Chicken or Egg… Does it matter?
Thursday, 5 April 2018
My mind has been turned slightly toward easter and a planned getaway to the Lake District with the family soon and I am writing this slightly later than I normally do in part as so much is happening right now in our beloved sector and related areas that I am not sure where exactly to start…
On the 13th March we had the Spring statement from Mr Hammond which seems to carry more importance than ever this year with the transitionary period we are now in the midst of… Erm I mean simply Brexit! We have learned that buying a property – from a tax perspective – in England, Scotland or Wales is no different now, the only difference is the name of the tax levied SDLT (England), LBTT (Scotland) and what will be called LTT (Wales). The tax system as a whole in all three are still penalising private landlords in respect of property but still leave room for manoeuvre for a corporate style set up which we naturally applaud. However there is still a slow and burning movement towards even more punitive style taxes for private investors in the residential property market that are… Well not British which we see as incredibly prejudice but at the same time doesn’t affect investment from foreign nationals through funds such as ours.
On that subject there has been a slew of negative stories involving foreign investment in to the UK property market, which we have been warning about for some time as – mainly foreign – Investors are sold massively prestige developments prior to being built with big promises on how well they will do out of it and then finding out that actually that is… Well incorrect. We would go further – and have done on social media – by saying this entire model is incredibly risky and when looked at without the tinted glasses of “prestige investing” simply doesn’t make sense and doesn’t factor in enough risk management or any options on exit strategy, this was one of many recently.
The evidence is stacking up that our dysfunctional housing market is not simply a case of house builders sat on land but that labor, planning and lack of resources (land and money) are the major factors in this dysfunction and although we believe that a lot of this needs political solutions – not all of it can. After Theresa May our Prime minister said only a few weeks ago “The answer to our housing crisis does not lie in tearing up the Green belt” And with only 1.7 Million acres of brownfield or suitable land (that needs to go through a length planning process) available a totally new strategy needs to be found. The short answer is more of the same for the foreseeable future and therefore continued returns for our partners. I wish everyone a great easter period and look forward to the rest of the year ahead as green shoots continue to appear in our economy here in the UK but most importantly for our fund, stakeholders and partners it’s more of the same please, thank you.
Oxford Spires Group