Last week the BBC asked if I would join Nicky Campbell on his show the Big Questions which will be live on Sunday 6th January 2018 from James Allen’s School for Girls in London. The issue to be debated will be whether it is fair that the super-rich earn in four days what the average man or woman earns in a year and whether London is only for the super-rich.
My response is, of course, it is not fair that some can earn in four days what others take a year to earn. But before we get heated up with issues of fairness and envy let’s look at what is really going on. My clients have money to invest, and this country/London needs cash for investment; into affordable housing, better child care, good education and excellent health. The simple question is how to get those with money to invest in what we want? One way is to raise taxes. Hollande tried this in France and the French simply sold up and walked away. Macron then reduced the rates and the investors came back.
My clients have lots of money to invest. On average, 28% want to invest in equities. If this were invested in our stock exchange it would create thousands of jobs across the country, and 18% in property, if this were invested in affordable housing it would solve the capital’s biggest crisis facing London’s workers; our cleaners, shop assistants, teachers and waitresses.
So, what are the barriers to entry, what is holding them back, why is the UK not benefiting from investments in the UK? Simply, because our tax system, discourages it. Our foreign residents are incentivized to keep their money invested outside the UK, investors keen to invest in affordable homes to let, have to pay up to 15% on acquisition, and most investments in the UK attract inheritance tax at 40% – with a few simple tweaks this could be changed and we could see investments flood into the UK, from which we could all benefit; affordable housing, better education, care for the elderly and excellent health care – just a few simple tweaks and some political will to make the UK a better place!
As to the second part of the debate, we need the Government to free up the housing market. A lot of my clients have money tied up in property in which they do not live – empty homes. They would sell and reinvest if the Government were to introduce incentives to these owners to invest in what we want; affordable housing, better education, care for the elderly and health improvements.
So, what are the causes of stagnation in the housing market? George Osbourne in 2015 increased stamp duty land tax by a further 3% for second homes and buy to let homes. As a result we now have £4 billion shortfall in Stamp Duty Land Tax against projections and the overall tax take is less tax compared to before the changes. Sellers can’t find buyers for homes above £2 million, - the rates of tax are simply too high, owners are not selling and the government and we in Britain are losing out!
What we need is some joined up, long term, back to basics thinking. Who has the money, what do they want, what do we want and join up the two with some incentives and penalties. If we were to reduce the 15% top rate of tax on buy to let properties and introduce incentives to invest, the vast swathes of land east of London could be freed up for housing, industry, research and development. My clients would readily sell up their mansions and reinvest.
But, are our politicians more concerned with getting elected next time around, or what is best for Britain, are they rearranging the deckchairs as good ship Britannia sinks, are we in danger of throwing away a great future on some ideological mantel of ‘fairness’, sacrificing our potential out of political cowardice, consigning our fellow citizens to homelessness, because we stubbornly ignore some basic facts of reality, wanting some mythological ‘fairness’?
It is really very simple incentivize those with money to invest in what we, Britain, want and need.
Please let me have your comments ahead of the show and of course your comments after it.
If you would like to buy Caroline’s book When you are Super Rich who can you Trust? or Uncovering Secrets; How to win Business from Private Clients you can buy them from Amazon or direct from www.GarnhamFOS.com or you would like to book a meeting with Caroline to find out more about how to protect wealth without losing control, email her on firstname.lastname@example.org or call on 020 3740 7422.