system in whilst it only concerns a few, and then when the other regions improve economically (and property values increase as a result) its established/its too late.

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19 hours ago, Castlevania said:

I read an interesting article which suggested that Boris will need to raise some taxes, and they suggested that reforming council tax so that it more accurately reflects the value of the house was a real possibility.

It’s something that should have been done years ago really. It will be interesting if they did go ahead with it. The Metroploitan elite who invariably vote Labour will by far be hit hardest.

Tidy!  Isn't England, as opposed to the other regions, massively overdue a re-rating?  Would be far easier than a wealth tax.  Personally I would prefer a poll tax or just merge into income tax but unlikely in the case of unrest, which we'll probably get anyway.  Oh, and councils should surcharge land banks, etc to get them used.  Again, no chance.

PS:  We'll need a way to transfer the metro tax receipts to other areas.  Plus, we should more accurately call it Council Pension Tax, and have a bit of a chat about that.  Local government needs massive reform.  Also Boris needs to move if he doesn't want a hostile local government come the next set of local elections given how people like to vote.

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On 14/12/2019 at 20:07, Tdog said:

Section 21 kicked into touch .. this is what landlords use for no fault evictions (this sort of stuff seems to go into budgets)

Section 24 brought in so all landlords are taxed on their income ... not only those on the upper tax threshold.

7%  overseas buyer premium.

Help to Buy scrapped and replaced with some form of MIRAS for first time buyers ... on the presumption this is what they mean by cheap long term mortgages. Obviously a 10 year fix at 2.5% isnt low enough.

The first 3 are what id like to see, the first 4 words of the 4th point is what any free market party would do.

Nope.

I expect the Conservatives will continue increasing taxes on non OO housing.

Gidiot did the 90% of he work with S24.

And easy tweak of making banks hold 100% of IO loan will finish IO BTL for good. This is already due to happen with Basel3.

 

 

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On 16/12/2019 at 13:37, Tdog said:

A quote from the initial post - "Now that Boris has likely secured at least 5 years, perhaps even 10 years of being PM, what are DOSBODers predictions for the long term economy and, specifically the imminent early 2020 Budget?

 

Better than Europe.

Uk will get an ok trade deal with us, who are backing away from wto trade.

Europe will get balls kicked due to germany.

2020 will probably contain more anyi non OO property invedtment taxes, prob falling on foreign owners. IO BTL will get further big kick in the balls. Holiday let taxes will get accelerated.

Uk spend will move away from london - xrail was the last hoorah.

Expect big spenging n changes on migrants - nation register, jsa only,   Wages will rise more than inflation.

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1 hour ago, Tdog said:

Well it seems Section 21 is a definite ... just now need to wait and see what changes they make ot section 8 to assist landlords in their evictions.

At one time after an election there'd be predictions on HPC of the new govt crashing the housing market to get more owner occupiers in for the next election. Seems this fantasy has gone and we are in the new paradigm.

I think they will understand that they need to throw a bone to renters. I can see 4 year tenancies becoming normalised (they will need to lean on the banks to achieve this) but offset by much quicker evictions for default (to keep the landlords happy).

I would welcome that.

 

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1 minute ago, Tdog said:

Yes it'll all be done so banks can keep BTLers in business and make money out of renters.

If they bring in S24 for all landlords it'd be far better than i expect it to get .. and with Boris' spending like Corbyn taxes will have to be raised from somewhere.

That's fine with me. I actually think there is a place in society for rented properties.

We just need to change the balance of power so that the tenant is (in normal circumstances) treated as a valued customer, not a wage slave.

 

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13 minutes ago, Tdog said:

It should have been that from day 1, disgrace that rental income is not classed as income. And landlords get tax breaks, families done get.

Fuckers want to offset their mortgages form a limited company.

Rental income is taxed as income.

I don't think that is the problem or the solution.

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8 minutes ago, Tdog said:

Sorry i should have added the offsetting of the mortgage part.  

 

Again, and I know you will disagree, I don't see that as the problem. Letting them claim 10% of rent against tax was. But that has been removed.

The problem is that it has become far too easy to become a landlord, leading to every fecking chancer having a go.

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13 hours ago, Tdog said:

Its a major issue though one of several.  In many cases theyre offsetting pretty much every penny in rental income they're getting. But its absurd that one group of people are allowed to do this and others aren't. 

If the govt brought in a new tax law where people could borrow money to speculate on horse racing, and offset the interest payments would you think it acceptable? 

Should MIRAS be brought back for people who work in the NHS be no one else? I'm sure you'll think no it'd be unfair for one group to get tax breaks no one else is entitled to.

But again if landlords want to offset interest then set up a limited company the option is there for them, though obviously i'd like to see this removed also.

We will see what their intentions are in a couple of months, this budget will be where they hit landlords and speculators the most imho. 

No. My view is that it is just too easy to become a landlord. And too cheap.

Back in the sensible days, you needed to either buy the rental property for cash or prove that you could service the mortgage from earned income (as well as paying whatever you had to for your home).

Just remortgaging your primary residence to pay the deposit on the rental, and then MEWing to heaven to buy more and more was not a sensible approach. You end up with some very income and disposable cash poor people owning millions of £ of housing. Which, from my experience, they can't afford to maintain.

We have a country of amateur, spiv, skint landlords.

Which is bad news for tenants.

 

 

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1 minute ago, Tdog said:

Landlords not being able to offset interest is one of the main things that enables them to become a landlord. 

Screws tighten on this then we get less of them as it means banks are less likely to lend to them, in fear of not getting their money back.

S24 for basic tax threshold brings about bankrupt landlords as opposed to skint one.

Well yes.

An interesting aside - my current landlord doesn't have a mortgage. I am his first tenant and I think he was a bit surprised to get the tax bill. He actually said he would rather spend the rent money improving the house than give it to the Government. Whether he actually does remains to be seen.

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@Tdog I don't fully understand the costings. It sounds like the Government want the housebuilders to fund the "hit" through CIL payments, i.e. instead of the usual bribes like "you can build these ugly slaveboxes if you give £100k to the local school", they are now saying in addition to that, housebuilders need to be contributing to this. But how?  By charging more on the non-keyworker houses...?

Keyworker scheme is an outrage anyway, why should people who work in the public service get a subsidised house when it's been proven they earn more than private sector, like for like?

Bin the entire thing, bump up the interest rates, and stop foreigners buying here. it's so simple.

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