Should you try to take a big jump up the property ladder?

0:02Welcome to This Is Money podcast sponsored by Charles Stanley Direct. I'm Georgie Frost and joining me and Simon Lambert today is Helen Crane. And coming up, first time buyers take out mega mortgages to buy their forever homes. Should you go all out to take a big jump up the property ladder though? As almost one quarter flats sell at a loss, we ask why have home buyers fallen out of love with leasehold? Plus, is buy to let really dead? Also, State Britain has an inflation problem, so what can we do about it? Interest rates stay unchanged, no surprises there. And an alternative to premium bonds.

0:37Coventry Building Society has a new prize draw savings account. Would you sign up? Don't be getting stuck to date with all the latest breaking money news. Just go to thisismoney.co.uk or download the app. But first, do you love talking money as much as listening to it? Then you'll love this. Charles Stanley Direct's financial coaching service gives you a real human, yes, an actual expert, to help you make sense of your finances. No jargon, no pressure, just clear answers to your money questions. Book a free 15-minute call today at charlesstanley.co.uk forward slash financial coaching. Go on, your future self will thank you.

1:14Remember, investment involves risk. Right, that's it from our sponsors. Now back to the podcast. According to new data from Barclays, first-time buyers are turning their backs on flats and terraced houses and stretching their finances to buy their forever homes now. More than a third are opting for more expensive semi-detached houses. That's an increase of 1.7 % year on year with three bed properties, the most popular. Meanwhile, the number buying flats was down 2.7 % to just 19%. Buyers are also taking out longer mortgages of 30 years or even more to finance this. Now, Helen, you've been looking into this.

1:53There's a lot of data. So there's a lot of information in here, but what do you make of it all?

1:58Helen Crane: So they're buying bigger houses, essentially. And I just sort of worry that people will look at this and think, oh, you know, what a first-time buyer is complaining about if they can buy a three-bed semi-detached house. Clearly, it's not that hard to get on the housing ladder, but that's not really the case. So this is some research from Barclays, essentially looking at what type of homes first-time buyers are buying. And they found that whereas in the past, they might have bought a flat or a terraced house as that sort of first foot on the property ladder. More than a third of first-time buyers are now buying semi-detached houses.

2:32Helen Crane: In August, that was 33.5 % of first-time buyers, and that's an increase year on year. Meanwhile, the number buying flats was 19%, which is down on the previous year. But the reason they're able to do that is because they're taking not only more expensive, larger mortgages, but also longer mortgages. so whereas they might have previously taken out I was going to say a 25 year term but I think for a lot of first-time buyers now a 25 year mortgage term is kind of something of the past so people are stretching it now beyond even 30 years to 35 or even 40 years because that allows them to obviously spread these payments over a longer time and the reason they're doing that I think I've had quite a few emails from readers on this this week actually who've done this and they're saying it's not like we need a sort of huge house right now or you know we're not doing it just to show off to our friends or say oh look at this big nice house we've got but it's because they're maybe buying a bit later in life so they're already in their 30s maybe and they're thinking well you know I might want to have a family in the next few years and I don't want to have to you know move again in two years time if if that happens and also things like stamp duty is it's incredibly expensive now to move house so they're sort of thinking smartly do we sort of skip that first step on the ladder you know we're buying a few years later than maybe we would have liked to have done or or than people would have done in the past so do we just save up a bit more and you know the people that've got into contact with me said you know I've taken second jobs this isn't something that I've just done lightly I've really sort of planned this out can we save a bit more and then skip that first step entirely and then end up in a house that you know will maybe be in for 20 years it's interesting because when i first saw this story i thought exactly what you just said there it's a case of people who are buying later we know first time buyers are getting older and when you're in your you know 30s and looking to buy a house you've got different considerations you might have kids step kids you might be thinking of having a family so it's not necessarily a case of people really scraping and looking down the back of the sofa scraping the barrel trying to find every single penny you could be earning more to pay for these things but actually what you're telling me is no actually that is the case in in some of these instances that people are really stretching their finances because they're thinking long term here yeah and i think the thing is as well you'd the hope this happens to a lot of first-time buyers whether or not they're buying a bigger house but the idea is that it will be maybe a struggle for the first few years but then you might get a pay rise you know you might build up a little bit of equity in your home and be able to remortgage to a to a better deal so I think the idea is maybe you know it'll be really tough for the first few years you know we maybe have to you know save harder sort of forego certain things but in a few years time we'll be in a in a sort of better position and we won't find ourselves in a few years time having to move and then pay x amount of stamp duty you know stamp duty is really expensive so if you're buying a 300 ,000 pound home that's 5 ,000 pounds and you know that's on top of your legal fees surveys or all the other kind of things that you have to pay.

5:38Helen Crane: So I think they're thinking maybe some short-term pain for long-term benefits. It's so difficult to buy a home anyway. I can kind of understand why people are thinking maybe if we just stretch ourselves a little bit now, then we don't have to kind of go through this again in a few years' time. Simon, am I right in thinking that those sorts of really long mortgages are actually quite common in other countries? They're just not so much here. Is that right? Because when I look at it, I think, oof, that is a really long time, 40 years. But actually, like I said, it's not that uncommon elsewhere.

6:14Simon Lambert: It's not that uncommon elsewhere. The difference with our mortgage system is that we fix for relatively short periods of time. I mean, we think a five-year fix is fixing for a long time. Whereas if you go to America, for example, which we think of as quite a financially risky country, mortgages tend to be fixed for much longer periods there some for the life of the loan if you go to france for example mortgages tend to be fixed for much longer periods there the difference is is that obviously you then need to be able to maybe get out of it if you can and that's what's put people off these long-term fixes in this country and you have got some lenders who will lend to people for 30 35 years and fix the rate for that entire time but every time this tries to get pushed people just borrowers in the uk just don't really want it and there is always that concern of like well what happens when they need to get out of it what happens when i need to get out of it i mean the thing is is that if you look at it and go okay well imagine i buy at the age of say you buy at the age of 27 right just pluck a figure out of the air right 40 years you're going to be 67 that is definitely round about the time that most people would hope to be retiring by I think even if they're 27 now they're going to be thinking well I might not be able to get my state pension then but I definitely probably think I might want to retire around about then so you're just squeezing in there the difficulty is of course is then if when you buy and you move home the next time you then extend the mortgage again and that is something that people often very regularly do in order to be able to get the monthly payments to squeeze in where they need them to be especially with you know affordability based lending where they look at your incomings look at your outgoings and if you extend that term it lowers the mortgage monthly cost and it manages to get you to squeeze in there but you can see how people are then very easily knocking into retirement and also the cost of the interest is a lot more if you go to thisismoney.co.uk forward slash calculators you'll find our true cost mortgage calculator and you can mess around with the figures and you can see the difference between 25 30 35 40 25 is very rare now for first-time buyers it was common when i was a first-time buyer i say not that long ago but okay but it was like nearly 20 years ago but 25 was was common then um and you know but it's very rare now just because of high house prices and needing to to squeeze in there but i do think if you can afford the extra bedroom for example it does make sense because the thing that quite often means that first-time buyers move before they think they were probably going to have to is the thing where as Helen said because that people are buying later it's something like having kids suddenly deciding they're in their late 30s and they'd quite like a spare bedroom that kind of thing we moved from our first flat four years into a five-year fix um it's lovely flat one bedroom garden flat in london it was great we had our first daughter so eventually we were like right we we need to move the other reason i think maybe some of this might be going on that we haven't talked about and why people might want houses larger houses with a garden and a bit of space is do you remember that thing about five years ago where they locked us all up and wouldn't let us out.

9:41Yeah.

9:41Simon Lambert: That sort of changed people's minds a bit on how they live and how they wanted to live. And whilst if you're in London or the centre of a major city, it's going to be very difficult for you to get a house. Outside of London, it's not that unheard of for people to be buying houses instead of flats. And the price difference isn't necessarily that much. And I can definitely see why people might have their minds turned towards them. You know, I was talking about that with a friend yesterday over dinner, COVID and the whole lockdown thing. I mean, it still blows my mind the things that happened during that time.

10:19But I guess as much as we've kind of feel like we've moved on from what was an incredibly surreal experience, there will obviously be sort of a hangover, lingering thoughts in our minds. And I certainly think that's got to do with where we want to live. And also, when you think of a spare bedroom, you might think of working from home, starting your own business, whatever you want to do. But this feeds in nicely to another story that you've got on your website that relates to this, and this is the declining popularity of flats. So it all sort of dovetails nicely. So the growing number of single-storey homeowners are being forced to sell their homes for less than they paid for them.

10:58In fact, it's over a fifth, more than double the rate seen across the wider market. This is according to new research from estate agents Hamptons, that's shared exclusively with This Is Money. But actually, if you take a look at other research, it shows a very similar picture. People having to sell their flats for less than they paid for them because people don't want them. Flats were once a favourite first-time buyers, buy-to-let landlords, all fighting over this. So what has happened and what does it mean for those looking to sell? So Helen, what's the picture here? What's going on? Why have we fallen out of love with flats?

11:33Helen Crane: Yeah, I mean, really quite an upsetting story for me as the owner of a flat here but I think I think it's a real cocktail of reasons so as we've just talked about you know first-time buyers may be favouring bigger properties when they can also as we've just said COVID you know people don't want to be cooped up if God forbid something like that did happen again but also the leasehold scandal people are hugely wary about what their flat's built of you know is their cladding do they have a management company who are this management company, what their service charge is going to be. I think that's a fair concern that people have.

12:11Helen Crane: As you said as well, buy-to-let landlords would often favour flats and a lot of those are now leaving the market for various reasons. So yeah, this data from Hamptons shows that this year to date, 22 % of flat sellers have sold them for less than they bought for. So we don't know when they bought these flats though. So one of my sort of first thoughts when looking at this story was you know maybe this is people who might have bought those flats in that real kind of house price boom at the start of covid and you know people don't tend to stay in flats for that long sometimes because of the reasons simon mentioned you know they might have a child they might need a spare room so the the rate that people move on from flats is quicker than houses so i think part of it might be they bought at this real high and now you know the housing market is do we say a slump I mean it's certainly not as sort of booming as it was back then so it could be to do with that but yeah we're seeing this real sort of price gulf emerging between houses and flats so there's Zoopla data which says in June 2015 the average price of a flat was£161 ,000 compared to£218 ,000 for a house so that's a gap of about£57 ,000 but now the gap between the average price of a flat and the average price of a house is£130 ,000.

13:32Helen Crane: So it's really, yeah, really kind of opening up there. I would say just as someone who owns a flat and, you know, hopefully wants to sell it at some point for not tons less than I bought it for, you know, there's lots of different types of flats, you know. So I've got a two bed flat with a garden and I'd like to think, you know, I'd love to live in a house if I could, but it's not, it's not that much worse than living in a house for me but I do think you know I've got friends I live in London I've got friends who live in you know small studio flats in leasehold blocks you know huge service charges and I do I can see why they've bought those properties because you know things that if you remember helped to buy you had to buy a new build so if you're buying in London you might well end up in a new build leasehold flat because that's kind of all you can get and And I do kind of, I feel for those people.

14:22Helen Crane: But I think, you know, there's flats and there's flats. And yeah, it's very difficult though. You know, it's not a good time to be a flat owner. John, I agree with you. I've, as you know, was a renter for many, many years and have lived in loads of different flats. The last three, in fact, all had garden space. But when I came to buy, and these stories are, I'm exactly this demographic here. I bought my first time house later. And when I did buy, it was a three slash four bedroom semi-detached. And I said to myself, I do not want a flat, even though the last I said three were absolutely perfect.

15:01But I just I was like, absolutely, I don't want to buy a flat. Simon, do you think this is going to reverse any time soon? Because someone's got to buy a flat. If we're all buying semi-detached, I mean, there's only so many, isn't there?

15:11Simon Lambert: Well, I mean, if you do want to buy a flat in a couple of years, I can refer you to my colleague, Helen Crane, who may possibly at that time be interested in moving. She has a lovely flat. It will be very well looked after and much improved, obviously, by the time she's lived in it for a while, because you'd much prefer Helen to have lived in the property you bought than whoever else could possibly be living there. So, you know, when you do, if it's in a few years' time, get in touch. Look, we lived in a couple of flats in London, and I loved them. They were great. But we were in London. We were near Finsbury Park.

15:45Simon Lambert: There's no way we would have been able to buy a house around there. I can see why if people are buying later, right? So say maybe if we'd have bought in our mid-30s instead, we might have gone, well, do you know what? Actually, let's just move out of town and then we can maybe afford a house rather than a flat. Whereas because we bought, you know, five, six years earlier than that, we were like, well, actually, we still want to be living in London. You say, like, who's going to buy these flats? But, well, if people aren't buying them and the price is going down, then there's going to come a point where they look like a bit of a bargain.

16:16Simon Lambert: and potentially maybe at the moment they might be a bit of a bargain. The thing that's going on in some of these instances though is if people have bought new built flats, they are losing money on them. So in the story here we've got right move listings in the capital are awash with flats selling for less than they previously sold for. One two bedroom flat in Brentford equipped with river views, a roof terrace, concierge swimming pool and gym. I believe there should be a comma between concierge and swimming pool in this story. unless it actually is a concierge swimming pool previously sold for 822 000 in october 2023 but is currently under offer with a listed price of 700 000 822 000 pounds for a flat in brentford right that's a lot of money even if it does have a concierge swimming pool okay so and i'm imagining i don't know for certain because i haven't looked at this listing and i haven't looked this flat i'm guessing this comes with a pretty hefty service charge on it and also there's a possibility that maybe this was bought brand new the thing with buying new build properties is they are sold at a premium they are sold as a premium product they are not sold at a discount to existing properties this is one of the issues with the whole we just need to build more houses to bring house prices down.

17:41Simon Lambert: It's like, well, we do need to build more houses, but we also need to stop selling them at a massive premium to the existing houses. The problem is, it's like a brand new car. People like it because it's brand new. Nobody else has lived in it. And once you've lived in it, it's not brand new anymore. And the problem is, is if someone else is building some more brand new flats around the corner that also have a concierge swimming pool, then you might choose to go for those ones instead. And all of a sudden, not only do you have the issue where obviously you're selling your property into the market depends what the market's doing people are deciding that they want to maybe have houses rather than flats and everything else like that but you've also lost the premium of it being brand new and i do think i'm not saying don't ever buy new build property don't buy new build houses don't buy new build flats but i do think that if anybody is going to buy a new build this is something that they really need to consider is what is the brand new premium that i'm paying on this and am I going to lose that money or what am I going to do about the fact that that premium is not going to be there when I come to sell.

18:43Good advice. Is the reality, Helen, though, that actually a lot of these instances of people selling flats at a loss or for not what they would have expected, not just about the fact that they're selling new builds, this is about the fact that we've really gone off flats?

19:00Helen Crane: Look, I think it partly is. You know, for all the reasons I mentioned earlier flats are maybe a little bit less desirable in in some circumstances i really i think for me and living in a city and speaking to people who are looking at buying flats in in london is people do really worry about the leasehold thing and the service charges because if you're stretching your budget to buy a flat anyway then the last thing you want is you know say you've got a 1000 pound a year service charge and the next year it doubles to 2000 i think that's a real worry for people and I think all the stories about that have made people really aware of that which is a good thing you know it's obviously good that you go in to buying a lease of like being aware of that but I think people are looking and thinking I actually I can't budget for an extra I don't know two thousand pounds a year if my service charge goes up I mean for me I think that's that's a huge part of the reason why why people aren't as keen on them um for me I'm when When we bought our flat, I was fairly insistent that we get a share of freehold flat, which is sort of fairly rare, but means that it's between, in my case, me and our upstairs neighbour to sort out, if anything goes wrong, how we kind of pay for it, which, you know, luckily our neighbour's very nice.

20:14Helen Crane: If she wasn't, it might be a bit more tricky. But I think for me it's a million times better than having some anonymous freeholder or managing company who just says, our service charge is going up this year, got to fix something, you know, costs are going up. I think that really scares people. And I think that's a big reason for it. So, I mean, you can understand some of these service charges. I mean, if you have concierge swimming pools, they don't pay for themselves. So what's the resolution to this? What can happen to make sure that that is not putting people off? Because are we in line for some sort of housing reckoning?

20:47Like I said, if no one's buying flats, and I'm sure they will if you go down low enough. But there's also other things you would need to consider as a government to sort out things like stamp duty. because I would imagine that these sorts of flats, particularly the sort of plush service ones, would be great for older people downsizing. People still want to rent, so it'd be great for buy to let. But again, we're going to talk about how landlords have been hammered and are leaving the market shortly. So what should the government do to holistically sort out this problem?

21:18Simon Lambert: Firstly, it should learn from its mistakes. There are new rules on leasehold. They were too slow to be brought in and probably they aren't good enough. Cladding, Helen alluded to it earlier, post-Grenfell, the cladding fiasco, the fact that people around the country discovered that actually their property may have unsafe cladding on it, may not have unsafe cladding on it. Someone was going to sort it out. Who's going to sort it out? Who's going to pay for it? Obviously, the developers should have paid for it. Developers tried to do everything they could not to pay for it and so on. And it left people with, you know, properties that were unsellable for a long time or very difficult to sell.

21:55Simon Lambert: We probably need to learn a little bit from the type of homes that we're building. You know, are the flats that we're building good enough? Are they a decent size? Are they providing people with shared outside space or their own outside space? There's so many blocks of flats that have gone up in London in what are not particularly, you know, traditionally expensive areas. They did this in Finsbury Park just as we were leaving. They built one above the station. They did it down the road at Manor House and places like that. You go to Tottenham and all those kind of places, all around London, and then you're building flats and then they're being sold for£600 ,000,£700 ,000,£822 ,000 for a flat in Brentwood, to give an example.

22:36Simon Lambert: It's like, how are we going to bring house prices down for people if we're basically building these flats and then flogging them for£800 ,000? I know they're in London, but Brentwood ain't Mayfair. No offence to people who live in Brentwood. how much would you consider buying that place for if not for 820 did you say and not for 700 what do you think how how low can we go simon well so so you gave the example of someone downsizing right so say somebody say so say somebody lives around that kind of west london area out of west london and they've got a nice semi-detached family home that's probably worth a million and a half right now if they're going to downsize they're obviously going to want to try to release some money save some money and so on and maybe a flat with a concierge swimming pool would seem attractive to them who wouldn't want to walk in be handed a towel be shown to their seat right perhaps absolutely you know maybe they'll come and dry you off after you've been in there or something too much okay okay sorry sorry um but you're not going to want to spend 800 grand on it or 850 grand on it plus the stamp duty are you I don't know what would I pay for it 500 maybe if I was in that position depending on how good the concierge at the swimming pool was I mean it's all about that though isn't it finally on this one Helen and we've mentioned landlords we've mentioned sort of the tax raids making things a little less attractive to landlords we've been saying it for some time now but we have seen landlords exit the market and you've got a piece on your website that doesn't ask if it's over.

24:13It says why the buy to let dream is over. But I have to ask as a journalist, is it over first? And then why?

24:21Helen Crane: I mean, it's certainly much less attractive than it was, say, 10 years ago, for loads of reasons. So obviously, things that everyone's struggling with, you know, higher mortgage rates, stamp duty, things like that. But also these additional burdens that have been put onto landlords so actually I just mentioned Stamp GQ they now have to pay more when they buy new properties thanks to new labour rules also there's this renters rights bill that is going through parliament at the moment and that's going to change things for landlords and tenants quite a lot so it's going to make it more difficult to evict people unless you have a really solid reason they have to give tenants more notice if they want to kick them out there's limits on rent hikes which are you know good for tenants um you know i think some of those things are definitely needed um but it's making landlords look at and think actually do you know what i'm i'm making less money this is becoming more and more of a hassle actually is it because should i just put my money should i just invest my money in stocks and shares and you know maybe i'll make a bit less but i won't have to you know take a call in the middle of the night to to fix someone's boiler and I think the difficulty with this is we do need landlords we need people who offer properties to rent because a a lot of people can't afford to buy some people just don't want to buy and you know these people do need somewhere to live can't get away from the fact that we we do need landlords to to provide that so we've spoken to a couple of landlords in this piece and I think the sense we may be getting is that if you're maybe an accidental landlord or if you're a smaller landlord who's just got a couple of properties maybe all this will push you out of the market because it's just not worth it for the sort of money that you're making maybe the kind of landlords that has a bit of a portfolio uh they've got a bit more money so they can sort of absorb those costs and and their sort of efficiencies i suppose if you if you own more properties but yeah it does seem that for someone who just owns a couple of flats or owns a house or a flat that they used to live in it might just not be worth it anymore.

26:28Simon, what are your thoughts on this? Let's say someone is moving country and they need to rent out their place or do they just sell because it's just not worth the bother?

26:40Simon Lambert: I think that in that instance if you can work out that you're going to get enough in rent to more than cover your costs and allow for the tax of element for example then it might be worth holding on to the property especially if you've just recently bought it not so long ago you've sunk a load of money in stamp duty into it anyway um i would look carefully at the tax position because there is effectively you are now taxed on your revenue not your profits for example i've got a friend who owns a flat in east london like dalston way right so it's popular area to live he and his girlfriend then moved in together and they moved into her flat and then they move somewhere else so he's kept hold of his flat now after all of his costs so bearing in mind this is a kind it's a nice flat it's not like particularly fancy it's one bedroom flat but it's in a very popular area so the rent is good right after all of the costs he's just about covering his repayment mortgage but having to put a little bit of money into it each month so that's you know rent comes in he pays the agent all the tax everything like that now obviously the thing to bear in mind here is he's actually paying that off each month so it is a repayment mortgage if it was interest only he'd be making more profit but not a huge amount not enough to make it like really worth his while so the fact that somebody's you know holding on to it while somebody's just like chipping away at the mortgage and then his aim is to then sell it and then they might buy somewhere together so you could see why someone might do that or you could see why someone moving country might do it you could see why people might still go okay i will be what we term an accidental landlord but only if the numbers add up in terms of getting into buy to let at the moment though i would say there's two right really important things to consider firstly the financial element and and the tax if you are in the fortunate position of having a hundred thousand pounds that you have decided that you want to invest into a property now the problem is you're going to have to pay stamp duty so you can't put the full hundred thousand down as a deposit you're going to need to put down roughly 25 or something so say you go okay well i'm going to put eighty thousand pounds into the property and i'm going to buy a three hundred thousand pound property you're going to pay twenty thousand pounds in stamp duty so that's your whole hundred grand gone right and you've paid twenty thousand pounds for the privilege of doing that if you were to put the£100 ,000 into a pension instead you would be able to put the whole£100 ,000 into the pension and the government will give you a 25 % uplift on it if you're a basic rate taxpayer and more if you're a higher rate taxpayer but let's just say someone's a basic rate taxpayer so you get£125 ,000 into your pension you might have to spread it over two years or more than that in order to cover getting that money into your pension because you're only allowed to pay as much into your pension as you earn in taxable employment income that year.

29:45Simon Lambert: But you get to put the whole 100 grand in and you get a 25 % uplift. So you get 125 grand going into your pension versus your property, you only get£80 ,000 going into it. So the numbers are very different there. Or you can put money into an ISA, you can then take your returns tax-free and so on and so on, but you don't get the uplift. But also, secondly, I think the only way that it really works now is if you can add value to the property. people can't rely on house prices going up in the same way they were and the income element of it is taxed so much more highly and you've got the stamp duty element as well so but if you can add value to the property and if you can do that potentially by doing some of the work yourself then maybe that is still worthwhile because you can still get the uplift the capital uplift that comes from that or you can maybe find somewhere that's a bit of an opportunity because people are like shunning it and they don't want it but maybe you can add an extra bedroom and by adding an extra bedroom you can add an extra element of the rent that then boosts up your income but i think you do as i said really need to be able to add value to the property to make it work nowadays just indulge me in a bit of forward thinking crystal ball gazing crystal ball gazing if in sort of 10-ish years, the route that we're on at the moment continues.

31:06What will the rental market look like? I mean, are we going to have to nationalise it almost if people don't want to go in? Or will it all just be big institutional investors, private equity? I don't know. What's it going to look like?

31:20Simon Lambert: Well, the idea was that we would professionalise it and it would be, you know more um big institutional investors as you said and there was going to be built to rent and everything like that and all these big companies were getting going to get involved in it that hasn't really come through in the way that was expected um also a lot of those places when you know we get a lot of press releases about you know built to rent and this company's built this and this company's built that you go look at them they are all you know new build places with very expensive rents and service charges and things like that they're not again similar to what i was saying about you know new homes being sold at a premium price the places that you're seeing where you are getting the institutional investment in homes to let they're not coming into the market at a price that's making things cheaper for people they're coming into the market at a price that's making things more expensive um so i think i can see why we started on the on the crackdown on buy to let i can see why we started trying to make it harder for people i could see why we tried to you know make it so that it wasn't easier for landlords to buy than first-time buyers and things like that but i do think that we have gone too far on this and also i think we've done too much to to scapegoat and demonize britain's small landlords you know there are rogue landlords out there there are landlords who don't do enough work to their properties Everybody's lived in places where it's like, oh, they say they're going to do some work and then they don't do the work.

32:55Simon Lambert: But actually, there's loads of really good landlords out there. And maybe we should have done more to try to make people be or encourage people to be good landlords. Because actually, if you're a good landlord and you look after your tenants and you look after your property, you will make more money. And I say this as the son of someone who runs their own letting agency. My mum runs her own letting agency. It's a one-man band and she has always made sure that the people who own the properties look after the tenants. And that means that you don't get the void periods. And that's where you really lose money as a landlord is when your place isn't rented out for a few months.

33:31Simon Lambert: That's it for part one.

33:38Simon Lambert: I'm joined now by Lisa Kaplan of Charles Stanley Direct for our weekly Investing Explained feature. Lisa, a question here for you. Do I have to take my pension tax-free lump sum all in one go or can I take it in multiple goes? Hi Simon, that's a great question. In fact, I was asked that by someone earlier today. The short answer is no, you don't need to take your tax-free cash all in one go. It's a question of administration and it may to an extent depend on who your pension is with. but there's nothing to stop you taking a portion of your tax-free cash. You just need to make sure you get the right form and fill it in correctly from your pension provider.

34:23Often they'll ask for, you know, have you had advice, et cetera, et cetera. So it can be a bit of a pain going back time and time again. So I wouldn't do it every month I'm going to take 2 % of my tax-free cash. I would look at it maybe from year to year because it is a bit of a pain in the neck to get hold of.

34:41Simon Lambert: Lisa, thank you very much. My pleasure. Welcome back. So we had a few bits of important economic data out this week, didn't we? Pay growth slows, the labour market cools, inflation remains at 3.8 % and no movement for interest rates either. Shake it all up. And Helen, what do we get? What picture does this paint about the UK economy?

35:02Helen Crane: I mean, it's not looking particularly great, is it? No. I think in particular, no, not ideal, Georgie. Let's give it a GCSE score out of nine. I'm not really sure I understand what they are, but I think nine is an A star. Oh, wait, wait. We have a producer who's an expert on this. So, dear listener, what you didn't realise there is in my ear, producer Sam. I don't think he's GCSE. Otherwise, you've got them really young, Simon. But I think he's probably the closest to GCSEs than us or O levels, as some people call it. So we're reliably informed if we are to rate the UK economy in terms of GCSE grading, apparently between I think it's between like zero and nine, although three or below a four is a fail.

35:49So I'm not really sure about what the point of the numbers beneath that is. Why don't they just do it one until six? But why don't you just do ABCD like the good old days? Helen, that was a really long way of asking just how's the UK economy doing in a GCSE school fashion that no one really understands except a producer that's a lot younger than us. And that's made me feel old. Helen, just do your best.

36:12Helen Crane: Yeah, so we now all feel incredibly old and I still don't understand the GCSE grading system. I don't know, a four? But then it's like, you can't really have a pass and fail because we can't retake the economy. I mean, what do we do? Lovely to, wouldn't it? We can't, Rachel Reese can't just do a reset. Let's just try it all again. Yeah, I mean, I don't know. I'd say we're, I mean, we're probably failing. We're certainly not passing with flying colours. So the first thing this week was the inflation data, which is at 3.8 % for August. That's proving really sticky, as economists say, which means inflation is remaining higher than we would like.

36:51Helen Crane: So it was previously forecast to peak in September at 3.7%. It's obviously higher than that. And the consensus sort of seems to be that it might sort of stay that way. So what's driving that? Food and drink inflation has gone up in August to 5.1%. And I think, you know, supermarket prices going up is something that people really notice. It's something that's obvious to all of us. And that's its highest level for 18 months. So it really just sort of hits people in the pocket. So, yeah, it's not going well on that front. We also borrowed a lot more as well. I was reading that's a new bit of data as well.

37:30That's not a good sign either, is it? We'll stay away from sort of GCSE grading here and just say, look, this isn't looking great. Why is inflation just proving so darn sticky?

37:42Simon Lambert: Let's not steer entirely away from GCSE grading here, shall we? because my eldest daughter started her GCSEs this year. So she's in the fourth year, right? In old numbers. Year 10? Year 10, right? Just to point out, I have no idea how this GCSE grading works. It is completely stupid. They seem to keep inventing new levels at the top of it. And whenever anybody explains it, including producer Sam, it's always by reference to A, B, C, D, right? So if everybody always explains the system by reference to that, including the schools and education authorities most of the time, maybe we should just go back to the old system instead of transferring it to numbers and back.

38:28Simon Lambert: I don't know. It's just an idea. So, yeah. So I think basically we might just about be scraping a C, but we are, in terms of our predicted grades, very dangerously looking towards a D. The reason why I'd say we might just be scraping a C is because growth is actually at 1.2 % in this country, which in G7 terms is not that bad. okay it's not that good either the eurozone has gdp growth at 1.5 percent which is higher than ours but if you look at some of our peers germany 0.2 percent annual gdp growth france 0.8 percent gdp growth and italy 0.4 percent spain however 2.8 percent and they've got inflation at just 2.7 percent and in america inflation is 2.9 percent which is notably lower than ours despite the fact the US economy is growing at a much better 2.1 % and they're supposedly dealing with the inflationary effects of Trump's tariffs right now that was meant to drive up their inflation rate.

39:37Simon Lambert: The problem with inflation in this country is quite a lot of it is self-inflicted. The Bank of England earlier this year was saying it was going to look through this driven by energy bills and a one-off effect of employment costs. The employment costs were triggered by our own Chancellor, who decided for her own reasons to balance the books in the budget by raising employer national insurance and the living wage at the same time after having dished out bumper public sector pay rises as well, all of which have driven inflation and unfortunately job cuts as well. So we're not in the greatest position.

40:20Simon Lambert: We're not looking like we're going to deliver on the growth that was promised. So markets are looking at borrowing being above forecasts and saying, well, you know what? Actually, we're going to want a bit more money in order to lend to you. And go back to last week's podcast, talk about gilt yields and the week before. Gilt yields have risen today. 30-year gilt still trading at a very high level. What that says is the markets are saying we think inflation is going to be higher in the UK than you say it's going to be. So we're going to need a better return in order to lend to you to cover for the fact that inflation is going to be higher.

40:55Simon Lambert: The problem is as well is we're staring down the barrel of a budget in two months time where Rachel Rees is going to try to balance the books again. And everybody's just like, oh, great, there's going to be some kind of more tax rises and more tax rises is probably the last thing the economy needs. And so we just appear to be going around in circles. However, I do think the eternal optimist that I am that things are about to get better. I believe the economy is probably already turning a corner. And I genuinely think that growth is going to pick up. So hopefully, whilst I think the budget is going to be pretty miserable, I think next year will be better than that.

41:35Simon Lambert: And we'll be back on more of an even keel, despite the best efforts of our politicians. And I don't just blame this government. I blame the one before it as well. That's the spirit, Simon. That is the spirit. I do want to talk, Helen, about the wage data, only for the fact it has quite a big impact on the state pension. The triple lock's been back in the news this week. Can we keep it? Can we not? Just explain that one, if you would.

42:04Helen Crane: Yeah. So this week we've heard that wage growth has fallen to its lowest level since May 2022. But it is still ahead of inflation. The reason that this is important is because this is one of the three things that feeds into the triple lock. So regular wage growth in the three months to July was 4.8%. And I think it seems likely that that is the amount that the state pension is going to go up by next year because it's higher than the two other elements, which are 2.5 % inflation and wage growth. so it seems like that's how much it's going to go up which is obviously you know good news for pensioners however there is another worry sort of creeping in which is that if the state pension does go much higher than it is at already pensioners or people who are just on the state pension might start becoming eligible for income tax so I think if it did go up by that much this it would just sneak in under that income tax level.

43:10Helen Crane: But then if it went up again after that, we could start to see pensioners having to pay income tax on their pensions, which is obviously a big worry. Well, it's mad as well, because it's like here to have some money. Oh, but we're just going to take it back. I mean, the admin involved in that is just utterly pointless. But we shall see what happens with that. Obviously, the final decision will come, I think the government says, before the November 26 budget. So yeah, we'll see about that one. Finally, move over premium bonds. Let's talk about Coventry Building Society. They've launched a new savings account that reward those who regularly put money away with the chance to win£5 ,000.

43:45The Sunny Day regular saver account enters savers into a prize draw very similar to the premium bonds. But what it does do that premium bonds doesn't do is it actually pays interest on their deposit. it. So that's one of the criticisms, isn't it, Simon, of premium bonds? Is it worth putting your money there? Tell us a bit more.

44:06Simon Lambert: The other big difference, of course, between Coventry's Sunny Day Saver and the premium bonds is that Coventry's Sunny Day Saver will pay you a £5 ,000 price, whereas the premium bonds will pay you a million pounds. Well, there is that as well. However, you ain't going to win the million pounds. You're very unlikely to win the million pounds. There are some people who do win the million pounds. There's a lot of people with premium bonds and there's only two people who win a million pounds a month look it this is actually it's got a pretty good rate on it uh it's got 4.3 percent rate on it which is very very attractive at the moment especially with the opportunity to win 5 000 pounds but there is a catch and the catch is that you can only put in up to 150 pounds a month so effectively this is one of those regular saver accounts that you get and they can come with much higher rates but the reason why they can pay much higher rates is because you can only put a certain amount of money into them and so you won't be earning that amount on you know the you know on the full balance you'll only be earning it on how much you put in each month as it builds up so decent account worth considering and always nice to see a building society coming out with something new and i would say that you know there's quite a lot of competition in the savings market at the moment have a look at your savings accounts because rates are being cut the biggest culprits as ever are the large banks the big banks are slashing your savings rates if you've got legacy accounts with them they will have cut them move your money elsewhere first port of call cash isa right you can put in up to 20 000 pounds a year into isas if you have not maxed out your isa allowance put your savings in a cash isa first because you don't pay tax on the interest otherwise you get taxed on savings interest above a thousand pounds but only if you're a basic rate taxpayer if you're a higher rate taxpayer it's 500 pounds if you're an additional rate taxpayer it's zero there's loads more people being dragged into this net just don't make it a problem just put your money in a cash isa choose one of the best cash isas ideally choose one that's flexible so that You can take money out and then put it back in without using up more of your allowance.

46:20Simon Lambert: And watch out for bonus rates that run down. There's loads of good rates out there on cash ices. There's also good rates out there on savings accounts. And you might want to put your money in a building society because a building society is owned by its members, run for the benefit of its members. Yes, they make big profits, but they're meant to recycle those into rewarding their members rather than big banks, which ultimately are owned by shareholders tend to have much more higher paid people at the top or a larger number of higher paid people at the top who get paid loads of money and they're all cutting your savings rate at the moment quite quite good tip set thank you very much simon before you go you start the week 70 billion pounds this is what the bank of england has scaled back its so-called quantitative tightening bond sale program to from 100 billion pounds and And this is effectively the Bank of England unwinding quantitative easing, QE, which involved it buying bonds in the market.

47:19Simon Lambert: It's now been selling bonds into the market. And there's been more of this going around. Some of the finger of blame for higher guilt yields is being pointed at QT and saying that the Bank of England is not helping, particularly at a time when the government is needing to borrow more money and our finances aren't looking that great. And it needs to change how it's doing things. And that was what it announced yesterday alongside its interest rate decision. And it's probably more important than the interest rate decision. The Bank of England has very much tried to do things by the book in unwinding QE, which, you know, is admirable.

47:57Simon Lambert: But I think we probably could have done ourselves quite a big favour by not doing it in the way that Bank of England has done. All right, then. That is it. Thank you, Simon. Thank you, Helen. Thank you for listening. you can keep up to date with all the latest breaking money news just go to thisismoney.co.uk or download the app if you have any comments or questions for the team anything you'd like them to look into any stats that you rather enjoy and would like simon to take a look at simon yes you can email us at podcast at thisismoney.co.uk and to say thank you for all the emails we got about flight time changes after the shout out the other week keep them coming if you have had your flight time changed by a large amount and it's like changed your holiday plans or something for some reason let us know because this is definitely a thing and we are getting on at the airlines about this and we're going to do an investigation into it so yeah if you've had crazy flight time changes email us podcast at this is money.co.uk and i don't know whether david beckham listened to last week's episode yet because we haven't had an email from him but bex if you are listening do get in touch about your pension give him time he's a he's a busy man simon come on you can't expect him just to like that you know if you like our podcast like beckham rate us wherever you found us helps other people find us too asterix not entirely sure beckham is a fan but we like to think so