Liz Truss is now the prime minister of the United Kingdom following a vote of Conservative party members. I believe you should always hope for a leader’s success whether you would have chosen them or not. If a leader succeeds, it benefits us all. If a leader fails, it hurts us all. Even if you don’t like the pilot, you don’t want them to crash with you onboard! Therefore, regardless of our political preferences, we should all wish Liz well in her new job.
It remains too early to tell exactly how she will lead this country. However, there are some indications of the direction she intends to take from her campaign for leadership. In this article, we will take a look at what her election will mean for property investors.
1. No New Taxes
Promised no new taxes. Good for those that own their properties in limited companies.
Possible VAT cut could help serviced accommodation providers.
Truss has promised no new taxes. She has stated that she will prevent the planned corporation tax increase. This will be good news for those that own their properties via a limited company. She is also tipped to oppose the elitist plans for a global minimum tax rate for corporations. If Truss prevents this globalist agreement, this will leave the possibility for lower tax rates in the future.
Truss is also considering cutting VAT by up to 5%. If this gets the go ahead, this will help those with serviced accommodation and those with other VAT registered businesses in the property sector. Truss’ general focus on lowering taxes is likely to be good for the property industry, but it remains to be seen whether she will follow through!
2. HMOs And Controlling Energy Costs
Expected temporary freeze on energy bills.
Prioritising energy production over carbon targets.
Truss is expected to freeze energy prices for businesses and individuals. Price fixing cannot be a long term solution, as it prevents the natural supply and demand mechanisms functioning, but will certainly provide a welcome respite to HMO owners.
In the longer term, there needs to be more supply to bring down costs. Truss has signalled a move away from carbon targets and towards energy production. She supports lifting the ban on fracking, allowing it in areas where there is local support, and increasing drilling for gas and oil in the North Sea. Truss also supports cutting red tape and deregulation more generally. It remains to be seen whether this will be enough to bring down energy costs however.
3. Big Borrower
Borrowing more will lead to more inflation. House prices will rise.
Kwasi Kwarteng has been appointed as chancellor. He has written a piece for the Financial Times stating that in order to deal with the current crisis there is a need for fiscal loosening, i.e. borrowing and spending. Truss has said she wants to put the government’s COVID debt on a “longer-term footing” which will mean refinancing £311billion.
An increase in money chasing the same amount of goods will mean that inflation will continue. While this isn’t good news in general, this will likely mean an increase in house prices over the longer term, as capital is moved into property by the rich to protect against falling purchasing power.
Ultimately, despite some of her policies being positive, Truss is no different than any other elitist globalist politician. She is linked to the World Economic Forum even tweeting about a “Great discussion at @wef on fixing the international trade system.” in 2021.
However, that is even more reason why now is a great time to get into property investment. If you don’t own something soon, the WEF will ensure that you will own nothing! Protect you and yours by making sure you are on the correct side of the wealth divide!