What would Prime Minister Andy Burnham mean for property investors?

0:01Hey everyone, Rob B here with Rob D and you are listening to The Property Podcast. It's a big one. We've got a new Prime Minister. He's talked a lot about property. He's achieved some big things in Manchester and he's also used those scary words in the past as well, rent control.

0:24Welcome to The Property Podcast. Thank you for joining us. In case you don't know, we run a business that arranges over£100 million worth of property deals every year for our clients. You can find out about that at propertyhub.net slash invest. And in all the conversations that we've been having with clients, there is one topic coming up more than any other. Today, we're talking about what Andy Burnham as Prime Minister could mean, what he might do, and most importantly, what you should be doing right now. It's time for our new story of the week. And this won't be the only time we talk about stamp duty in this episode we need to talk about Andy's plans for stamp duty but there is an important news story here and it comes courtesy of Hamptons and they've done a bit of research and they've worked out that the average stamp duty bill in England is up 194 % since 2015 where property at the same period has risen by 44%.

1:17So 194 versus 44%. And this is the clever trick, Rob, that the government uses, and all governments, not just the existing one, where they keep thresholds level and they let inflation reap the rewards. Do you want to explain what I mean by that? Yes, there are a few reasons for this. Stamp duty has been tweaked over the years. But the biggest reason is what the cool kids call fiscal drag. So essentially, as inflation pushes prices up tax bands stay where they are which means that more transactions and a bigger proportion of transactions get dragged into the higher tax bands where a higher rate of tax is applied.

1:54The result of that you said Rob was a 194 % increase over the last 10 years. What that means in real money is that the average back in 2015 was£1 ,557. Now the average is£4 ,572. That's the average this is not taking into account the extra investor surcharges that's a whole separate thing but even putting that aside above the average you're gonna have lots of homes in the southeast not particularly spectacular homes but expensive ones nonetheless where the cost is way above that average and as the commentary in this piece says and you have long been saying rob that's a massive drag on everything and everyone it holds the economy back it holds people back because you end up paying this giant bill just to move sideways so if you want to move from one house to a similar house that happens to be in a different location.

2:39You're paying a huge bill and a far huger bill than you were 10 years ago. Well, as I've alluded to, there may be changes afoot when it comes to stamp duty. So let's get into this week's episode. Rob, as we recall, we haven't officially got a new prime minister yet, but I think we all know who the next one is. So let's talk about Andy Burnham, because depending on your media outlet of choice, you're either terrified of the prospect of him coming into power or quite pleased maybe delighted it's too strong but quite pleased and optimistic of what the future holds and the truth probably is somewhere in the middle but let's dig into it especially for those people who are really fearful right now of what changes may come with him as prime minister now let's be super clear sound like a politician don't i i want to be clear let's be super clear let's be very clear let's be I want to be very clear with you, listener.

3:33Now, don't answer the question at all. Yeah. That's the trick. So be very clear, then talk about something entirely different. It's been very warm recently. And Andy has different policies, but the heat is getting to me. Now, back to the serious stuff. We will actually answer the questions that you have. But to be very clear, he hasn't announced any policies yet. So a lot of what people are talking about right now are things that Andy has, or Mr. Burnham or the Prime Minister in waiting has been saying that he would do or would like to do if he was in power. Some of these things he's talked about are from quite a few years ago and they've been dug up by the media to create headlines.

4:14You know they've got a job to do right they need clicks they need people to read and if you just say actually we're waiting to see for what's going to happen it's not as interesting but I think it is a useful exercise to go back through some of the things he's talked about in the past because it gives us an idea of what potentially we could expect in the future and Rob let's get into one of my favorite topics that you said in the news story and and that is stamp duty because it's been mooted that that could be replaced with a land value tax so stamp duty would be no more and it would be replaced with a land value tax we've talked about how we could shake up the property market in the past and I made some comments around a similar system to this and it got a bit of backlash not everyone was delighted with my views on how you could tackle stamp duty and make those changes a land value tax is something that andy's been a fan of in the past but it's still a tax rob so why would he be keen to change stamp duty to land value tax is it just a tax with a different name or would it make any difference no the idea of a land value tax is that it taxes the unimproved value of land so we won't get into the detail of it but the gist of it is you're paying the same amount of tax for a given piece of land regardless of what is built on it so the incentive is therefore for land to be used to its maximum benefit to be used as efficiently as possible because then you can get the most value out of it compared to the amount of tax that you're paying the amount of tax doesn't change and of course it becomes more painful to just sit on land so if you happen to have just had a load of farmland sitting around in your family for generations or whatever then unless you sell it or do something with it at the moment there's nothing to pay but under a land value tax there'd be an annual charge to pay which therefore discourages hoarding and makes it more likely that it will be released to someone who will do something more productive with it.

6:03So from a pure incentives point of view when you compare it to stamp duty it comes out a whole lot better because stamp duty is actively discouraging you from doing the thing that the economy should want you to do and that individuals want to do which is transact to move to actually do something. Stamp duty puts a break on that. So you could get into the debate about, well, how is it implemented? What would the amount be? Could he do it? Will he do it? Does he actually want to do it? Will it happen? But the underlying logic of it is very simple. Something else that has been talked about a lot in the media is a wealth tax.

6:35And to quote Andy, in the past, he said, we overtax labour, people's work, and we undertax people's assets. That's led to people then say that, well, he wants a wealth tax. He hasn't actually said that and he's consistently stayed away from saying he would want or introduce a wealth tax. It's an absolute hot potato wealth tax but it has been implemented in other countries around the world and sometimes successfully. It depends on the aggression of the wealth tax. Something that people forget is the wealthy are mobile and they can move and if they're overtaxed they can move on. It's something that Gary Economics just seems to overlook when he talks about heavy taxes for the rich and he forgets that it's not 1940 and people do have options to move around but that's a whole other episode the point is that aggressively going that direction i don't think would be successful and based on his reluctance to commit to it in any shape or form even when he's not in power suggests that he won't go that far but we will see politicians in the past have been known to change their mind and position particularly if it's a vote winner near an election.

7:46So let's see what happens there. Something he has talked about though is capital gains tax and realignment. And the core idea behind this is to ensure that unearned money, things like selling shares, property or other investments, is taxed at the same rate as a regular salary. So salary is taxed normally higher than capital gains and he said in the past he thinks it should be the same. Again this is going back a few years so it may not be in his mind now but that is something that property investors will be awake to and alert to that if that does change and I say property investors all investors will be alert to.

8:30Remember though if you are investing in a limited company that isn't going to be something that hurts as it stands anyway. This is going to be for legacy landlords who don't have their investments wrapped up in a company, and that would be more painful for them. So if it starts to gain traction and it looks like this may happen, you could see possibly more. In fact, you'd expect to see more legacy landlords exiting the market. They already are. There's a new wave coming in, but the old garden moving out. We've talked about that extensively, Rob, but you can see that trend continuing. Yes, I think you can say that quite confidently because we've seen this already.

9:05We saw this last year because last year when we had the seemingly endless run up to the budget with rumour after rumour One of those rumours was a significant hike in capital gains tax And the whole talk about aligning it with income tax in the end didn't happen But people who were minded to sell anyway did accelerate their plans because they wanted to get in ahead of that change happening When you look at the accurate figures, you never know the reason why someone did something And in reality, it's always a combination of factors So you can't go, oh, yeah, well an extra 30 ,000 people sold because of this but from people who wrote into our sunday times column from the conversations that we heard that was definitely a factor in some people's thinking and so i think you're right rob if this rumor or suggestion does gain traction and start to look more likely that probably will accelerate some people's plans the funny thing about tax in general is you're always trying to achieve an outcome but managing first second third order consequences and things that are always shifting because the flip of that can be true as well if it does happen but people believe that this government is not going to stick around and the next government could change it back then you might see the opposite.

10:04You might see people just not realising gains for a couple of years because they're going to wait in the belief that the rate is going to fall and therefore it could backfire and the tax take could actually fall. This is the whole challenge. This is why easy though it is to criticise and make fun of politicians and we're not always above doing so. It is also incredibly difficult to know what to do because it's impossible to pin down with any degree of accuracy what the outcome of a policy will be. It could be completely the opposite from what you intended. Another topic that would interest us all that is discussed in the past is council tax reform.

10:34And he has called it broken, the current system. You know what, I actually agree with him. Something he's pointed out on a regular basis is the disparity between different areas and regions. For example, a modest family home in the north of England could be paying more council tax than a multi-million pound mansion in Westminster. That's actually real. It sounds crazy. And it is crazy. But it's the reality. so it is broken i agree i don't think many rational unless you live in that mansion in westminster and you're very happy i don't think many people would disagree with the idea that council tax is broken it's a bit rubbish and it needs fixing how to fix it he's not given a lot of detail again these are just sound bites from the past but the fact that he's up for the challenge I take good encouragement from that and Rob I think we need to say one more time that these are just things he's talked about in the past and you know what if you went back through our podcast of over 10 years you could probably get a lot of sound bites from us we've changed our opinions multiple times over the years but if you wanted to create some headlines if we ever ran for prime minister I mean they'd have a field day there's loads to go out and we've changed our mind as well and that's the point Andy Burnham may have changed his mind on some of these policies as well and they're just talking points I think a better conversation although that's interesting I'm sure people have found it useful I'm actually more interested in what he's done not rather than what he's talked about because these are things you talk about but I'm more interested in action and he has been a very busy boy and he has again I think I think it'd be very hard for anyone to dispute this done incredible things for manchester and the wider region he's got into power because of that track record and i know critics will say well it's a very different from the top job and again i do not dispute that but he has achieved something where many others have failed in the past in other areas and regions he's been arguably the most successful metro mayor in the country and he's done some incredible things so let's talk about that track record manchester from when he got into power from where it is today it's a different place and it's not all him i'm not suggesting that but he's certainly been part of it you could even go as far as a catalyst for that change he's definitely made a difference though yeah it's fair to say that manchester has transformed during his time as mayor he became mayor in 2017 and if you look at the city center which of course is just one part of Greater Manchester which he was the mayor of, the city centre has absolutely transformed over that time.

13:17Now being there while something happened and causing it to happen are two very different things and the groundwork for a lot of what made Manchester so successful and attracted so much investment and made such bold moves was done as far back as the 90s. So I don't think even his strongest supporters would make the argument that Andy Burnham was the architect of this success but there are particular things that he did that have been hailed around transport, around homelessness, around Greater Manchester Police. But for me, the thing I think you can point to, and so yeah, he did that, was advocating for Manchester, winning it more funding, winning it more devolved powers, and just generally being a believer and a cheerleader for the region.

13:53And it sounds a bit fluffy, Rob, and maybe it is, but if you're trying to make the positive case for Andy Burnham, then you'd say, well, the country needs a bit of that. If you do that for Manchester, if you could do that for the country that'd be a big win it'd be a massive win and if you're now thinking oh wow well rob and rob are hardcore labor you've not listened to the podcast for long like we do not side with parties we just want what's best for the country so if you're listening to this now and getting a bit uptight because you feel like we're being really favorable to a politician in a color that you don't like you need to get over it like it's not about colors you know red blue green yellow whatever the other colours are.

14:30The point is, it's just what's best. And this is not an endorsement of Andy Burnham, but just having anybody be an ambassador for the country. I don't care who it is. Anybody to be a cheerleader for the UK would be a good start. It's not going to solve everything. The sentiment is so low in the UK. Shockingly low. Again, not just in property investment. This is across the board in every area in every sector we need somebody to stand up and go you know what the uk is amazing and yes it's got its challenges but wow we've got some amazing things happening and we should all be really proud of that and we can go on to achieve great things that would be refreshing because all we've had for the last few decades is just politician after politician leader after leader come in say it's all terrible but it's not my fault it's the last person you know it's their fault it's terrible for that reason and that doesn't help anyone so that alone would be very very welcome and he is very popular in manchester not just only with the public but with the business community as well and when you look at the skyline in manchester from where it was when he started to where it is today he could have been a blocker to that or an enabler and clearly he's been supportive of all that change so when you look at the property transformation in manchester that's really interesting as well again he's not been there on site putting the bricks down nor has he funded the developments personally himself but we're not saying that it is all anti-burnham but he's been there while it's happened he's encouraged it and he's championed it let's bring this back now down to property because again he has a track record there so we talked about the things he's talked about but what has he done interestingly and a lot of people would have missed this i did but andy burnham is a landlord himself so that's interesting does that mean he's going to be putting policies in for his self-interests i hope not but it is interesting that at least he understands the world of property investment and how to operate within minute and his approach to property investors has been I think fair there's not a lot to go off it people have used the term carrot and stick so what do we mean by that well he's raised fines to landlords by 43 % and that's where landlords have fallen foul it's not him just picking on landlords that's where they've not been working to the standards required of property investors so some people may say that's a stick approach or possibly even negative i don't think that's a negative i think we should be providing good homes to our tenants the other thing he's done is provided grants and up to 30 000 pounds for landlords who have become more energy efficient and he's pushed a good landlord charter so overall it doesn't sound too bad but we've left the elephant in the room.

17:26The one thing that would make a huge difference, the one thing I think would be a terrible mistake. Historically, it's been shown to be a terrible mistake when you look at governments that have implemented this. And this falls back into the earlier category of things he's talked about not done. So we need to say that from the off. But rent controls, Rob. We've left it to last for a reason, because it is the biggest fear. It would make the biggest change. and let's not dress it up it would be a disaster yes this is the big one and this is where landlords are rightly going to be the most nervous and the track record based on what he's said is not the most encouraging so as far back as 2015 he was talking about wanting local communities to have the power to introduce rent controls and in 2023 he was a signatory on an open letter to michael gove calling for a rent freeze he also apparently wrote to michael gove separately around that time arguing that landlords were using the cost of living crisis to push through rent hikes.

18:30So again, if you want to put scary headlines together, there is evidence that you can find. But I think there are a few things to keep in mind when it comes to any politician. The first is you can find evidence of them saying pretty much anything because depending on the audience they're speaking to, they will hit different points and they'll couch their message in different ways. Secondly, they will just change their mind. Nothing wrong with that. Like we said, we've done it over the years. But thirdly, what a politician believes and what they actually believe that they can do and should do at any given moment are completely different things.

19:00So I think for any policy we've spoken about, including rent control and including land value tax, no politician is going to go, well, I believe this would be the best thing, therefore I'm going to do it. No, they've got to consider if it's something they can get through their own party, if it's something they can get through parliament, if it's something where even if they could, would that be the right thing to do right now, given where we're starting from? So yes, you'd rather have a prime minister in waiting who said you know what rent controls you can see why it's appealing but it's obviously a bad idea it's failed every time it's been tried that would give you more confidence but i don't think it's something to overly freak out about which rob brings us to the ultimate question that everyone's going to be asking and what matters beneath a lot of what is just kind of speculation and gossip which is given that barring something extraordinary andy burnham will be our prime minister some point soon what should we as investors be doing about it absolutely nothing that's the truth that's the truth because why would you make big decisions rash decisions on headlines because as we've gone through these are just things that someone's talked about in the past that people have dug up the action that he's delivered has actually been quite positive and i don't think many people would argue that he's been a good thing for the north of England, Manchester in particular.

20:17Does that mean he'll be able to play the same tune again, repeat that trick when he's Prime Minister? No. He might be great, he might be awful. We have no idea. And based on recent Prime Ministers, unfortunately, he's got more chance of being the latter. But that's the thing, and I'm going to talk about something briefly, I won't go on, that I've talked about in the past that I really hope you've absorbed into your inner being by now. But if you are waiting for a third party, someone exterior to you, to influence your life in a positive way, like once I get a good Prime Minister, I'll be successful, any nonsense like that, you just need to stop immediately.

20:55The last 10 years, how many Prime Ministers have we had? A ridiculous amount. Have people been successful in property and beyond during those 10 years? Absolutely. We had COVID. We've had Brexit. We've had lots happen since we've started recording this podcast. have people been wildly successful during those periods absolutely have people made differences to their financial futures absolutely have others used excuses of what's gone on to justify why they haven't taken action while they haven't progressed yes because we love to tell ourselves a story and if we've not achieved we don't want to go well it's because i was a bit lazy or i wasn't brave enough or I didn't do enough research whatever it may be you blame others you tell yourself a story taking ownership is something that's very rare with human beings like people like to blame even people say oh I take ownership but then still blame like it just happens it's just human nature it's the default position and some people do go beyond that so be careful Andy Burnham will not make you a successful property investor nor will he ruin your life will rent controls be a disaster if they come in yes i've said that will it happen highly unlikely we'll keep you updated we'll be here week in week out and if it starts to gain any momentum or any noise then we'll address it but all of it has been noise it's just that this particular noise scares property investors the most but it's noise what he's talked about and what he will do are very different things and we have to remember it's been a few years since he's talked about these things michael gove hasn't been in power for a long time now that's who he was writing to he didn't write to starmer he didn't write to rachel reeves about rental controls he's not talked about it once publicly so the chances are it's not a policy he's pushing right now so you just need to operate as normal and you'll be far well it's as positive an end as i think we're going to get to for an episode about politics but we still got time to add a little bit more value to your life before we move on in the form of hub extra so rob what have you got this week i've been playing around working with a new device recently and i wanted to wait a few weeks of using this before i made a recommendation i'm not saying you should all now rush out to buy one of these but i think it is going to be interesting for some of you and that is the Fitbit Air.

23:28The Fitbit Air is a whoop-like device. Very, very similar. It's smaller, it's lighter and that's something I like because you don't notice that you're wearing it. But it gives you all your readings. It gives you your sleep scores, your heart rate, it knows when you're, it tracks your sporting activities. It gives you all that health data and it is really interesting but I've had a whoop in the past and given up on it and it wasn't just because it was a bulkier device on my wrist that was not the main reason it was that the data alone became less interesting after a while and that may happen with the Fitbit but I think it will last longer at least and the reason for that is the AI integration because some of you may not know but Fitbit is actually owned by Google and it connects with Gemini and that is really powerful because I'm really active.

24:33I'm actually more active now than I have been in 10 years. I go to the gym a lot more, I play a lot more paddle and because of a lot of activity I've got a lot of data to go at but then talking with the AI about that data, my recovery because unfortunately as I'm a bit older now my recovery was slower and i would suffer from muscle soreness but it's really interesting my recovery has dramatically improved because it's given me tips and guidance on how i should manage that recovery for all the excessive activity that i do so it's the ai element that is the winner for me and i know whoop have a version but google's ai is just so much more powerful, so much more powerful.

25:19And the other thing is, it's a lot cheaper. So the device itself is£99. And you don't actually need to pay for a subscription. You don't get the AI part, but you do get a lot of the data. But the AI part is£8 a month or£80 a year. But I don't pay that and I've got the AI. And the reason why is I pay for the Pro account for Google Gemini, which is about£20 a month and it's included. So I was paying that already. So all I've had to pay is the£85 and I've got all the AI included. That£20 a month also gives you some storage as well. So if you're paying for storage elsewhere, you could find that you're saving yourself a lot of money by using Google Gemini.

26:07So if you're using Google Gemini and you've got a whoop already, i think this is a no-brainer to consider the swap i would seriously look at it so overall is it for everyone no if you're not really active you know do you really need your heart rate of you sitting on the sofa in the evenings i'm not like having a dig but what's the point it's just not worth it but if you are active then it's worth serious consideration especially if you're a google gemini subscriber already for me it was a no-brainer like i've said i was already paying for it i was already active the device cost me 85 quid why not but it's not for everyone but i do think the ai integration of devices like this is really interesting and this is just where we are today in two years time it's highly likely i won't be wearing this because there'll be a technology much more advanced i'm sure of it the way the world's going but for now for 85 pounds i'm very very happy well that is our stunt for this week thank you for listening i hope you found that in some way interesting, helpful, reassuring.

27:07If you have enjoyed it, please do tell a friend because that's the way the podcast grows. If you've been having a conversation about this topic with another investor, then do point them towards this episode. It'll help them and it'll really help us. But until we see you next time, have a great week. Bye-bye. Bye-bye.