Jump to content
House Price Crash Forum
The Masked Tulip

The Morning After The Budget The Day Before

Recommended Posts

How are we all feeling about things this morning?

24 hours have almost passed and I wonder how, with some sleep, what we think of the Budget.

28% CGT is not the 40% but apparently it is not tapered and it is lumped onto your income so basically everyone with a BTL or second home will fall into the 28%.

LHA rates are coming down but not for a year and then it will be phased in throughout 2011-12. That is going to go unnoticed for most of this year I guess. Perhaps in our interests to mention it to landlords and EAs in passing.

The 24% cuts in Public departments over 5 years seems to mean job cuts. I think between now and Christmas we will be fed weekly annoucements of PS depts cutting a 100 here and a 100 there.

Share this post


Link to post
Share on other sites

not too bad. Still optimistic of HPC this year although won't as quick as it would have been with better CGT.

The budget has done nothing to prevent HPC but little to speed it up also.

The BOE MPC minutes have made me rather chirpy today though.

Edited by Pent Up

Share this post


Link to post
Share on other sites

Cheer up scepticus... get some sunlight...

Paul Mason's piece about the Budget on Newsnight was interesting. He concluded that it all comes down to whether you believe in growth or not.

Basically he said we will be standing here 5 years from now looking at the miracle UK economy like the Chinese Tiger of Europe or, not his worlds mine, we are fecked with much worse than we have now!

Can we turn around a nation hooked on house prices, benefits and public sector jobs in that time?

Share this post


Link to post
Share on other sites

Can we turn around a nation hooked on house prices, benefits and public sector jobs in that time?

No, but hopefully Labour will not get in in 5 years and reverse all of the good work that will have been done.

Share this post


Link to post
Share on other sites

How are we all feeling about things this morning?

24 hours have almost passed and I wonder how, with some sleep, what we think of the Budget.

28% CGT is not the 40% but apparently it is not tapered and it is lumped onto your income so basically everyone with a BTL or second home will fall into the 28%.

LHA rates are coming down but not for a year and then it will be phased in throughout 2011-12. That is going to go unnoticed for most of this year I guess. Perhaps in our interests to mention it to landlords and EAs in passing.

The 24% cuts in Public departments over 5 years seems to mean job cuts. I think between now and Christmas we will be fed weekly annoucements of PS depts cutting a 100 here and a 100 there.

Vindicated - my non-exploitive, reasoned approach to property management and refusal to gear up to the hilt (funded by top of the market rents) is now demonstrated to be exactly the right approach. Our prospects of 100% occupation with hand-picked tenants are guaranteed.

Edited by Reluctant Heretic

Share this post


Link to post
Share on other sites

How are we all feeling about things this morning?

24 hours have almost passed and I wonder how, with some sleep, what we think of the Budget.

28% CGT is not the 40% but apparently it is not tapered and it is lumped onto your income so basically everyone with a BTL or second home will fall into the 28%.

LHA rates are coming down but not for a year and then it will be phased in throughout 2011-12. That is going to go unnoticed for most of this year I guess. Perhaps in our interests to mention it to landlords and EAs in passing.

The 24% cuts in Public departments over 5 years seems to mean job cuts. I think between now and Christmas we will be fed weekly annoucements of PS depts cutting a 100 here and a 100 there.

if Osborn sticks to what he said, we might get back our uk like it should be.. It might unfortunately take more than 5 years.

let's believe and give a chance to this new gov.. and put Brown in jail as the pig deserve it .

Share this post


Link to post
Share on other sites

In fact, BBC grilie stood outside Parliament now just saying that although most people do not realise it yet come the Autumn thousands of public sector workers who have a job now will not have one.

Share this post


Link to post
Share on other sites

If a tighter fiscal policy means a looser monetary policy for longer.....

It does.

I think that is the Conservative party main tool/goal: low interest rates.

Usually that helps private sector growth. But in the British case, if we don't regulate mortgages (max. LTV, max multiple of income, etc.), then it may go again into properties, instead of businesses.

We need to regulate, reduce the amount of credit being sent to mortgages.

Share this post


Link to post
Share on other sites

How are we all feeling about things this morning?

Either this is a cop out with the government failing to cut deep enough or it is deliberately just stage one with further more stringent measures to follow when the electorate has become used to these.

IMHO

The growth figures are too ambitious (especially if cuts are actually made to the public sector)

The 25% cuts to the public sector will not be realised (non specific , lots of massaging)

Net result is the deficit (and the debt) will not be reduced enough.

Share this post


Link to post
Share on other sites

A few thoughts on the Budget. As that Slayer song goes "Here comes the Pain"

One of the basic techniques in Neuro-Linguistics-Programming (Wikipedia definition) works around the principle of "reverse expectations". For example, if somebody told you you’d won the lottery and were about to pocket 10 million Pounds, you'd be well annoyed to find out the price was in fact "just" 100,000 quid. Along the same lines, if you get summoned by a Court of Law for a nasty speeding offence, and expect a ban and a few grand worth of fines, you'd be chuffed with your 3 point deduction and 200£ fine.

It appears George Osborne knows this well, and employed this technique for the build-up to his first budget as a Chancellor.

The axe came down all right, but, except for the "unavoidable" VAT increase, there was no 50% Capital Gains Tax or too many other draconian measures which would have caused mayhem between civil servants and the like.

Still, his very generic 25% departmental budgets cut plan looks scary enough. Who'll be getting the chop?

The other point is the approach to inflation. I believe Osborne knows he won't be able to manage the inflation target, or better, Mervyn King and he both know this. With inflation at - say - 4% and a lot of public spending capped at 2%, he'll be cutting budgets in real terms by quite a lot.

Moving on to other areas, there could be some "unexpected" repercussions on housing, as the CGT tax hike to 28%, coupled with the cap on housing benefits could persuade a fair number of Buy-To-Let speculators to head for the exit. With inventories rising, this could mean more good news for house prices, as they might start to deflate even faster than they were going to do anyways.

The critics have been eager on the "save the recovery" argument, and railed on the danger of a "double dip" recession caused by the austerity. As I mentioned previously, today's GDP growth is not organic, but driven by years of excess and debt build-up. Yes, Paul Krugman's acolytes would have probably managed to keep the boat afloat for another few years, but the final bill would have been even greater.

Share this post


Link to post
Share on other sites

How are we all feeling about things this morning?

24 hours have almost passed and I wonder how, with some sleep, what we think of the Budget.

28% CGT is not the 40% but apparently it is not tapered and it is lumped onto your income so basically everyone with a BTL or second home will fall into the 28%.

LHA rates are coming down but not for a year and then it will be phased in throughout 2011-12. That is going to go unnoticed for most of this year I guess. Perhaps in our interests to mention it to landlords and EAs in passing.

The 24% cuts in Public departments over 5 years seems to mean job cuts. I think between now and Christmas we will be fed weekly annoucements of PS depts cutting a 100 here and a 100 there.

Overall, I am happy with it. It was a good budget - the best they could do, politically.

Low income workers will benefit the most during this parliament, with the income tax allowance going up from £6.5k to £10k. A worker on 10k will save (3.5k x 0.2) = £700/year, or 7% of their income. And benefits will be reduced. Fair.

Interest rates will be kept lower for longer now, and IF they regulate mortgages, it will help private sector growth.

LHA will be dealt with, albeit at a low speed.

In an ideal world I would have preferred a higher CGT, 40% or 50%, to be implemented only in April 2011. That would finally burst the property costs bubble. But it was obvious that it was politically impossible to do that, considering our electorate and media.

It was better than I expected.

( I doubt that Osborne will be able to cut 25% from departments though. Let's see. And he said on Radio 4 that he left some safety margin there. This may be it.)

Share this post


Link to post
Share on other sites

It does.

I think that is the Conservative party main tool/goal: low interest rates.

Usually that helps private sector growth. But in the British case, if we don't regulate mortgages (max. LTV, max multiple of income, etc.), then it may go again into properties, instead of businesses.

We need to regulate, reduce the amount of credit being sent to mortgages.

Some straws in the wind: rebalancing towards the productive economy.

The rot started big-time after Brown did two things: firstly made pensions less tax-efficient and left the biggest breaks for the rich in property, second tied interest rates to a measure of cheap Chinese production and ignored real inflation. Now we have reducing corporation and jobs taxes (encourage investment in the productive economy), no more new crap on pensions (ditto), and tightening up housing benefit (reduced windfalls for property pimps over the market as a whole).

Every little ... may help.

[edit to add] Forgot to say, changes in China may do wonders for "inflation" ...

Edited by porca misèria

Share this post


Link to post
Share on other sites

Rent seeking is exploitive. No getting away from it my dear.

I am a renter too - so I know the value of a good landlord. Most of them are bastards (oops!) bastards IMO but one or two are fair and genuinely provide a good service.

Edited by Reluctant Heretic

Share this post


Link to post
Share on other sites

Rent seeking is exploitive. No getting away from it my dear.

+ 1

In today's Britain, it is - mostly as a consequence of quasi-monopolistic distortions via the planning system, this artificial, political, rationing of building plots.

Share this post


Link to post
Share on other sites

if Osborn sticks to what he said, we might get back our uk like it should be.. It might unfortunately take more than 5 years.

let's believe and give a chance to this new gov.. and put Brown in jail as the pig deserve it .

+ 1

Share this post


Link to post
Share on other sites

If a tighter fiscal policy means a looser monetary policy for longer.....

This is the whole point isn't it? Danny Alexander said as much on Newsnight: cut cut cut to allow interest rates stay 'as low as possible for as long as possible'.

What they now know is that the UK has an unprecedented level of debt mostly due to high house prices. The debt is the elephant in the room. It has to be reduced as otherwise there will be another – worse – banking crisis. They will not at any cost put up interest rates because the only politically viable policy is to enable this debt to be reduced by households paying back over time and inflation. If they can keep a lid on the problem for 5 years AND keep inflation in the region of 4-8% they will be looking at a 25-40% reduction of debt.

This is the route they have chosen and it comes with all sorts of dangers. It is what they will attempt and it will probably result in 5 very difficult years. They are attempting to avoid the Great Depression (deflationary death spiral) AND Weimar (hyper inflation). The current system has the cards stacked in their favour and they know it… Joe and Jane blogs with a 5x salary mortgage, a BMW in the drive, 20K credit card debt and 1.8 kids may well be fine. Those who have STR funds in UK cash may be p1ssed off!

But it may all go terribly wrong for their plan.

Share this post


Link to post
Share on other sites

You sound like an appalling **** of a person

That's a bit harsh. We do need to have a private rental sector and I have seen nothing to suggest that RH is an unpleasant character. It is unsurprising that an LL would want stable, reliable tenants. That is reasonable in my opinion and it is sensible to reduce risk.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 153 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.