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Well, today has been, erm, bloody odd to be honest.
Firstly I am in Dubai, so whilst sat sipping coffee, I got a message through from a friend saying “base rate reduce by 0.5%, what do you think.”  Before my next swig of the sweet necessity in my life, I headed to BBC to see the truth.
Base rate had indeed been cut by 0.5%, as an emergency measure, to stimulate the investment market, because of CORONA VIRUS fears.  Wait, what?  I am supposed to be scared of Corona Virus?  (more on this later)

Screenshot 2020-03-12 at 00.29.45
So firstly, lets look at the base rate reduction to a record low and the relaxation of capital rules (meaning lenders can lend more money to borrowers than previously) in isolation.

GREAT NEWS!!!  For borrowers and those investing money.  There will be many sat on a variable rate mortgage who have just seen a substantial saving on their monthly expenditures (thus more cash flow) and lenders will likely reduce the fixed rate mortgage offerings in the coming days.
More money available to lend, at cheaper rates.  Sounds pretty bloody good to me.
When money is liquid and rates are low it is time to fill your boots.
Remember this decision has been driven by fear.  As my favourite spiritual guide, Warren Buffet, famously said ‘be fearful when others are greedy, and greedy when others are fearful.’  Those words have been ringing in my ears all day, drowning out the incessant chat of CV.

BAD NEWS!!!!  For savers.  Your already abysmal saving rates, just got a whole lot worse. The decision was made to stimulate investment and to stop people hoarding (in every way) through fear.  They are literally punishing you into some action (I hope), in order to stave off a CV induced recession.  So, if you want to get more than terrible savings returns you need to take some educated action, or work with someone who can.

So by midday Dubai time, (8am UK), I had already got rather excited.  So much that I had even forgot about the 2020 Budget scheduled for later in the day.  Once I remembered, I started to get even more excited (sad I know) about the impending changes that Rishi Sunak would surely make in our industry to stimulate the need for housing and property development…..

Screenshot 2020-03-12 at 00.43.57

So, as I sit (whilst drinking coffee with a UK property investor based in Dubai) watching and recording updates on the budget, waiting for something momentous in our industry to get my teeth into.
Planning reform – lets bring more houses into operation?
Stamp Duty incentives –  are they going to drop the 3% surcharge, or increase the lower threshold?
Clause 24 – will they abandon the unfair (IMO) tax on landlords turnover, whom own properties in their own names?

Corona Virus.
The budget was pretty much a budget aimed at Corona Virus.
Wait, so should I be shitting myself now?  I will be honest, I still don’t know, but a budget aimed in the large at a Virus and our countries protection will certainly go some way in fuelling project fear.

What did happen for our industry, well to be honest, not much.  However here is a snapshot.

  •  Entrepreneurs relief – this will remain, but the lifetime allowance has been reduced from £10m to only £1m
    Simply, entrepreneurs relief is the tax reduction (to 10%) on the proceeds of the sale of a company (a significant saving on the capital gains tax that would be payable).  So previously on a £10m lifetime of business sales, you would pay £1m in tax.  Now anything above £1m you will pay 20% + tax on.
  •  Stamp duty surcharge for foreign buyers of properties in England and Northern Ireland to be levied at 2% from April 2021.  This will not apply to Ltd companies with offshore directors and shareholders apparently.  Which begs the question, “what is the point?”  The point is they said they would do it in their election manifesto, and they hope that Joe Public overlook the detail and think that they are being helped.  Anyone “in the game” knows that this is business as usual, as international investors will continue to buy in UK ltd companies without the surcharge.  Basically, a cheap vote winning load of nonsense (being polite).
  •   Business rates.  Probably the best one but still missing on detail.  A £3000 cash grant available for those who qualify to pay small business rates relief.  Allegedly the business rates system for the high street will have a full assessment later in the year, but we have heard that before.
  •  More than £600bn is set to be spent on roads, rail, broadband and housing by the middle of 2025 – how much his housing?  Need more detail.  £650m package to tackle homelessness, providing an extra 6,000 places for rough sleepers.  I like this, but it doesn’t scratch the surface as that is less than 25% of the current rough sleeping numbers (of those reported), not to mention the many who are not on the streets, but are still classed as long term homeless (due to being in temporary and/or emergency residency)

In the coming days more detail may come out, and there may be some hidden nuggets (I will edit the post later for anything worthy), but it seems this budget is all about Corona, and no need for a lime, although I am feeling a tad bitter.

Screenshot 2020-03-12 at 01.10.51

Now, as someone who doesn’t really watch the news, I will be honest – this was soooooo not on my radar.
Beyond seeing the videos on social of all the balloons in Costco fighting over bog roll (I swear to god, in years to come they will look back and wonder what the f**k their ancestors were on) and hearing about the new found value of hand sanitiser from memes offering a Rolex trade for 100ml of hand cleanliness, I thought this was a massive hype train.  I will be honest, I still do.
After looking at stats today (inspired by the budgets commitment to the cause) I can’t help but feel that the development of social media, whilst having a great influence in many areas, can turn a mole hill into a mountain.  It is clear that people are sick, and sad that so many have died, but as a numbers guy the stats just do not justify the reaction in my opinion.
Action absolutely should be a thing, and it is good that the government have taken it, but it seems to be at the expense of everything else that may have been in the budget (take out CV and next to nothing happened in many areas) .   I feel like they can, and will stabilise things very quickly.
To put it into context, a good friend shared some stats comparing China (the worst impacted and seeming origin of CV, that is now seemingly stabilising) death rate VS deaths through road accidents in the UK in 2018.

Death rate in China due to CV to date – 1 in 454,401 (1.435bn population / 3158 deaths)

Death rate 2018 UK traffic accidents gave you a 1 in 37,536 chance

Effectively you were 12 times more likely to die of a road accident in the UK in 2018 than you are to have died of CV in China to date.
Did we ban all cars?  Tell everyone to lock themselves up and to not get in a car?

(also before anyone says that “it was contained in one small part of China quickly) – that small part of China is 60 million people in population…….. (UK population is 66.44 million as of 2018, with 33.6m holding a driving licence) )

So, my conclusion, albeit semi-researched at best, is that CV is actually a thing…..I wasn’t previously sure.  However it is nowhere near as big a thing as being made out, and as usual it’s often the reaction to an event which makes the situation worse than the event itself.  Great the government are taking action, as they should.  However, my concern is that the impact of the reaction may well cause more harm than good.  Markets have already reacted, base rates have fell and governments (and their people) are scared.  For me it will breed opportunity (see Warren Buffet above) but for many others it may well fast track a recession that could have been delayed.

PS I have been asked many times today “are we on our way into recession” – my answer has been we are always on our way to a recession……. a fall follows a rise as sure as night follows day.  I have done a video on the property cycle (Pre CV) on YouTube that you can watch here:


Next question – “well does that not worry you.”

Answer – “nope.”

OK I will elaborate.  It doesn’t matter what the market is doing as long as you have the right strategy in the right market, at the right time.  You can make money in an up, a down, a still, and a swirly twirly market if you know what you are doing and are applying yourself well.  For an investor, as sad as the reality is, a recession often brings great opportunities.
Remember Uncle Warrens words.
‘be fearful when others are greedy, and greedy when others are fearful.’
‘observe the masses and do the opposite’
They have never been truer than during a recession.

Nor has the following, which I will sign out with love with…….(speak again soon)

PS by the next blog post I am hoping CV has been and gone……

This entry was posted in Blog.


  1. Andy Miller says:

    Great observations Danny. The budget was always going to be a non event. CV enabled them to pretend it had substance.

    If you want another stat just look at the number of deaths in Africa EVERY DAY from Malaria, many of them children. This goes unreported. Why?

  2. Ajay Nayyar says:

    Afraid not buddy. Lenders not reducing fixed rates. They will increase them in order to compensate for the losses they are making in their trackers. In fact, HSBC has already increased their rates. Lenders are scrambling as quickly as possible to do so currently. In the long run, they may decrease, but not immediately.

    1. Had a reduction agreed on mine within hours…..

      1. Ajay Nayyar says:

        in what context? Were you mid fixed rate? On a tracker? On a svr?

  3. Steve says:

    Hey Danny, great blog as always! Quick question on the additional 2% SDLT for overseas buyers. Did you have a source to suggest that this doesn’t apply for overseas based Directors/Shareholders? I’ve read conflicting reports that it applies to both personal name and Ltd Company purchases. Many thanks and hope you’re enjoying Dubai!

    1. Cheers buddy – to be fair the information has got increasingly vague since the budget – yesterday it was reported on the bbc as not impacting ltd companies. I have just looked into the detail and it states it will be a hike for non UK tax paying entities – a uk ltd co would pay tax here and not apply if that is the case. Let’s see if they clarify further….

      1. Steve says:

        Gotcha, thanks Danny. It will definitely be interesting to see how the detail plays out, the reality is so often very different to how it is first portrayed!

  4. Kevin George says:

    Great stuff Danny – to the point and crystal clear, as always.

    I think, on the virus, it’s proving very difficult to gauge which sources to trust: if you look at MSM, it wouldn’t come across as a huge concern here in the UK at present. However, there are other sources that take the opposite view and decry the lack of government action to try to contain the spread.

    Nevertheless, much like in an economy, your own individual psychology is going to determine your fate: you can run away at the signs of danger i.e. stockpile loo-roll and tins of beans and plan not to leave your house for 9 months, or you can go about your business as usual and take whatever comes your way in your stride. Time will tell how extensive the spread becomes, but I’m backing myself to stay healthy and fit enough to recover even if I am one of the unlucky victims of CV.

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