In his Autumn Statement, George Osborne announced major measures on housing, tax credits and public spending. Matthew Partridge looks at the major announcements and what they mean for the UK economy.
The post The Autumn Statement: what are the biggest changes? was first published on MoneyWeek.
Hedge funds bet big against the euro after Mario Draghi pledged to 'do whatever it takes' to prop it up. They could get a nasty surprise for Christmas, says John C Burford.
The post Hedge funds are short the euro – and they’re about to get a nasty surprise was first published on MoneyWeek.
Mauricio Macri, the winner of Argentina’s general election, has inherited a political and economic mess. But his arrival should help the country – and investors – thrive, says James McKeigue.
The shady world of terrorist financing could open a whole new front in the government’s war on cash, says Natalie Stanton.
The idea that bonuses make people work harder is nonsense, says Merryn Somerset Webb. They have little positive effect, but an almost infinite number of negative effects.
The pound is struggling against the dollar, but is at its highest against the euro since the financial crisis. So what does the future hold for sterling? Dominic Frisby investigates.
The FTSE 100 continued to fall yesterday, losing a further 0.4% to close at 6,277.
On this day in 1952, Agatha Christie’s murder mystery play The Mousetrap began a run of 25,000 performances and counting in the West End. It is now the longest-running play in the world.
The post 25 November 1952: ‘The Mousetrap’ premieres in London was first published on MoneyWeek.
The ECB's executive board is split on whether to pursue a more ambitious asset purchase programme, or stick to a policy of 'fiscal prudence'.
David Cameron has announced the results of a defence review: more military spending for Britain.
It will be a brutal irony, says Dan Denning, if the only way we can defend an illiberal order from a real menace is to turn modern society into a perpetual police state.
A financial crisis always begins in some peripheral market, says Dan Denning. The next one could come from emerging-market bonds.
Markets have been remarkably stable since the financial crisis. But stability breeds risk, says John Stepek. Now they're wobbling – and it won't take much to send them tumbling.
The post Why financial markets blow up at exactly the wrong moment was first published on MoneyWeek.
The FTSE 100 started the week on the back foot yesterday slipping 0.5% to close at 6,305.
On this day in 1859, Charles Darwin published ‘On the Origin of Species’, the book considered by many to be the cornerstone of evolutionary biology.
The post 24 November 1859: Charles Darwin publishes ‘On the Origin of Species’ was first published on MoneyWeek.
A lot of people are getting in on buy-to-let with borrowed money. But it’s a risk that isn’t worth taking, says Merryn Somerset Webb.
Japan’s demographic shift means Japan’s love hotels – which have long been a feature of tourists’ must-do lists – might not be around for much longer, says Merryn Somserset Webb.
The post Want the ‘love hotel’ experience? Tokyo’s shortage of lovers means you must head to Japan now was first published on MoneyWeek.
In Switzerland, bank customers are now being charged to deposit their cash, It won't be long before it happens here, too, says Dan Denning.
The euro is currently searching for a low – and has just hit a vital target, says John C Burford.. Could this be the start of a major relief rally?
Japan may be in recession, but Japanese stocks still represent very good value for money, says Merryn Somerset Webb.
With borrowing higher than expected, George Osborne has some tricky choices to make in Wednesday's Autumn Statement, says John Stepek. Here, he looks at what might be in his sights.
The post What nasty surprises will George Osborne spring this Wednesday? was first published on MoneyWeek.
The FTSE 100 ended the week on a high, adding a further 0.1% to close the week 3.5% up at 6,334.
Former Russian spy Alexander Litvinenko died in hospital on this day in 2006, after being poisoned with the radioactive isotope polonium-210.
The post 23 November 2006: Alexander Litvinenko dies in hospital was first published on MoneyWeek.
Profits are down and the shares have crashed at Rolls-Royce, says Simon Wilson. But the aircraft engine maker is probably on the flight path to recovery.
The real space race is about to being – one that could create exciting opportunities for entrepreneurs, says Matthew Lynn. Space is the next great commercial frontier.
The post The moon was just the first step – the real space race is about to begin was first published on MoneyWeek.
Successful trading isn't about correctly forecasting the market trend, says John C Burford. It's about extracting the profits.
Has your money-printing programme run out of things to buy? Never mind, says Merryn Somerset Webb. The world is full of things to splash out on. Just use your imagination.
The post Never underestimate the creativity of central bankers was first published on MoneyWeek.
The price war in the oil market is going to claim some victims soon enough. But it might not be the obvious candidates, says Dan Denning.
Hedge funds have been a big part of the EU referendum debate so far. Here we profile four of the biggest players.
Beaches in the Algarve and city breaks in Lisbon are popular with tourists, says Natasha Langan. But northern Portugal is a haven for those looking to escape the crowds.
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Realistically we can expect to see a downward drift at the bottom end of the market, where the BTL landlords are in direct competition with FTBs for starter homes. This is the preferred investment area, with a captive tenant base.
At present investors are willing to pay significantly more than homebuyers due to the tax concessions available to them. They are far less active at the middle and higher ends of the market.
We will probably see those higher value properties moving sideways for some years until the steam has been let out of the bubble. About 5/8 years in my experience.
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Mauricio Macri is forming a stellar Cabinet. Looks like the developed world is willing to help. The outgoing thugs are clinging on to power till the last day apparently - from their campaign slogan "Lets change" to "We changed" it looks encouraging.
The tide has really turned against buy to let. First the tax changes in the budget and now this. It is a smart political move by Osborne as he does realise that the 20s and 30s year old not being able to afford the houses as become a minefield which Labour can easily exploit. That was one of the reasons for so many of them voting for Corbyn in the labour party elections. The change in stamp duty along with the housebuilding and help to buy are good moves to get back that voter base. Next at some point will be Bank of England introducing higher capital charges for banks to buy to let lending increasing its costs. Expect these creeping changes every few months now. I believe the best days of being a buy to let landlord are now behind us.
Supplemental 3% on stamp duty for buy-to-let and second home purchases from April in Autumn Statement. I assume it will still be an expense when calculating capital gain tax.
Not sure this is forum for morality Ruth - But anyway, I can't see what's immoral about providing shelter for somebody under a fair transaction. Is it immoral to make a profit on food then? Better make sure all the corner shops and farmers don't make a profit! Time to impose an unbalanced punitive tax on them as well? Like most businesses buy to let can be quite profitable but the operating returns are not high. In London, if you own the flat/house outright the return after costs but before tax is likely to be around 3.5% - hardly raking it in. Also, this belieft that buy to let is distorting the market, and this is a market, is hardly supported by the evidence. Previous housing price booms took place long before BTL was a significant force and it still accounts for a relatively small percentage of transactions
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This is true. But, the same was true in Ireland, Japan and America at various points in history. I think the banks are big enough to protect one place, london, especially during the credit crisis, but going forward, there is no way the banks are big enough to prop up an entire country's house prices.
As I see it a 40% tax payer will see a potential 100% increase in tax for example if rent is £100,000 per year interest 60,000 per year now net profit £40,000 taxed now at 40% = 16,000
net profit (40,000 (gross profit) - 16000 (tax)) = 24,000. After the changes rent 100,000 taxed at 40% = 40,000 tax subtract interest rebate 60,000 x 20% = 12,000 gives total 28,000 tax bill. so net profit is 40,000 - 28,000 = 12,000 . i.e. landlord see halving of net profit from 24,000 now to 12,000. So landlords either have to sell up a face capital gains tax (which residential home owners don't have to pay) or pay up. The government it appears has decided landlords are easy group to hit as they are easy to blame for big house prices and high rents, rather the multiple of other reasons. They aren't a large enough group to make different at elections so it the old saying divided and rule. The big companies who are able to lobby government but don't have a vote, are not affected.
It is the overspending public services that the Tories dislike and are trying to abolish. No services no overspending, no strikes, no unfair pay structures, no golden pensions, except of course in parts that they have an interest in!
Darwin's book was recently voted #1 in terms of books that most influenced human conceptions of ourselves and history. And it deserves this honor. Once credible evidence was shown that people are just one of the transitory life forms that evolved on this planet, people could not longer believe that we are the product of a separate and unique creation by divinities. Darwin's ideas continue to shape all aspects of the biological sciences today. Biographies of Darwin reveal his extraordinary passion for research, his lifelong joy in his marriage to Emma Wedgwood, and his great personal humility, honesty, and generosity. Well-played, Mr. Darwin.
Yes, the next time you get a flu shot or need a third generation antibiotic, tell yourself this is "devolution."
How do you explain the massive changes in the biosphere over the last few billions of years? Life has seemingly gotten more complex over time. This doesn't fit well with "devolution" very well, does it?
This is nothing but 'Hypothesis " there is no such thing as Evolution, there is only
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I have no issue with somebody building a house and renting it out. But what is happening is that existing housing stock is being bought up by private landlords - which takes homes off the table for those wanting the stability of owning their home. And we count these landlords not in dozens, hundreds or thousands - but two million - it is impossible to deny that this pushes up house prices out of reach for those who simply want a home.
I do not agree that the cause of the housing crisis can be solved by simply building more homes as the btlers continue to view those who want to buy their home as potential tenants and will continue to buy up homes if not deterred.- which can be best achieve through tax and regulation. The asset is not the houses - but the scarcity of houses and the supply of tenants. This has, at least partially been politically engineered.
The UK also supports a strange NIMBY culture where people who already own homes (that are a blot on the landscape) make objections to other people wanting to build a home also - and incredibly, planning officers and politicans listen to these people who are actively denying others a home.
Over the last few years there has also been a conflict of interest in government as so many MPs are also landlords and keeping a short supply of housing privately worked in their favour.
In any event, the needs of those who need to access housing should be the only priority and those who point to mainland Europe for proof that renting is a good way of life should be reminded that renting is properly controlled there. Their systems supports tenants, controls rents and has security of tenure in a way that does not exist in the UK which is highly exploitative and relies on 'goodwill' of landlords instead of law enforcement - which gives real protection.
Lots of landlords will be sitting on large capital gains tax liabilities if they have to sell up. Especially if they have mortgaged to buy more properties. So the Tax man will take their tax where or not landlords sell up. Buy to let was a long term investment over years. Sudden changes in taxes like this make it impossible for anyone landlord or not to make long term investments in the UK. Today the landlord taxed, tomorrow it could be a saving tax, pension tax or capital gains tax on your main house.
The banks are capitalised on the value of mortgages, so if house prices fall, to less than mortgages banks will be in trouble best you can hope for is a slower rise in house prices
Surely, as interesting a question is why Merryn is absolutely obsessed with London property prices?! She and Moneyweek have been predicting a crash since 2008, citing inflation, deflation, rising interest rates, capital gains tax, Grexit, stamp duty, China's crashing economy, 'un-affordability', etc. etc. Why? Is it because she sold up her London house a few years back and is still smarting at missing out on the subsequent rise in value? Dominic Frisby and Matthew Partridge, who have admitted they are stuck in the rental market, are the other main commentators consistently predicting doom in the property market. Are they correct? Or have they done MW readers a terrible disservice (if anyone has taken their advice)? Why the prejudice against buy to let landlords rather than say, short sellers? I am very sympathetic to the those caught in the property / rental nightmare that London can be but Isn't this meant to be an investment magazine?
A mortgage used to be a no-brainer, in the days of tax relief on owner/occupier interest. That started to be withdrawn in 1988, when Nigel Lawson restricted interest relief to one income when two people jointly owned a mortgage. Since the relief was withdrawn completely, it has been no more than a fair bet.
In the "noughties" people got the idea that they needn't save, because their houses would do their saving for them, and the more houses they bought on big loans, the more net capital they would gain. They could even withdraw equity by re-mortgaging on bigger loans and spending the money. Then along came the Great Recession.
BTL on a large interest-only mortgage, with insufficient income to clear the debt, has never been a substitute for a pension.
It totally rips up the way tax has always been calculated and I agree if it was on new purchases then at least you know what you are getting into before hand
This has thrown my model and millions of others to the wolves and ultimately it will be the tenants that suffer as I am going to have some difficult conversations next year even though I don't want but have no choice this will create havoc in 2021 mark my words
Although I have deliberately avoided BTL, I thoroughly agree with you, Steo. There is a risk that the tax will drive your business into a loss. It is wrong to tax turnover rather than net income, which is why no other business loan is treated in that way. The chancellor should at least exempt existing BTL investors from this tax, which is a classic example of moving the goalposts in the middle of the game.
I agree. I cannot understand the obsession that still attracts young people to owning property on a loan. With variable house values and variable rate mortgages, it is more uncertain than renting, and owning a house can be a millstone around one's neck if a good job opportunity arises elsewhere.
Two questions is it landlords faults governments haven't built enough houses ?
Is it landlords fault that lenders are asking for large deposits pricing ftb out of the market ?
You need to have a long think about your anti landlord buy to let sentiment because it is mis guided and based on mainstream myths that all landlords are greedy rogues couldn't be further from the truth I get Christmas cards from my tenants explain that !
Vulture culture you say idle ? U are generalising massively and I am insulted.
I work 7 days a week I buy and renovate houses and provide quality accomodation for the less fortunate
I have councils calling me up daily asking me for houses I have just housed an asylum seeking family who where in bed and breakfast what I bring to the party as you say is quality housing for young families who couldn't dream of owning a home and before you say it not because of landlords because of successive failings of the government policy
We provide a high quality service that this government cannot provide we should be applauded not condemned as believe it or not we are not all vultures driving bentlys but hard working middle class people who happen to be in the property business you are commenting on things without any foundation as you quite clearly do not understand the real reasons for this housing crisis shortage to say it is buy to let is laughable as we buy houses first time buyers wouldn't buy anyway
The government will never allow house prices to fall, after the Conservatives' experience of the 1990s and Labour's experience of 2009-2010. Falling house prices always lose governments elections.
I understand completely. My own children are only a few years away from when they will be establishing careers and starting families and I want to see a serious reduction in BTL vulture culture before then. I have not raised them to work their butts off so idle landlords don't have to.
Why do you think that you, as a speculator and an investor, deserve special treatment - or even equal treatment. What do you bring to the party? Ruth, above, is an engineer. She is adding real value somewhere as an engineer. The teacher you are comparing yourself with is educating children. You want privileges for preventing engineers and teachers from buying homes to raise their children in.
And, as for CGT, that is not relevant to anyone who has been prevented from home ownership. I understand perfectly well all right. And I have no sympathy at all for you or your flawed business model.
Level playing field you are swallowing the political line if you want a level playing field why don't owner occupiers pay CTG whey they sell why do they not need a gas safety certificate electrical certificate smoke alarms a license the list goes on the two situations are totally different as one is a business one is not.
One question why are ltd companies exempt and why is every other single business in the western world allowed to deduct finance costs to arrive at profit don't take this the wrong way but you haven't a clue what you are on about and are listening to the tosh Spouted out by the media and the government
True, always unintentional circumstances, probably lead to higher rents as some landlords, sell up. Some landlords will buy smaller properties with higher yields - more completion for first time buyer rather than less. Buying with cash, also has capital gains issues as you are paying capital gains on your money rather than borrowed money.
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