UK Property Investors are they benefiting from Rishi’s Decision?

So Rishi the Chancellor has a dilemma right now, does he continue funding and see us all the way through or does he pull it back and reign it in to keep the debt levels down or does he keep it but target it in a specific and measured way. And that is his dilemma that we are going to take a look at now. 

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Alright Rishi’s dilemma, Rishi pledges to make jobs ‘number one priority’ and I think you know what he has to do this. I have been saying this all along, watch the unemployment rate, because if you watch the unemployment rate that is going to give you a good indication of how bad things are going to get. So far at 4.8% it’s not that bad, we went from 4.5% to 4.8% which we kind of expected because most people expected the furlough to end but it didn’t, it got extended. So now we are going to see through the winter and that is great news for property investors. It’s bad news if your property has tenants that decided they are not paying for any reason they can’t be bothered calling the government in getting all the support packages and that because you can’t evict them until January 11th and even if you have a court order you have to give them further 14 days so it’s going to be January 25th before anyone really gets evicted in reality.  Let’s talk about Rishi’s dilemma, it’s one thing to say jobs, jobs, jobs but the other thing is you have to really be careful about this because they are spending a lot of money and in fact this is worldwide. In some ways this is a good thing that worldwide this is happening because if it was just happening in one particular country, that country is going to get in huge debt and suffer for many many years, because this is a global thing this is really changing things up. When we start to look at the actual numbers they are staggering, make no mistake. But on the other side if they didn’t do that we will be getting into a deeper recession and that recession would probably play out for a longer period. Now we are going to double dip it seems, we went in dramatic 21% I think it was 21.8% whatever it was and we’ve come out and actually we grew and now it looks like we are going back into the recession again, which we kind of expected that, so when they say double dip don’t be too concerned about that. It’s not a real biggie. The dilemma Rishi has and the challenge is there is only one direction you can go. The dilemma is do you borrow more money and spend more money and keep backing up the spending that is already done. Or do you go, you know what enough is enough we are going to leave it there, you’re on your own. Now, if I was him you have to spend more, and really I don’t think he has any other choice. I don’t think any politician that wants to stay in power has any other choice. And the fact that all of them are doing it basically means that it’s almost okay to do that. And we will deal with the consequences later, which I have talked about previously many times if you watch my videos about what I think the consequences are. I don’t think it’s going to be as bad as a lot of people are making out. When we have a look at the house price crash people on youtube, I think that is more about getting views than it is about the reality of the situation. Look and the reality is grim there is no doubt about that, there are some elements, it may come true that is an option but I think a lot of people are playing that option for headlines more than actually good economics.I think with Rishi his dilemma is does he keep spending, or does he stop spending or slow spending or target spending and when I said before if he stops furlough they may start to introduce something. And even with stamp duty they may not just cut it off but what they will do is target it to industries that they feel need it and where it would be of value. That is probably more likely and I think he is back in all corners, between Boris Johnson and Rishi, that is the only choice they have. So expect more borrowing expect more of that to come. But I don’t think it’s necessarily a bad thing.  

Please give your insight on Capital Gains Tax and the end for entrepreneur’s relief.

Capital gains tax first of all, I’m not sure that the doubling of the capital gains tax is going to have as big an effect. There is a $40B shortfall. I think it is that they have to make up somewhere. Now, the challenge with that capital gains tax makes up a very small proportion of that, the big things that do are income tax, NRI and things like that there is another one I can’t remember the other one right now my brain’s gone dead. Bottom line is this is part of Rishi’s dilemma: does he keep borrowing or does he now start taxing. It’s an interesting dilemma that he’s got right now he is caught between a rock and a hard place. Do I think that they are going to double as I have said the capital gains tax. I don’t so, I don’t think it’s going to be as drastic as that, I think taxes are going to go up, I do think taxes are going to go up. But I don’t think they would just be capital gains tax because one thing all the countries around the world seem to be doing is supporting their property market, their share market and their property market. They've become essential things and the last thing they want is the property market to die because then voters go get lost you, we want somebody else. As much as some people are sitting there going you know what that is terrible, they are going to double tax that is terrible. I don’t think that is necessarily going to happen. As for entrepreneur’s relief: How many people really use them? Look, I love the entrepreneur’s relief, not that I have actually used it  because we haven't really sold businesses, we tend to build businesses and keep them. But it’s there and I think it’s a fantastic thing. I think entrepreneur’s who take risks and do that should be rewarded. But they’ve had 10 years of austerity and they’ve looked at all different ways to make money and I think what they will probably do is put things back to the table. However, the other side of the entrepreneur’s relief is this, the market is changing where now if you think about London, Manchester and Birmingham they’ve got now all these really well established new technology, companies and environment where they are nurturing new start ups and things like this and there is the VCs (Venture Capital) market going on. Because that's actually, potentially something that the government would want to promote. It would want to attract these companies in. Let’s face it America has a monopoly on the unicorns, America has the monopoly on all the big companies. China to a lesser degree as well, UK not really we don’t have too many headquartered, start-ups that have done really well. But that’s what they’re trying to do. So, the sooner that they stimulate and they get that environment really working well and understand it’s working well already. What do I think the entrepreneurs look will they take it? I think even if they take it in the present form, I think they will be putting back other stuff and I think that’s what probably would happen. We’ll see from there. Hopefully Nag that answers your question.If there isn’t any questions, I want to thank you very much. As always make sure you click the like button, subscribe. If you have any questions put them into that email webinars@gladfish.com and I am happy to answer them back with videos or if they are more specific in nature by all means speak to the team and they can actually go through and explain and answer whatever can give you that clarity. I want to thank you again and we’ll see you next week. Until next week, have a great day and live with passion. See you later bye guys.