London's RICH - Are the street still Paved with Gold?, Will Brown's policies end "the very rich feast" ? Options

[DrBubb]

"So Dick got safe to London, and was in such a hurry to see the fine streets paved all with Gold...
....in London, whom they afterwards treated with a very rich feast."
= = = = =

(excerpts from a FS article):
THE RICH FEAST IN LONDON HAS LEFT A PROPERTY BUBBLE IN ITS WAKE
Is this going to be followed by a Huge Hangover and an attack on the Super-Rich?

.

. . .
THIS is where things stand now:

"The former Chancellor Gordon Brown, who was one of the principal architects of the so-called miracle, has taken over as the new prime minister. He is proud of the decade of strong growth, but few beneficiaries of that growth have been willing to look behind the curtain, and see how it has been engineered. The UK economy is in a debt-bloated bubble, which has well-suited the wealthy, and those many workers and professionals in the City and Estate Agencies that have benefited from the rapid growth in asset values (and debt) which have brought matters to their current over-stretched condition. But so-called miracle has not delivered much at all in the way of increases in the disposable incomes of the average voter. Such income gains as have been seen, have been mostly eaten up by higher taxes, something that Brown as Chancellor had proved expert at increasing with various clever stealth methods. Pensions in particular have been hard-hit by taxes he introduced. And many have turned to property as a place to park their pension money. They are hoping that a huge cyclical upswing, which has already lasted twelve years, will defy all previous cyclical indicators, and be maintained indefinitely. That's another heroic assumption, going along with all those who have taken on massive debts, that it is safe to borrow huge multiples to their incomes."

2/
"There is beginning to be some antagonism towards the wealthy. Rising property prices are not an unalloyed blessing. Other prices, for things like restaurant meals, and personal services have also risen in the wake of rising rental costs. And for those who have not yet bought (because they were too young to "get on the property ladder" before it rose out of sight), and for those who sold out 2-3 years ago, when property was just beginning to stretch beyond historical levels of affordability, the high prices create stress, and delay important life-decisions, like "settling-down" and starting a family. Many of these people now have a feeling of being dispossessed by the property boom. And the dispossessed, as a percentage of the political electorate is rising in number, as older property-owning folk pass on, and are replaced by new voters as non-property owners reach voting age. They are a force not-yet-exploited, but one that the political parties, are increasingly likely to turn to, to win votes in future elections.

In Britain, there has recently been a lively debate about the tax advantages afforded to private equity investors, who pay small long term capital gain taxes on gains. This seems like favoring the rich, who then wind up paying a lower percentage of taxes than their secretaries and their cleaners. Rumblings about how the British approach to taxing those domiciled elsewhere continue to be heard from time-to-time, but as a Chancellor to PM Blair, Brown never pushed too hard to close these loopholes. Might things look different to him now that he occupies number 10 Downing Street himself?

We are already getting some signs that New Labour under Brown may take up different causes than New Labour under Blair. Once known as the stealth Chancellor, Mr. Brown is capable of becoming the Chameleon Prime Minister, turning against policies that he supported as Chancellor, on the basis that it is politically expedient to change his stripes."

...more: http://www.financialsense.com/fsu/editorials/2007/0705.html

= = = = =
CLONES
HPC- : http://www.housepricecrash.co.uk/forum/ind...showtopic=50652
CC-- : http://www.creditcrunch.co.uk/forum/index.php?showtopic=1455
GHPC:

[DrBubb]

Flat deal will mean tax savings for Brown
By Christopher Hope, Whitehall Editor == 07/07/2007

Gordon Brown gave his £700,000 flat in central London to his wife Sarah weeks before he moved into 10 Downing Street, The Daily Telegraph can disclose.

The Brown residence in Great Smith Street, not far from the Commons

The Prime Minister’s wife then cashed in on recent soaring property prices by taking out a special type of mortgage against the value of the flat with a private bank.

Downing Street sources said that there were no tax implications from the transaction and insisted that Mrs Brown had borrowed against the flat to give her more financial independence.

However, tax experts pointed out that the change of ownership could save the Browns thousands of pounds in income tax if Mrs Brown decided to rent out the one-bedroom flat now that the Browns live in Downing Street.
. . .
Estate agents said a good quality one-bedroom flat in the same building could sell for about £700,000.

Janet Coe, a manager at Tuckerman Estate Agents, said: “If anything came up we would sell it. No problem.”

Tax experts said that if the Browns rented the property for £2,500 a month, bringing them £30,000 a year, the transfer of ownership could save them up to £7,000 a year in income tax.

This is because Mrs Brown would have a £5,225 income tax allowance, as well as paying at the lower 10 per cent and 22 per cent rates.

If Mr Brown still owned the flat he would be taxed at 40 per cent of £30,000 — £12,000.

...more: http://www.telegraph.co.uk/news/main.jhtml...7/nsarah107.xml

[HollandPark]

(here's Will Hutton with a watered-down, less comprehensive grasp of the issues):

Dinner table chat about house prices turns nasty

Will Hutton / Sunday July 8, 2007
The Observer

At a gathering of my wife's family last weekend I was sharply reminded of the generation gap when it comes to property. The over-35s are winners with their cushion of equity, which grows vast the nearer they are to pensionable age; the under-35s have debts that make them feel fearful at becoming losers in the property jungle.

I had conversations that I am sure are reproduced all over the country. A mother spoke of her fears that it would be impossible to move to a larger flat in the same neighbourhood to accommodate a second baby. Another said that my generation did not understand how hard it was for young people to get started these days without well-off parents.

Britain has created a monstrous house-price-inflation machine that is beginning to devastate lives, segregate communities and dominate our culture. And do serious damage to the process of wealth generation. Last week's rise in interest rates to 5.75 per cent, with further interest-rate increases certain, is the price of a freedom to borrow.
. . .
But the mood is changing. It seems the middle class has begun to decide that the current mayhem is not in its interests. Privately some Tory policy-makers are toying with finding ways to use the tax system to slow down house-price inflation, pondering whether it really would be political suicide.

The Labour party has been paralysed, writing off taxing as leftist and impractical. But the politics of the house-price inflation machine are beginning to change. It may have made many over-50s very rich, but for the rest the social division, the private heartache, the risks of massive indebtedness and yet dearer houses make no sense. Right-wing policies have created a world we don't like. The pendulum is swinging back.

...more: http://www.guardian.co.uk/commentisfree/st...2121360,00.html

[DrBubb]

Jim Puplava has put the article on his StormWatch page...

Financial Sense Storm Watch Editorials
07/09 General Motors' Market Leadership Has Come Courtesy of the PPT by Eric Englund
07/07 Collateralized Debt Obligations: The Financial "Love Canal" of the 21st Century by Ed Steer
07/06 Garbage Bonds & Bonfires by Jim Willie, CB
07/05 The American Inflation: Part 1 by Jordan Roy-Byrne
07/05 The Rich Feast in London has Left a Property Bubble in its Wake by Michael Hampton
07/03 Global Exodus from the US Dollar in Motion by Gary Dorsch
07/03 Investment Landfill: How Professionals Dump Their Waste On You by Paul Tustain

...see: http://www.financialsense.com/stormwatch/main.html

= = =

"Interesting how Will Hutton's watered down, and half-baked article gets more attention,
than the hard-hitting and supported arguments on Financial Sense"

PROBABLY, i need to write articles with shorter sentences

[Cuthbert Calculu...]

It's nothing to do with the length of your sentences, dearie, nor indeed the quality of your writing, which is excellent, but the platform that your writing is on. Welcome to the media. Hutton is in a mainstream publication with decades of history, if not centuries; he has a considerable reputation and, in journalistic terms is a minor celebrity. Your article is on an alternative website. So he gets the attention.

The beauty of the internet, however, is that the power of the mainstream is being diluted.

Hopefully, the same thing will happen with governments.

But the recognition from Puplava is excellent. Congratulations.

[DrBubb]

thanks for the comments. Fr.
but i can go on improving the writing anyway

[DrBubb]

(this is from The Times, June 19th- which seems AGES AGO by now)

June 19, 2007
Spree by super-rich raises prices even for first-time buyer
Gabriel Rozenberg and Helen Nugent
An international elite is pricing British citizens out of the housing market with the help of government tax breaks for foreigners living in the country, figures reveal.

More than half of London’s multimillion-pound houses are now bought by “nondoms” (nondomiciles) who, unlike most British citizens, are able to use offshore trusts to pay far less stamp duty.

Economists say that the new boom in house prices in the capital fuelled by foreign money is rippling down the market, making it harder for first-time buyers to get on the property ladder.

Gordon Brown will come under pressure today to justify the rules, which critics claim create a double standard. The Government exempts nondoms from tax on their international earnings, even though in most cases their home countries do not tax them either

While it tends to be wealthy foreign citizens who take advantage of the rules, many British-born people can also declare themselves nondom, on the ground that their family origins and “cultural ties” lie overseas.
. . .
Figures from Savills, the estate agent which specialises in properties at the top end of the market, show that some 68 per cent of properties selling for more than £5 million last year went to foreign buyers.

The Liberal Democrats have described the situation as grossly unfair, saying that the Chancellor has avoided the issue out of fear that tackling it would spark an exodus of wealthy foreigners from the City, undermining the booming financial services sector.

Vince Cable, the Liberal Democrat Treasury spokesman, promised to close the loophole that exempted nondomiciles from tax on their British homes. Under his proposals, which will be expanded upon in a report by the Lib Dem tax commission today, nondoms would also lose their status if they stayed in Britain for more than 17 years.

...more: http://property.timesonline.co.uk/tol/life...icle1951400.ece

[DrBubb]

Thei podcast comes from a VI:
Here, in this podcast recorded by property website BuyAssociation, Judith Heywood,
Times deputy property editor, and Yolande Barnes, Savills market guru, delve deep into the reasons behind the city's runaway success. :
http://property.timesonline.co.uk/tol/life...icle2000653.ece

"practical impartial advice" - yeah, sure.

"The trend-bucking growth in London house prices has been one of the biggest property stories so far this year. While the national figure for annual house price inflation has hovered around 10% (according to Nationwide figures), in prime central London, by contrast, the most expensive homes have risen in value by an astounding 30% in the past year, according to Knight Frank. The average London house price now exceeds £335,000, according to Land Registry figures out today; for England and Wales the average is £180,594."

They admit that it is many people from overseas- "some working in the city... investing bonuses"

= = = = =

Typically, it is a LOOK BACKWARDS, with nothing intelligent to say about the future.

With trying to be polite, the interviewees need a brain transplant, because portions of their brains are missing.
AND there is a big hole in the discussion. They havent spoken about underlying dynamics in any depth at all (as per normal).
Aggressive lending, and speculative buying, would lie at the heart of any balance discussion. They avoid these issues,
noy wanting to frighten off possible future buyers.

The CW Radio podcast is much better than this sort of pure-vested-interest-bullcrap

[DrBubb]

MORE OF THIS is coming... you can bet on it!

Tucked away in the Sunday Times a piece of earth shattering imporrtance - especially for LLs.

http://www.timesonline.co.uk/tol/comment/c...icle2076274.ece

He’s barely been prime minister for three weeks, yet Gordon Brown is already getting a taste of his own medicine. He’s had his first row with the chancellor.

Brown and Alistair Darling have disagreed over plans to change the tax rules on buy-to-let properties. The prime minister wanted to axe some of the financial advantages enjoyed by landlords, and discussed the plan with housing advisers and Treasury officials. But Darling insisted it would lose votes.

“I’ve had my first row with No 11,” Brown told Labour supporters last week, while a Treasury source explained: “The idea would be electoral suicide. Alistair Darling is against any tax on buy-to-let properties and will not move on the proposal.”

[Sir Humphrey]

“I’ve had my first row with No 11,” Brown told Labour supporters last week, while a Treasury source explained: “The idea would be electoral suicide. Alistair Darling is against any tax on buy-to-let properties and will not move on the proposal.”

Or to paraphrase; the Treasury is against BTL tax reform. It will be interesting to see if the "clunking fist" lands on it's former benefactor.

[DrBubb]

Shock-Horror! The FT is talking about raising taxes on Homeowners, including Non-Domiciles

Be brave, prime minister, and tax property, FT article

Until 1960 income tax was collected on the notional rent that accrued to owner-occupiers of land and property, providing a justification for the relief on mortgage interest that outlasted it by more than 35 years. Abolition of the tax did not remove the case for treating non-cash benefits arising from owner-occupation in much the same way as other income from capital. We sometimes hear the suggestion that capital gains tax should be levied on owner-occupied housing, but it is easy to see that this would act as a super stamp duty locking many more people into unsuitable housing. Given that most house prices can be estimated relatively straightforwardly, a much better idea is to levy a property tax on the capital value.

If one assumes a notional return of 4 per cent per year, a tax at 1 per cent of the capital value would amount to a tax on notional income at 25p in the pound. Such a tax levied last year on the basis of 2005 values would have delivered revenue of £33bn, compared with council tax of £22bn and about £5bn from stamp duties on residential property. So a change to a 1 per cent tax would allow room for a cut in other taxes, such as a cut in the standard rate of income tax by 2p in the pound.

But the redistributional effect of the tax would be substantial. Although houses are banded for council tax purposes, the tax bill increases much less than in proportion to the value of the house. A property tax would be collected from non-domiciled people with housing in Britain as well as from conventional residents.

..more: http://www.ft.com/cms/s/cb0abc70-3bd9-11dc...00779fd2ac.html

[DrBubb]

NEW RICH GETTING HAMMERED - says Coxe

Don Coxe nails it here, in this July podcast:
http://events.startcast.com/events/199/B00.../eventframe.asp

Listen to his choice comments about the Property market in the UK.
"worse excesses than the US" - give the cycle time, friends, things will come your way soon

His story, "For whom the Toll Bills", points out the fallacy, about high-end property
being immune to a slide. The homeowner/speculators who bought high-end used Alt-A
(interest only) mortgages to buy their expensive homes, and couldnt afford to fully
furnish them. The NEW RICH are the biggest losers in this crisis.

WE MAY see the same thing in the UK

[No6]

Brown and Alistair Darling have disagreed over plans to change the tax rules on buy-to-let properties. The prime minister wanted to axe some of the financial advantages enjoyed by landlords, and discussed the plan with housing advisers and Treasury officials. But Darling insisted it would lose votes.

“I’ve had my first row with No 11,” Brown told Labour supporters last week, while a Treasury source explained: “The idea would be electoral suicide. Alistair Darling is against any tax on buy-to-let properties and will not move on the proposal.”

Interesting one. In what way would this be electoral suicide? How many BTL's are there and how many vote New Labour anyway? There are millions of priced out FTB's with votes, but I have a feeling that these don't count in our democracy because they probably don't vote anyway. Disillusioned by there being nothing worth voting for.

[DrBubb]

REALITY begins to hit

Investors shun sterling as credit implodes

Global investors have begun to shun the pound as the credit crunch spreads through the UK financial sector and raises the risk of a hard landing for the British economy.

. . .

Marc Ostwald, an economist at Insinger de Beaufort, said reliance on the City left the UK exposed to the downdraft of the imploding credit boom.

"There is definitely a risk to growth after all this, given our dependence on financial services and the sheer volume of debt we've accumulated," he said.

Household debt has reached a record 160pc of disposable income, higher than America. The UK current accound deficit is 3.4pc of GDP. The budget deficit is stretched to its limits at around 3pc of GDP, leaving no leeway for fiscal easing to cushion any downturn.

"I'm afraid this may be worse than the 1998 sell-off because we're right at the top of the cycle, tipping down the hill. The only question is how fast we go down. This time the world no longer has imported disinflation from China, so it's harder for central banks to cut rates," he said.

@: http://www.telegraph.co.uk/money/main.jhtm...sterling117.xml

[DrBubb]

HERE COMES THE HAMMER -
about to pound away at that Rich-Person's-Complacency towards London
==========

Tories Would Increase Iht To £1million, paid for by a £25k levy on non-doms
and raise stamp duty band for FTBs to £250,000

http://news.bbc.co.uk/1/hi/uk_politics/7021357.stm

Shadow Chancellor George Osborne says a Conservative government will increase the threshold for inheritance tax from the current £300,000 to £1m.
He will also scrap stamp duty for first time buyers on homes up to £250,000.

The £3.1bn cost of increasing the inheritance tax threshold and the £400m bill for scrapping stamp duty will be paid for by imposing a £25,000 charge for non-domicile taxpayers

"There are between 150,000 and 200,000 people who live in this country but who do not pay tax on the money they make abroad, he said. Prime Minister Gordon Brown has been under pressure from his own party on tax breaks for wealthy "non-domicile" residents"

NON-DOMICILED TAXPAYERS
+ Live in the UK and may even have UK citizenship
+ Have strong allegiance to their country of origin
+ Pay tax only on UK earnings, not on profits from businesses abroad
+ Not the same as non-residents, who have tax-free status if they do not exceed 89 days a year in UK

How many of those 150-200,000 are going to stick around to pay this new tax?
I can forsesee that tens of thousands of those expensive new homes may soon be for sale,
when this tax comes through.

[happylarry]

How many of those 150-200,000 are going to stick around to pay this new tax?

Most of them? £25k capped tax is surely not a lot for people claiming non-dom status as they will be really wealthy, that flat rate equals normal taxed income of £83k which is not a massive amount. Can't see why they would want to live in the UK though, plenty of nicer places around the world to enjoy your income from elsewhere.

[DrBubb]

Most of them? £25k capped tax is surely not a lot for people claiming non-dom status as they will be really wealthy, that flat rate equals normal taxed income of £83k which is not a massive amount. Can't see why they would want to live in the UK though, plenty of nicer places around the world to enjoy your income from elsewhere.

right.
and many of these folks only live in london for a few months each year,
so they may want to get under 89 days per annum, so they can pay zero tax

[happylarry]

right.
and many of these folks only live in london for a few months each year,
so they may want to get under 89 days per annum, so they can pay zero tax

If it is that easy then guess they might just do that, they would still want a house for three months, people have holiday homes for less time?

Paying £20k tax via PAYE just now and might hit 25k soon enough, wish us residents had capped tax, harder you work the more they take.

[DrBubb]

Now there's a "Bash the Rich" protest planned for Nov.3rd:
http://forum.globalhousepricecrash.com/ind...=23988&st=0

[Soldintime]

If it is that easy then guess they might just do that, they would still want a house for three months, people have holiday homes for less time?

Paying £20k tax via PAYE just now and might hit 25k soon enough, wish us residents had capped tax, harder you work the more they take.

Well the new 30K non dom tax is hitting me. Having lived in the UK for 9 years I have moved all my investments abroad, from share trading, to property investing. Whilst still running a business in the UK.

£30K or having my overseas income taxed is quite a bit. However if you opt for the 30K both me and my partner will also loose our personal tax allowances. The way my UK business is run is through a husband and wife structure. This is another target for Labour. So as a middle class non-dom in the UK I am going to be £45K-£50K worse of a year through the tax measures. I must agree the non-dom rule is not fair compared to british born. However I am moving out of the UK as there are plenty of other places in the world with low taxes and better quality of life, british born people can do the same. Plus after 9 years I need a change of scenery.

Having enjoyed the non-dom rule for quite a few years I can't bear it to pay high taxes.

PS did you know Phillip Green has abused the 90 day rule to the max over the last few years where the days of travelling in and out of the country did not count. He managed to get 45 4 day working weeks by flying in early monday morning and late on thursday. This is rule will also be changed in April, the days off travel count now as well. Hence Arcadia is expanding in the US as Green needs to find reasons to spend it less in the UK. You might also seem him move all his shares to his wife Tina whom he completely trust as she owns already 50%, she lives fulltime in Monaco.