May 13, 2024 • 29 mins
Welcome to the Essential Property Podcast. In episode 45, hosts Paul Samuda and Amanda Woodward, with a combined 45 years of experience in the property market, explore the intricate relationship between politics and the residential property market.
Join Paul and Amanda as they focus on how international political events influence the domestic market. They provide valuable insight into how disturbances in the Middle East have impacted the property market in Stoke-on-Trent, Newcastle-under-Lyme, and Crewe.
Discover the domino effect that geopolitical unrest, such as the invasion in Ukraine, Brexit, and the Israeli-Palestinian conflict, can have on landlords, tenants, and the property market. Get expert advice on considering these political implications, particularly in decisions around mortgages and potential changes in interest rates.
From the legislative perspective, Amanda sheds light on the financial challenges for landlords due to implementation of Section 24 and the Renters’ Reform Bill. Learn how such political moves could inadvertently disadvantage landlords and affect the property market.
In the throes of unpredictable interest rates and economic climate, Paul shares that property investors need to adopt a more proactive, well-informed approach to their property acquisitions and sales. Understand how to factor in potential taxation changes and choose the most appropriate mortgage products.
Finally, link your personal goals to your investment strategies. With an eye on sudden market turnabouts, make well-informed decisions, whether you aim for legacy, retirement, or residual income.
Tune in to this engaging episode and navigate the world of property investment amidst a politically charged and constantly evolving global context.
*** Our deepest condolences extend to all the nations grappling with conflict and the devastating impacts of geopolitical turmoil. Our heart goes out to the innocent civilians enduring unimaginable suffering during these challenging times. May peace and healing find its way to those affected, and may the world unite in efforts to bring an end to such sorrow and strife ***
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
(00:03):
Hello, and welcome to the Essential Property Podcast with your hosts,
Paul Samuda and Amanda Woodward.
With 45 years of combined experience in the world of property buying,
selling, investing and developing,
they are here to share with you their knowledge in the Stoke-on-Trent,
Newcastle-under-Lyme and Crewe property market. Let's get started.
(00:26):
Music.
Hello and welcome to another episode of the Essential Property Podcast.
And today's episode is titled, How Does Politics Affect Residential Landlords?
And the purpose of this podcast was on the back of a conversation this weekend
(00:47):
between Paul and I, where I asked the question, how does the very,
very sad disturbances and disruptions in the Middle East affect UK property?
And an hour and a half later, Paul is still explaining to me how it affects UK property.
So I said, right, come on, it's episode time. Share your thoughts,
(01:08):
your understanding and your theories, I guess, with our listeners.
And I will ask you some questions in terms of how I process that,
which hopefully will be the same as questions that our listeners might want to ask as well.
So Paul, how does the very, very sad and tragic events taking place overseas
affect us all the way back here in the uk as landlords i mean it was it was quite a.
(01:30):
Stunning question and very relevant i think i think
my view and this is not meant to be me giving a pitch about my politics it was
just a very interesting subject which i thought was relevant at the time and
i thought let's let's talk to our our listeners and i think politics matters
with everything it doesn't matter whether it's here at home in your town or
city or nationally or internationally,
(01:53):
you border, you raised it on the back of the bombings and the fighting that
were happening in the Middle East.
And I think my immediate answer is that everything matters.
And we may not immediately see the effect of it day after tomorrow,
but it matters in the medium term, the coming months and years,
(02:13):
and sometimes long term, sometimes for better, sometimes for worse.
Well, I think you only have to look at the way landlords have been treated by
our own government and the interaction and the taxes and the changes to know
how important politics is.
And I think as landlords, sometimes we underestimate that. We underestimate
the role it plays and why things happen.
(02:34):
And then more recently, if you think about the invasion in Ukraine and the spike
in energy prices, the invasion in Ukraine was a geopolitical event.
So it was overseas it was driven
by politics and the reactions the americans
got involved the europeans got involved the brits got involved
to defend ukraine and whether you wanted to vote for that or not it just happened
(02:58):
and then all of a sudden right you know petrol prices oil prices rocketed what
we paid at home in terms of gas electricity more than doubled in a very short
space of time so if you're a landlord if you're an hmo landlord then you're
going to be affected by that.
If you're a tenant of an HMO landlord, you're going to be affected by that because
the HMO landlords probably put up their prices.
(03:20):
So that's a very, very simple example of what could happen.
And when there's a disturbance or an outbreak of war or suggested war in some
part of the world, the first people to react are actually the money people,
especially the stock market. Those are the first people to react.
And you You sort of take your cue from there. There's either a sell-off or there's a push up in prices.
(03:44):
And you look at, well, what stocks are going up in price?
Oh, it's the oil company. So they're going up in price because oil prices are going up.
But property prices or property companies, sorry, may go down in price because
there's an expectation that interest rates might go.
So a very convoluted answer to
your question is 100% we
(04:06):
get affected as residential landlords even though there
are activities that happen halfway across the
world or in another country and how important
is that in terms of our planning if i said on a scale of one to ten ten being
absolutely very important you should think about it every single day of the
year and one being don't worry about it i would say we're a good seven so you
(04:32):
should think about it more often than not.
And why do I say SEP? It's because every action, there's a bit of a reaction.
It always comes back to money. If you're throwing money to help someone fight
a war, that money has to be paid for.
And as taxpayers, we end up paying for it. And if the government overspends,
that money has to be repaid, or more money has to be reprinted,
(04:54):
that pushes up inflation.
And that affects us because they push up interest rates.
So we've experienced, if you think about it, from Brexit, another political
decision, all the way through to what's happening in the Middle East.
And that includes COVID, that includes Ukraine, lockdown.
We've been affected in some shape or form.
(05:15):
Be interest rates, be not being able to rent short stay.
We've had to pay more for our prices because prices have rocketed up because
people have said, my goodness, during lockdown, I hate this.
Let me go and buy a bigger property.
The government has stimulated the economy. They've stamped duty.
There's a rush to go and buy property.
So just over that last period from Brexit all the way through to the Ukraine
(05:40):
war and now this Israeli, Palestinian,
Iran, we've been affected as landlords in some shape or form to the point where
landlords are thinking of selling because they said, I've had enough.
Maybe I've made my profit. I need to get out.
Or it's no longer profitable because interest rates have gone too high.
They've come out of fixed rates and it's now untenable.
So yeah, I would give it a good seven that we should be thinking about it on
(06:03):
a regular basis in terms of the decisions we make, certainly in the medium term.
And the biggest decision any landlord can make is if they have a mortgage.
If you don't have a mortgage, then it's not a major problem.
But if you have a mortgage and a good 60% of landlords have mortgages,
if you have a mortgage, then you're always interested in the interest rate.
The other thing is just the local politics.
(06:24):
Politicians, they have one reason for being, and that's to garner more votes,
to be voted back into power.
And politicians, whether you believe it or not, will do just about anything
to get the votes. I think we've certainly seen some examples of that,
haven't we, in recent years?
Yeah, no question. I mean, that's all they do. They just want to get votes.
And if they already have people in the bag, let's say, but there's a bunch of
(06:48):
people that are sitting on the fence, then they'll write,
dare I say, lie or repackage in order to get those people who are sitting on
the fence to vote for them.
And worry about the implications afterwards. And that had seemed to have happened
more and more and more over the last few years.
And it would seem that every single quarter,
(07:12):
there's something extremely political that has happened that has affected our
country and in turn affected property either directly or indirectly.
Either positively or negatively.
More recently, it's been more negatively than positively. So,
yeah, I think, you know, maybe 15 years ago, wouldn't have to bother about it too much.
But I think certainly in the last, you know, five plus years,
(07:36):
I think it's gone up in terms of level of importance to think about the politics
of this nation and international politics as well.
And what would be some examples of the different sorts of political announcements
that are being made to the different demographics of society?
I think a really, really obvious one that hurt landlords and,
(07:56):
you know, any landlord that had a mortgage would remember this was Section 24,
where all of a sudden, you know, George Osborne had said, we don't like the
idea of you as a landlord being able to make the interest you pay tax deductible.
And one of the main reasons for
that is because landlords were i think
(08:19):
the economic term it was is crowding out
local first-time buyers so if you imagine you're a landlord and you see a house
that you quite fancy buying you'll rock up and you'll make an offering accepted
in the full knowledge that you can get mortgage a first-time buyer goes out
they've got a limited budget no flexibility ability and chances are,
(08:39):
if housing needs a little bit work,
we're going to walk away or we just won't be able to compete with it at all.
And George Osborne said, we need the first-time buyer voters.
People are complaining like crazy. They can't afford to buy.
So how can we give them a little bit more of incentive?
Let's give them some money. Let's help them with their deposit.
But also let's disadvantage the landlords by taking away one of their incentives to purchase.
(09:04):
And that's, you know, they can deduct the interest from the income.
He sort of phased it in over three or four years.
But it was a very, very expensive exercise for any landlord that wasn't incorporated
and had to now work out what the interest liability was going to be to the point
that you could actually not make a profit but still end up paying tax.
(09:26):
That's a simple example, siding on the side of first-time buyers,
incentivizing first-time buyers and disincentivizing landlords.
And that's a political decision.
Sure. And I guess that was the start of almost the kind of attack,
wasn't it, on landlords, or certainly in my career of investing,
that was the first quite pivotal decision where you think, hold on a minute,
there's something quite significant at play here.
(09:48):
And then I guess more recently would be like the renter's reform bill,
in terms of how that will also generate votes for renters.
Yeah, absolutely. I mean, we as landlords look after almost a quarter of the
nation, certainly a strong fifth of the nation, or approaching a quarter of
the nation, in terms of keeping a roof over their head.
So, a substantial number. Now, if it's perceived that that segment is complaining,
(10:14):
and we know there's many a good landlord.
And there's a handful of bad land, but if it's packaged that all landlords are
a bit questionable and they're taking advantage of renters,
then if you can garner a large percentage of what could be 10 million votes,
that could swing an election.
(10:35):
I could swing the election. So you can say, okay, we're coming on your side.
We hear you. We hear your pain. Let's kneecap some of the landlords.
Let's give you more rights. Let's enable you to bring your pets.
Let's enable you to not be kicked out, you know, without a good reason.
Let's give you all these rights and let's hamstrung the landlords,
(10:57):
you know, and then maybe you'll vote for us.
And that's a political decision. It doesn't matter how it's packaged.
It's a political decision. There's people get around the table and say,
look, we could win office.
And of course, I'm not saying that it's not the right thing to do all of the circumstance.
Sometimes, you know, politicians do make good decisions, but it's the politics
of the decision just to garner votes, which can be a little bit upsetting because
(11:20):
it doesn't make any sense.
Now, the other thing that happens on the back of that is that sometimes politicians, they,
forget about the behavioral aspect of their decisions. And I'll give you two examples of that.
The most recent example was, let's say, lockdown and COVID.
And all this money was being given away because it was a very extreme situation.
(11:41):
People couldn't go to work.
And they said, let's cut staff duty as a bit of an incentive because it's going
to slow down the property market and we need to keep that moving.
But people were sitting in their houses and their apartments and looking around
and think, I absolutely hate this place.
It's too small. There's no garden. I need to trade up.
Combine that with the stamp duty, and you now have a runaway property market,
(12:04):
which was never the intention when those things were put in place. Never the intention.
So you've actually made the plight of the first-time buyer even worse,
and the plight of the renter even worse, because now they definitely can't afford
to buy, especially if they're in the south of the country.
So the behavioral side, the economics is just a little bit of demand and supply,
and working it out based on particular theories and what's happened in the past
(12:27):
and how as many people have.
But the behavioral side is the psychology.
And do you remember they used to talk about revenge travel?
Revenge travel was a term that had never, ever existed until post-COVID.
And all of a sudden people said, what, you told me I can't travel.
Well, I'm going to travel as much as I want to now that I'm free to do so.
(12:47):
And that was never in the equation when the politicians were trying to work
out what they should do, what they shouldn't do.
And that's the scary thing, that decisions can be made and the implications
end up being an absolute disaster.
And sometimes it feels worse off than the way you were before.
So I have a question for you.
There's two ways that you can go with this.
(13:08):
You can take heed of the information that you're sharing.
You can read up on it. You can listen to it. You can try to process what the
government is doing, both both nationally and globally.
Or you can put your hands over your ears, say, la, la, la, I can't hear anything,
and continue to run your business as they call it a kind of ignorance is bliss type strategy.
(13:31):
I think it's obvious which one you would recommend.
But what should the average landlord do? Let's say you have between one and
50 properties. You're a small corporation,
How do you take this information? How do you process it? And what actions do you take thereafter?
Yeah, that's a great question. That's a great question. We have always said
on our podcast that we take the view of property as a long-term investment.
(13:53):
And I think what you're saying in the final analysis, if you're looking at property
as a long-term investment, does all this matter in the end?
Because if you look at the last 100, 200 years, property prices have always gone up.
It's always outperformed the average answer. So, and there's always been political
machinations over the last few decades and wars and oil crises,
(14:17):
but probably prices are still going up.
So does it all, does it really matter at the end of the day?
I think long-term, no, it doesn't. I think everything reverts to the mean.
So how that is interpreted is that if probably prices grow by an average of
4% a year over the last 50 years, chances are it's going to grow by 4% of the
year over the next 50 years. Now, it's not going to be in a straight line.
(14:39):
It's going to be 10% one year, 2% another year, 10% another year,
minus 3% another year, but it's going to average at 4%.
So you could say it doesn't actually matter. But I think what has happened more
recently is that in the shorter term, and let's take short, a year to two years,
some of the changes have been quite intense.
(15:02):
So it's very easy for us to say, tough it out, think long-term,
think in terms of 10-year tranches, and you're losing 350 pounds a month on
a property because the interest rates have gone through the roof.
Hold on to it, lose 350 pounds a month, lose somewhere 8,000 pounds over the year, it'll even out.
(15:23):
But if inflation's gone up, if your own home, you're paying more for your own
home, if food and the table has gone up, something has to give.
Something has to give. So if you look at lockdown, how extreme lockdown was.
So some of the political decisions have been very, very, very extreme.
And the implications of that have been a lot larger than we've ever seen before.
(15:46):
If you're a renter, let's just say, you're now paying in the last three or four
years, you're probably paying in some areas 30% more in rent than you were before.
So it could be consuming over half of your income, whereas before it was only
consuming maybe a third of your income.
(16:07):
And that's huge. That's huge.
So in answer to your question, ignorance is bliss. Yes, I agree.
Long-term thinking, yes, I agree with that. But the short-term pain has become
more acute from some of the decisions that have been made.
They're talking about if you're doing Airbnb, if you have second home,
(16:27):
they're talking about just charge you an extra 200% on your council tax.
Whether you live there, don't live there, whether you rent it,
not rent it, they're taking away your ability to deduct the interest from the
income. Even for Airbnb now, that's now gone into law from 2025.
So all of a sudden, those political decisions cut you off at the knees.
(16:50):
So the only thing you're dependent on is, okay, let me make a small profit or
a loss every year and hope that the value of the property goes up over 10 years.
And that is a little bit more risky than we signed up for. So that's my answer
to that question, Amanda.
I think the other reason why it's important is to understand is because I'm
sure there's going to be some people that have serviced accommodation or Airbnbs
(17:12):
who are not going to be aware of that change in interest deductions options
or non-interested options until they file their tax return and their accountant
says, okay, you can't claim for this anymore.
Sorry. Okay. My profit is no longer what I thought it was. So being ahead of
the information or certainly reading as it comes out, it is important at the
(17:33):
end of the day, no matter how bad that news might be in the short term.
Yeah, absolutely. Absolutely. And this whole thing started on the back of your
question about about the activities in the Middle East, if the war widens and
becomes worse, that fuels an increase in oil prices, that fuels inflation,
that then means that interest rates aren't going to come down anytime soon,
(17:56):
and that's going to impact your cash flow if you have a mortgage.
If you don't have a mortgage, then happy days, no problem. Now,
you have to think about that.
You've got to think about, do I fix now? Do I go for a tracker or a variable?
Do I go for a two-year fixed or a five-year fixed. And all that is based on
the climate, the political climate, the geopolitical climate,
(18:18):
the economic climate, as a result of political decision.
Israel sort of bombing Iran is a political decision. Iran bombing Israel is a political decision.
So it all stems from politics. It all affects us in some shape or form.
And we have to, if we don't act or react to this in some instances,
then we could get caught in a crossfire, literally, and have an asset which
(18:40):
is either deteriorating because we're not making any money,
We can't invest in that asset. You know, if you think about the politics of
the green politics, and let's say there's no more gas boilers after 2030,
or EPCs, I mean, all those are political decisions, and they have implications for us as landlords.
If you can't plan ahead and think, okay, what do I do?
(19:02):
Do I take the hit now, or do I wait and see what happens if another government
comes in and changes that?
This is stuff here and now that we have to think about. And I'm saying,
whereas before it might have been a three out of 10 in terms of importance,
I think it's more a seven out of 10.
We have a new government, a Labour government, if you think about it.
My friend Angela Rayner is going through the mill at the moment because she's
(19:24):
been nubbled by the Tory press, ironically, over property.
Now, well, you know, I mean, you know, as I said, I'm not going to share my
political views, but I think a lot worse has been done.
And you know there haven't been police investigations
but anyway she comes into power let's say labor comes into power yeah and you
(19:49):
know she may have a little bit of an attitude and maybe she would want to play
softly softly with some of the property boys and she says no i'm not having
it right you gave me such a hard time at my little counselor counselor house house.
So all you second and third homeowners and you big old landlords,
I'm going to vote to squeeze into the Pipstrom. That happens.
(20:12):
You know, we forget that politicians are also humans and they bear grudges.
They bear grudges without a shadow of a doubt.
So I think one of the things that have come out of it, I think people should think more about it.
I think people should understand the politics of promoting for votes.
And you've got first time by a vote, you've got pensioner votes,
(20:34):
you've got the boomers, you've got their votes, you've got the renter vote,
there's all these little niches where they want to get votes so they can win
their local elections or their national election.
And that has an implication for us, generally speaking.
You know, this is a broad generalization. Landlords are planning for the future,
planning on retirement.
(20:55):
And I would guess majority probably vote conservative.
So because everything, we've already got a landlord vote, so we can take piss
a little bit and they also vote for us, but we don't have the rental vote because
they're a little bit poorer and we want to get in their vote.
And we want to try and help them get house.
So let's compromise with our landlords who, whose vote was already in the bag.
(21:17):
And let's try and get the rent-a-vote and the first-time buyer vote which isn't
in the bank and that's the way the political game is played whether you like
it or not you know if you've got a local councillor who you know complains to
the local mp it goes to the house of parliament and says that abnb's all over
the place there's all these rich landlords coming in and buying locals.
And my little sally who's lived in there in the
(21:38):
village for you know 20 years can't buy a
first house you know they scream that enough
times and they'll get change you know they'll get
they'll get change so yeah it it affects us
and we do need to think about it a friend of mine sent me
a news article only a couple of days ago of a
conservative mp who we actually went to school with many many many years ago
(22:00):
in london and they're a local councillor or they're the conservative mp and
And they are doing a big campaign on why there should be no more HMOs in their
constituency and very anti-landlord.
And so it's going to be a tough day on election day in terms of where your loyalties
lie, because I think, you know, it's very hard to be loyal now because we're
(22:23):
just not sure of what to do going forward.
Where should you get your information from? So if you're looking to get good
quality political information or the political topics we've been discussing,
where would you read to get something that's fairly non-biased, that's intellectual,
that's not media-driven?
Where do you go? Another quick question. And the reality is that the media...
(22:48):
Is very partisan. They're very biased towards the left or the right.
So the Telegraph is a right of centre paper.
So they'll say and talk about things that are supportive of property,
and they say, you know, clamping down on landlords is harsh and you shouldn't do that.
Then you might have another paper who are left of centre that might be a little
(23:09):
bit more in favour of kneecapping the landlords.
If you're going to, you know, The Economist is very, very good to give quite a neutral view.
I get the Financial Times of the weekend and they had a great article this weekend
in terms of do you fix your mortgage or not with all the trouble that's happening
around the world, which range for interest rates going.
(23:30):
There are a bunch of pin meetings that have become YouTube and podcasts that
talk about this, the Baker Street Podcast and his name escapes me right now,
but he gives a very, very good summary.
Mark Holder, he has a podcast class uh wrestling podcasts and
they are pretty good in terms of giving
(23:51):
their view in terms of the economics of things and how politics
changes things i think the thing to do is is to try and keep ahead of the game
you can't change decisions easily but if you know it's coming you can adjust
accordingly and i think that's the key thing and i think sticking your head
in the sand and and as you say you know sort of putting your head over your
ears i think that's no longer fit for purpose us.
(24:14):
I think that can be quite expensive in the medium to long term.
And you don't want to look back and think, if only I fixed, if only I sold at
that point, reduced my debt on my other part of the portfolio,
I wouldn't have ended up in this, in this, in this bother.
So that's why I would say, but there's lots of information out there.
AIM ChatGPT will give you an unbiased point of view if you ask the right questions.
(24:37):
Whenever I have this type of conversation with Paul, it always amazes me how
much sort of wide range in knowledge and wisdom and experience.
That he has that you have, Paul, which I guess just comes from,
you know, years in business, years in property.
And also perhaps when you've been engaging with sort of mentees all around the
(24:59):
country that are doing different strategies and different things and have all
different backgrounds and you're working with them to try to work on their portfolio.
I know you do a lot less of that now but if any
of our listeners would like to spend some time with paul either
in a capacity of mentorship or in
a capacity of reviewing your portfolio we have
(25:19):
set up some services around that we don't really talk
about it a huge amount if you are interested in having a conversation with paul
then certainly reach out and we can see how we can help you in that department
just to give a steer in terms of what you want to do next and to have somebody
to actually ask that question too rather than making that decision on your own
i think we we've always is locked in it in terms of what are our ultimate long-term goals?
(25:42):
Everything comes back to goals. What is it that we wanted to get out?
Was it a legacy? Was it retirement? Was it residual income?
And when things change in the sand, it might affect that goal itself.
Maybe it's worth toughing it out. Or maybe you have to change your strategy.
And that's what we do in the advisory. We go back to goals. And I'm seeing some
people next week to talk about this very thing, that want to do more HMO.
(26:07):
And they want to talk about how much more and how big an HMO and where.
And the first thing I ask is, well, why are you doing it? What's your goal?
What's your 10-year plan? Or what's your 20-year plan?
Are they solid? Why do you have those as goals? That's the starting point.
And so it's not just about property. It's about your person,
your family, your end game, where you want to end up. Sometimes it's about your legacy.
(26:32):
So yeah, we're certainly able to offer that guidance and advisory if people desire.
Sure. Well, if there's nothing else to add, I think we'll wrap it up there.
Is there any final thoughts on this subject?
I think the only thing I would say is that, you know, sometimes I feel like
we're all on a bit of a chessboard.
And sometimes as landlords, we're like pawns on this chessboard.
(26:56):
And, you know, you have the major players, the major pieces,
which is the king, the queen, the rook, the knight.
And then you have a bishop and you have these pawns.
And every now and again you know a
good chess player will sacrifice a few
points in order to get through and win
the other side i think that's what politics is like they use
(27:18):
us as small landlords and they sacrifice us
to win the bigger prize and the bigger prize for them
is to get those votes of people they wouldn't ordinarily get
so they sacrifice us sometimes and i think if you if you recognize
that then you know how to defend yourself
somewhat and know how the game is
played so that's that's probably my parting word you know
(27:40):
if you haven't played chess for a long time maybe start playing again
or remind yourself of different moves the knight was always my favorite piece
but yeah we're we're like pawns and we don't want to get bulldozed over by some
of the larger players in the market so that's what i would say and i suppose
in closing for me is that i do I do believe long-term everything does revert to the mean,
(28:03):
which means everything goes back to that average trend,
so property prices do go up by an average of 4 or 5% over the last 50, 60, 70, 80, 100 years.
I think it's going to continue that way. So even though there's these little
blips when we look back at them, and at the time they felt horrible.
But over a long period, when you look back to them, they was like,
you know, blocked on the landscape.
(28:24):
So if you can afford to still continue and think long term, I would say do so.
But you can make that a little bit more comfortable by keeping in touch with
the economics and the politics of the country and the world now.
And I guess a final thought from my side is, whilst we're here discussing the
sort of tragic events happening overseas and how that affects our businesses and us as landlords,
(28:47):
we should also just note how much that
is affecting the people on the ground in those locations so tragically
and that we just hope and pray that it resolves
itself in some shape or form as quickly as possible just to reduce that all
the trauma and all the tragic events that are happening for those poor people
yeah absolutely 100 agree with that okay so until next time keep listening keep
(29:08):
sending your questions and your feedback on the podcast we like to hear from
you and we will see you guys soon.
Music.
We hope you enjoyed today's episode and if so, please hit subscribe and share
with those who you think would enjoy it too.
To get in touch with Paul and Amanda directly, please visit
(29:30):
their website www.essentialpropertyoptions.co.uk for more information.
Music.
Hello, and welcome to the Essential Property Podcast with your hosts,
Paul Samuda and Amanda Woodward.
With 45 years of combined experience in the world of property buying,
selling, investing and developing,
they are here to share with you their knowledge in the Stoke-on-Trent,
Newcastle-under-Lyme and Crewe property market. Let's get started.
(00:26):
Music.
Hello and welcome to another episode of the Essential Property Podcast.
And today's episode is titled, How Does Politics Affect Residential Landlords?
And the purpose of this podcast was on the back of a conversation this weekend
(00:47):
between Paul and I, where I asked the question, how does the very,
very sad disturbances and disruptions in the Middle East affect UK property?
And an hour and a half later, Paul is still explaining to me how it affects UK property.
So I said, right, come on, it's episode time. Share your thoughts,
(01:08):
your understanding and your theories, I guess, with our listeners.
And I will ask you some questions in terms of how I process that,
which hopefully will be the same as questions that our listeners might want to ask as well.
So Paul, how does the very, very sad and tragic events taking place overseas
affect us all the way back here in the uk as landlords i mean it was it was quite a.
(01:30):
Stunning question and very relevant i think i think
my view and this is not meant to be me giving a pitch about my politics it was
just a very interesting subject which i thought was relevant at the time and
i thought let's let's talk to our our listeners and i think politics matters
with everything it doesn't matter whether it's here at home in your town or
city or nationally or internationally,
(01:53):
you border, you raised it on the back of the bombings and the fighting that
were happening in the Middle East.
And I think my immediate answer is that everything matters.
And we may not immediately see the effect of it day after tomorrow,
but it matters in the medium term, the coming months and years,
(02:13):
and sometimes long term, sometimes for better, sometimes for worse.
Well, I think you only have to look at the way landlords have been treated by
our own government and the interaction and the taxes and the changes to know
how important politics is.
And I think as landlords, sometimes we underestimate that. We underestimate
the role it plays and why things happen.
(02:34):
And then more recently, if you think about the invasion in Ukraine and the spike
in energy prices, the invasion in Ukraine was a geopolitical event.
So it was overseas it was driven
by politics and the reactions the americans
got involved the europeans got involved the brits got involved
to defend ukraine and whether you wanted to vote for that or not it just happened
(02:58):
and then all of a sudden right you know petrol prices oil prices rocketed what
we paid at home in terms of gas electricity more than doubled in a very short
space of time so if you're a landlord if you're an hmo landlord then you're
going to be affected by that.
If you're a tenant of an HMO landlord, you're going to be affected by that because
the HMO landlords probably put up their prices.
(03:20):
So that's a very, very simple example of what could happen.
And when there's a disturbance or an outbreak of war or suggested war in some
part of the world, the first people to react are actually the money people,
especially the stock market. Those are the first people to react.
And you You sort of take your cue from there. There's either a sell-off or there's a push up in prices.
(03:44):
And you look at, well, what stocks are going up in price?
Oh, it's the oil company. So they're going up in price because oil prices are going up.
But property prices or property companies, sorry, may go down in price because
there's an expectation that interest rates might go.
So a very convoluted answer to
your question is 100% we
(04:06):
get affected as residential landlords even though there
are activities that happen halfway across the
world or in another country and how important
is that in terms of our planning if i said on a scale of one to ten ten being
absolutely very important you should think about it every single day of the
year and one being don't worry about it i would say we're a good seven so you
(04:32):
should think about it more often than not.
And why do I say SEP? It's because every action, there's a bit of a reaction.
It always comes back to money. If you're throwing money to help someone fight
a war, that money has to be paid for.
And as taxpayers, we end up paying for it. And if the government overspends,
that money has to be repaid, or more money has to be reprinted,
(04:54):
that pushes up inflation.
And that affects us because they push up interest rates.
So we've experienced, if you think about it, from Brexit, another political
decision, all the way through to what's happening in the Middle East.
And that includes COVID, that includes Ukraine, lockdown.
We've been affected in some shape or form.
(05:15):
Be interest rates, be not being able to rent short stay.
We've had to pay more for our prices because prices have rocketed up because
people have said, my goodness, during lockdown, I hate this.
Let me go and buy a bigger property.
The government has stimulated the economy. They've stamped duty.
There's a rush to go and buy property.
So just over that last period from Brexit all the way through to the Ukraine
(05:40):
war and now this Israeli, Palestinian,
Iran, we've been affected as landlords in some shape or form to the point where
landlords are thinking of selling because they said, I've had enough.
Maybe I've made my profit. I need to get out.
Or it's no longer profitable because interest rates have gone too high.
They've come out of fixed rates and it's now untenable.
So yeah, I would give it a good seven that we should be thinking about it on
(06:03):
a regular basis in terms of the decisions we make, certainly in the medium term.
And the biggest decision any landlord can make is if they have a mortgage.
If you don't have a mortgage, then it's not a major problem.
But if you have a mortgage and a good 60% of landlords have mortgages,
if you have a mortgage, then you're always interested in the interest rate.
The other thing is just the local politics.
(06:24):
Politicians, they have one reason for being, and that's to garner more votes,
to be voted back into power.
And politicians, whether you believe it or not, will do just about anything
to get the votes. I think we've certainly seen some examples of that,
haven't we, in recent years?
Yeah, no question. I mean, that's all they do. They just want to get votes.
And if they already have people in the bag, let's say, but there's a bunch of
(06:48):
people that are sitting on the fence, then they'll write,
dare I say, lie or repackage in order to get those people who are sitting on
the fence to vote for them.
And worry about the implications afterwards. And that had seemed to have happened
more and more and more over the last few years.
And it would seem that every single quarter,
(07:12):
there's something extremely political that has happened that has affected our
country and in turn affected property either directly or indirectly.
Either positively or negatively.
More recently, it's been more negatively than positively. So,
yeah, I think, you know, maybe 15 years ago, wouldn't have to bother about it too much.
But I think certainly in the last, you know, five plus years,
(07:36):
I think it's gone up in terms of level of importance to think about the politics
of this nation and international politics as well.
And what would be some examples of the different sorts of political announcements
that are being made to the different demographics of society?
I think a really, really obvious one that hurt landlords and,
(07:56):
you know, any landlord that had a mortgage would remember this was Section 24,
where all of a sudden, you know, George Osborne had said, we don't like the
idea of you as a landlord being able to make the interest you pay tax deductible.
And one of the main reasons for
that is because landlords were i think
(08:19):
the economic term it was is crowding out
local first-time buyers so if you imagine you're a landlord and you see a house
that you quite fancy buying you'll rock up and you'll make an offering accepted
in the full knowledge that you can get mortgage a first-time buyer goes out
they've got a limited budget no flexibility ability and chances are,
(08:39):
if housing needs a little bit work,
we're going to walk away or we just won't be able to compete with it at all.
And George Osborne said, we need the first-time buyer voters.
People are complaining like crazy. They can't afford to buy.
So how can we give them a little bit more of incentive?
Let's give them some money. Let's help them with their deposit.
But also let's disadvantage the landlords by taking away one of their incentives to purchase.
(09:04):
And that's, you know, they can deduct the interest from the income.
He sort of phased it in over three or four years.
But it was a very, very expensive exercise for any landlord that wasn't incorporated
and had to now work out what the interest liability was going to be to the point
that you could actually not make a profit but still end up paying tax.
(09:26):
That's a simple example, siding on the side of first-time buyers,
incentivizing first-time buyers and disincentivizing landlords.
And that's a political decision.
Sure. And I guess that was the start of almost the kind of attack,
wasn't it, on landlords, or certainly in my career of investing,
that was the first quite pivotal decision where you think, hold on a minute,
there's something quite significant at play here.
(09:48):
And then I guess more recently would be like the renter's reform bill,
in terms of how that will also generate votes for renters.
Yeah, absolutely. I mean, we as landlords look after almost a quarter of the
nation, certainly a strong fifth of the nation, or approaching a quarter of
the nation, in terms of keeping a roof over their head.
So, a substantial number. Now, if it's perceived that that segment is complaining,
(10:14):
and we know there's many a good landlord.
And there's a handful of bad land, but if it's packaged that all landlords are
a bit questionable and they're taking advantage of renters,
then if you can garner a large percentage of what could be 10 million votes,
that could swing an election.
(10:35):
I could swing the election. So you can say, okay, we're coming on your side.
We hear you. We hear your pain. Let's kneecap some of the landlords.
Let's give you more rights. Let's enable you to bring your pets.
Let's enable you to not be kicked out, you know, without a good reason.
Let's give you all these rights and let's hamstrung the landlords,
(10:57):
you know, and then maybe you'll vote for us.
And that's a political decision. It doesn't matter how it's packaged.
It's a political decision. There's people get around the table and say,
look, we could win office.
And of course, I'm not saying that it's not the right thing to do all of the circumstance.
Sometimes, you know, politicians do make good decisions, but it's the politics
of the decision just to garner votes, which can be a little bit upsetting because
(11:20):
it doesn't make any sense.
Now, the other thing that happens on the back of that is that sometimes politicians, they,
forget about the behavioral aspect of their decisions. And I'll give you two examples of that.
The most recent example was, let's say, lockdown and COVID.
And all this money was being given away because it was a very extreme situation.
(11:41):
People couldn't go to work.
And they said, let's cut staff duty as a bit of an incentive because it's going
to slow down the property market and we need to keep that moving.
But people were sitting in their houses and their apartments and looking around
and think, I absolutely hate this place.
It's too small. There's no garden. I need to trade up.
Combine that with the stamp duty, and you now have a runaway property market,
(12:04):
which was never the intention when those things were put in place. Never the intention.
So you've actually made the plight of the first-time buyer even worse,
and the plight of the renter even worse, because now they definitely can't afford
to buy, especially if they're in the south of the country.
So the behavioral side, the economics is just a little bit of demand and supply,
and working it out based on particular theories and what's happened in the past
(12:27):
and how as many people have.
But the behavioral side is the psychology.
And do you remember they used to talk about revenge travel?
Revenge travel was a term that had never, ever existed until post-COVID.
And all of a sudden people said, what, you told me I can't travel.
Well, I'm going to travel as much as I want to now that I'm free to do so.
(12:47):
And that was never in the equation when the politicians were trying to work
out what they should do, what they shouldn't do.
And that's the scary thing, that decisions can be made and the implications
end up being an absolute disaster.
And sometimes it feels worse off than the way you were before.
So I have a question for you.
There's two ways that you can go with this.
(13:08):
You can take heed of the information that you're sharing.
You can read up on it. You can listen to it. You can try to process what the
government is doing, both both nationally and globally.
Or you can put your hands over your ears, say, la, la, la, I can't hear anything,
and continue to run your business as they call it a kind of ignorance is bliss type strategy.
(13:31):
I think it's obvious which one you would recommend.
But what should the average landlord do? Let's say you have between one and
50 properties. You're a small corporation,
How do you take this information? How do you process it? And what actions do you take thereafter?
Yeah, that's a great question. That's a great question. We have always said
on our podcast that we take the view of property as a long-term investment.
(13:53):
And I think what you're saying in the final analysis, if you're looking at property
as a long-term investment, does all this matter in the end?
Because if you look at the last 100, 200 years, property prices have always gone up.
It's always outperformed the average answer. So, and there's always been political
machinations over the last few decades and wars and oil crises,
(14:17):
but probably prices are still going up.
So does it all, does it really matter at the end of the day?
I think long-term, no, it doesn't. I think everything reverts to the mean.
So how that is interpreted is that if probably prices grow by an average of
4% a year over the last 50 years, chances are it's going to grow by 4% of the
year over the next 50 years. Now, it's not going to be in a straight line.
(14:39):
It's going to be 10% one year, 2% another year, 10% another year,
minus 3% another year, but it's going to average at 4%.
So you could say it doesn't actually matter. But I think what has happened more
recently is that in the shorter term, and let's take short, a year to two years,
some of the changes have been quite intense.
(15:02):
So it's very easy for us to say, tough it out, think long-term,
think in terms of 10-year tranches, and you're losing 350 pounds a month on
a property because the interest rates have gone through the roof.
Hold on to it, lose 350 pounds a month, lose somewhere 8,000 pounds over the year, it'll even out.
(15:23):
But if inflation's gone up, if your own home, you're paying more for your own
home, if food and the table has gone up, something has to give.
Something has to give. So if you look at lockdown, how extreme lockdown was.
So some of the political decisions have been very, very, very extreme.
And the implications of that have been a lot larger than we've ever seen before.
(15:46):
If you're a renter, let's just say, you're now paying in the last three or four
years, you're probably paying in some areas 30% more in rent than you were before.
So it could be consuming over half of your income, whereas before it was only
consuming maybe a third of your income.
(16:07):
And that's huge. That's huge.
So in answer to your question, ignorance is bliss. Yes, I agree.
Long-term thinking, yes, I agree with that. But the short-term pain has become
more acute from some of the decisions that have been made.
They're talking about if you're doing Airbnb, if you have second home,
(16:27):
they're talking about just charge you an extra 200% on your council tax.
Whether you live there, don't live there, whether you rent it,
not rent it, they're taking away your ability to deduct the interest from the
income. Even for Airbnb now, that's now gone into law from 2025.
So all of a sudden, those political decisions cut you off at the knees.
(16:50):
So the only thing you're dependent on is, okay, let me make a small profit or
a loss every year and hope that the value of the property goes up over 10 years.
And that is a little bit more risky than we signed up for. So that's my answer
to that question, Amanda.
I think the other reason why it's important is to understand is because I'm
sure there's going to be some people that have serviced accommodation or Airbnbs
(17:12):
who are not going to be aware of that change in interest deductions options
or non-interested options until they file their tax return and their accountant
says, okay, you can't claim for this anymore.
Sorry. Okay. My profit is no longer what I thought it was. So being ahead of
the information or certainly reading as it comes out, it is important at the
(17:33):
end of the day, no matter how bad that news might be in the short term.
Yeah, absolutely. Absolutely. And this whole thing started on the back of your
question about about the activities in the Middle East, if the war widens and
becomes worse, that fuels an increase in oil prices, that fuels inflation,
that then means that interest rates aren't going to come down anytime soon,
(17:56):
and that's going to impact your cash flow if you have a mortgage.
If you don't have a mortgage, then happy days, no problem. Now,
you have to think about that.
You've got to think about, do I fix now? Do I go for a tracker or a variable?
Do I go for a two-year fixed or a five-year fixed. And all that is based on
the climate, the political climate, the geopolitical climate,
(18:18):
the economic climate, as a result of political decision.
Israel sort of bombing Iran is a political decision. Iran bombing Israel is a political decision.
So it all stems from politics. It all affects us in some shape or form.
And we have to, if we don't act or react to this in some instances,
then we could get caught in a crossfire, literally, and have an asset which
(18:40):
is either deteriorating because we're not making any money,
We can't invest in that asset. You know, if you think about the politics of
the green politics, and let's say there's no more gas boilers after 2030,
or EPCs, I mean, all those are political decisions, and they have implications for us as landlords.
If you can't plan ahead and think, okay, what do I do?
(19:02):
Do I take the hit now, or do I wait and see what happens if another government
comes in and changes that?
This is stuff here and now that we have to think about. And I'm saying,
whereas before it might have been a three out of 10 in terms of importance,
I think it's more a seven out of 10.
We have a new government, a Labour government, if you think about it.
My friend Angela Rayner is going through the mill at the moment because she's
(19:24):
been nubbled by the Tory press, ironically, over property.
Now, well, you know, I mean, you know, as I said, I'm not going to share my
political views, but I think a lot worse has been done.
And you know there haven't been police investigations
but anyway she comes into power let's say labor comes into power yeah and you
(19:49):
know she may have a little bit of an attitude and maybe she would want to play
softly softly with some of the property boys and she says no i'm not having
it right you gave me such a hard time at my little counselor counselor house house.
So all you second and third homeowners and you big old landlords,
I'm going to vote to squeeze into the Pipstrom. That happens.
(20:12):
You know, we forget that politicians are also humans and they bear grudges.
They bear grudges without a shadow of a doubt.
So I think one of the things that have come out of it, I think people should think more about it.
I think people should understand the politics of promoting for votes.
And you've got first time by a vote, you've got pensioner votes,
(20:34):
you've got the boomers, you've got their votes, you've got the renter vote,
there's all these little niches where they want to get votes so they can win
their local elections or their national election.
And that has an implication for us, generally speaking.
You know, this is a broad generalization. Landlords are planning for the future,
planning on retirement.
(20:55):
And I would guess majority probably vote conservative.
So because everything, we've already got a landlord vote, so we can take piss
a little bit and they also vote for us, but we don't have the rental vote because
they're a little bit poorer and we want to get in their vote.
And we want to try and help them get house.
So let's compromise with our landlords who, whose vote was already in the bag.
(21:17):
And let's try and get the rent-a-vote and the first-time buyer vote which isn't
in the bank and that's the way the political game is played whether you like
it or not you know if you've got a local councillor who you know complains to
the local mp it goes to the house of parliament and says that abnb's all over
the place there's all these rich landlords coming in and buying locals.
And my little sally who's lived in there in the
(21:38):
village for you know 20 years can't buy a
first house you know they scream that enough
times and they'll get change you know they'll get
they'll get change so yeah it it affects us
and we do need to think about it a friend of mine sent me
a news article only a couple of days ago of a
conservative mp who we actually went to school with many many many years ago
(22:00):
in london and they're a local councillor or they're the conservative mp and
And they are doing a big campaign on why there should be no more HMOs in their
constituency and very anti-landlord.
And so it's going to be a tough day on election day in terms of where your loyalties
lie, because I think, you know, it's very hard to be loyal now because we're
(22:23):
just not sure of what to do going forward.
Where should you get your information from? So if you're looking to get good
quality political information or the political topics we've been discussing,
where would you read to get something that's fairly non-biased, that's intellectual,
that's not media-driven?
Where do you go? Another quick question. And the reality is that the media...
(22:48):
Is very partisan. They're very biased towards the left or the right.
So the Telegraph is a right of centre paper.
So they'll say and talk about things that are supportive of property,
and they say, you know, clamping down on landlords is harsh and you shouldn't do that.
Then you might have another paper who are left of centre that might be a little
(23:09):
bit more in favour of kneecapping the landlords.
If you're going to, you know, The Economist is very, very good to give quite a neutral view.
I get the Financial Times of the weekend and they had a great article this weekend
in terms of do you fix your mortgage or not with all the trouble that's happening
around the world, which range for interest rates going.
(23:30):
There are a bunch of pin meetings that have become YouTube and podcasts that
talk about this, the Baker Street Podcast and his name escapes me right now,
but he gives a very, very good summary.
Mark Holder, he has a podcast class uh wrestling podcasts and
they are pretty good in terms of giving
(23:51):
their view in terms of the economics of things and how politics
changes things i think the thing to do is is to try and keep ahead of the game
you can't change decisions easily but if you know it's coming you can adjust
accordingly and i think that's the key thing and i think sticking your head
in the sand and and as you say you know sort of putting your head over your
ears i think that's no longer fit for purpose us.
(24:14):
I think that can be quite expensive in the medium to long term.
And you don't want to look back and think, if only I fixed, if only I sold at
that point, reduced my debt on my other part of the portfolio,
I wouldn't have ended up in this, in this, in this bother.
So that's why I would say, but there's lots of information out there.
AIM ChatGPT will give you an unbiased point of view if you ask the right questions.
(24:37):
Whenever I have this type of conversation with Paul, it always amazes me how
much sort of wide range in knowledge and wisdom and experience.
That he has that you have, Paul, which I guess just comes from,
you know, years in business, years in property.
And also perhaps when you've been engaging with sort of mentees all around the
(24:59):
country that are doing different strategies and different things and have all
different backgrounds and you're working with them to try to work on their portfolio.
I know you do a lot less of that now but if any
of our listeners would like to spend some time with paul either
in a capacity of mentorship or in
a capacity of reviewing your portfolio we have
(25:19):
set up some services around that we don't really talk
about it a huge amount if you are interested in having a conversation with paul
then certainly reach out and we can see how we can help you in that department
just to give a steer in terms of what you want to do next and to have somebody
to actually ask that question too rather than making that decision on your own
i think we we've always is locked in it in terms of what are our ultimate long-term goals?
(25:42):
Everything comes back to goals. What is it that we wanted to get out?
Was it a legacy? Was it retirement? Was it residual income?
And when things change in the sand, it might affect that goal itself.
Maybe it's worth toughing it out. Or maybe you have to change your strategy.
And that's what we do in the advisory. We go back to goals. And I'm seeing some
people next week to talk about this very thing, that want to do more HMO.
(26:07):
And they want to talk about how much more and how big an HMO and where.
And the first thing I ask is, well, why are you doing it? What's your goal?
What's your 10-year plan? Or what's your 20-year plan?
Are they solid? Why do you have those as goals? That's the starting point.
And so it's not just about property. It's about your person,
your family, your end game, where you want to end up. Sometimes it's about your legacy.
(26:32):
So yeah, we're certainly able to offer that guidance and advisory if people desire.
Sure. Well, if there's nothing else to add, I think we'll wrap it up there.
Is there any final thoughts on this subject?
I think the only thing I would say is that, you know, sometimes I feel like
we're all on a bit of a chessboard.
And sometimes as landlords, we're like pawns on this chessboard.
(26:56):
And, you know, you have the major players, the major pieces,
which is the king, the queen, the rook, the knight.
And then you have a bishop and you have these pawns.
And every now and again you know a
good chess player will sacrifice a few
points in order to get through and win
the other side i think that's what politics is like they use
(27:18):
us as small landlords and they sacrifice us
to win the bigger prize and the bigger prize for them
is to get those votes of people they wouldn't ordinarily get
so they sacrifice us sometimes and i think if you if you recognize
that then you know how to defend yourself
somewhat and know how the game is
played so that's that's probably my parting word you know
(27:40):
if you haven't played chess for a long time maybe start playing again
or remind yourself of different moves the knight was always my favorite piece
but yeah we're we're like pawns and we don't want to get bulldozed over by some
of the larger players in the market so that's what i would say and i suppose
in closing for me is that i do I do believe long-term everything does revert to the mean,
(28:03):
which means everything goes back to that average trend,
so property prices do go up by an average of 4 or 5% over the last 50, 60, 70, 80, 100 years.
I think it's going to continue that way. So even though there's these little
blips when we look back at them, and at the time they felt horrible.
But over a long period, when you look back to them, they was like,
you know, blocked on the landscape.
(28:24):
So if you can afford to still continue and think long term, I would say do so.
But you can make that a little bit more comfortable by keeping in touch with
the economics and the politics of the country and the world now.
And I guess a final thought from my side is, whilst we're here discussing the
sort of tragic events happening overseas and how that affects our businesses and us as landlords,
(28:47):
we should also just note how much that
is affecting the people on the ground in those locations so tragically
and that we just hope and pray that it resolves
itself in some shape or form as quickly as possible just to reduce that all
the trauma and all the tragic events that are happening for those poor people
yeah absolutely 100 agree with that okay so until next time keep listening keep
(29:08):
sending your questions and your feedback on the podcast we like to hear from
you and we will see you guys soon.
Music.
We hope you enjoyed today's episode and if so, please hit subscribe and share
with those who you think would enjoy it too.
To get in touch with Paul and Amanda directly, please visit
(29:30):
their website www.essentialpropertyoptions.co.uk for more information.
Music.
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