Sunday Supplement 23 Nov 25 - Let's get it over with

"Property taxes are an interaction between stamp duty, council tax, capital gains tax, and inheritance tax. You don’t solve that problem by just adding another wealth tax to it." - Lord (Mervyn) King, former Governor of the Bank of England. This week’s quote pertains to the deep dive, as usual, and I tackle the Budget speculation head-on, now we’ve reached fever pitch. As the calendar creeps towards a new year, it’s a natural time to pause and tackle the biggest challenges that keep SME property businesses from achieving true, sustainable growth. For most, this boils down to two core areas: Laying a bulletproof strategic plan for the next 12 months, and finally cracking the code on financial measurement and accountability. If you’ve ever felt lost in a sea of bookkeeping data, or if your productivity methods are falling short, it’s time to switch from doing to leading—and truly understand how your assets are performing. Book in on the next Property Business Workshop with myself and Rod Turner - Thursday 22nd January - Central London - https://tinyurl.com/pbwnine Trumponomics time. America First. Some relief for European exporters of agricultural products as an executive order eased duties on coffee, tea and bananas amongst other things. Targeted but minor relief. However steel and aluminium 25% tariffs continue to keep pressure on manufacturers, and German PMI figures this week bore that out. This week there was also recognition - although it was quiet - that the US’s policies of deregulation and tax incentives are driving competitive advantage for the US, primarily at the expense of the EU and the UK. The call in the EU is, of course, for subsidies - because that’s the language they understand. However, they are also calling for simplified regulations…..don’t hold your breath. Defence spending was in the headlines again this week, with pressure continuing for countries to match their 2% NATO targets. The UK is in the clear on this one, of course. As we head into the G20, sans Trump, because of the administration's position on South Africa and the alleged genocide of white farmers, the whole of Europe knows it needs to be on the same page to be able to negotiate meaningfully at the upcoming high-level summits when and if Mr T DOES turn up. The UK wants to move to a strategic tech and AI alliance, and has announced some chunky numbers to be invested in AI this week. The leverage is, of course, Western collaboration against China. The ultimate summary of the Economic Prosperity Deal, though, is, of course, that the US are better off than they were before the tariff threats, and the UK is worse off. That’s not UK specific - that’s either Trump being a master negotiator OR simply a trade off between short term gains and long term relationship damage between nations. The bits of detail if you are interested - a removal of the 20% tariff on US beef imports (it is so expensive, there’s little to be feared I’d think?) - and UK food standards remain in place. US ethanol also paves the way for a duty-free quota of 1.4 billion litres - which will hurt domestic bio-ethanol producers. There’s also been some work done in enforced lowering of regulatory hurdles, streamlining customs and procurement processes - which, to be honest, sound positive. But mostly positive for the US. The UK has, however, resisted pressure to remove the 2% DST (digital services tax) and indeed, this should go up, frankly. It’s also held firm on no-hormone-treated beef and no chlorinated chicken. More of a bloody nose than anything, and of course the US have mostly got their way. Back to Blighty. The UK real time property market. Chris Watkin delivered once more in a big Week 45. Listings printed 26.1k, down 1000 on last week, as the market continues the listing slowdown towards the end of the year. The average week 45 saw 27.6k homes listed - the balance continues to redress a little. It will be a slow process though and another clearout (at the end of the year) followed by the usual Boxing Day Action, will tell us more about where we are at - but I’m happy now concluding that listing overperformance is over, and therefore will drop out of the figures in about 9-10 months time, is my sense (drop out of the year-on-year data, I should clarify - what we call “base effects”). My “10% more stock than a normal market” ready reckoner continues to hold on the back of circa 2 years of overperformance in listings compared to historical averages, and only a couple of months of us creeping back below those averages. There have been 1.59m homes listed this year so far! We are 8.2% ahead of the 9 year average, but that does include 2020 which pollutes the figures somewhat. We are really inching back towards the 2024 numbers now, week by week, having been 6-7% above them at various points in the year - but we are still listing more than we are selling (as always), so it is all eyes on the withdrawal rate as a general rule. We are only 1.1% ahead of the 2024 listings YTD now, but are still 8.2% ahead of the 2017-19 average. Week 45 is historically a very uniform one - and this one was nothing special, but we did list 11.5% fewer homes than week 44 of 2024. It looked a lot like a pre-pandemic week 45. Indeed - there’s just about enough time left for it to be a close one between 2025 and 2024 for listings - but if you believe a fair few have held off the market because of the budget, will they go on before the end of the year (Boxing day!) - or will 2024 stay as the listings winner for the past decade? It will be too close to call. Price reductions in week 45 - 16.7k - a shift downwards. Estate agents know that price reductions at this time of year are just not that effective, so they try a lot less hard in my view. October’s completed number was 12.8% of existing stock reduced - compared to September’s number of 14.1% for reductions - August’s 11.1% still looks a summer anomaly as the numbers came back to the 14.1% reduced in July, 14% reduced in June, in comparison to last year’s 12.1%, May’s 13.4%, and the 5-year average of 10.7%. 2025’s average is 13.2%. A bit of a reversal of what I’ve been saying for most of this year - LESS stock being listed, AND fewer reductions - the market is heading towards normalization. What still holds and will for a while yet, however - there’s still more stock, and there have been more reductions - absolutely and relatively. 23% more reductions than the 5 year average, if you take the difference between 13.2% and 10.7%. “25% more reduced properties than a normal market” also works as a ready reckoner, or is likely to even be an underestimate just because of the amount of stock out there. 22.9k homes sold subject to contract, healthy enough and 400 UP on last week which is rare at this time of year. The 2025 average is 26k. Week 45s on average print 22.9k (over the past 9 years) - so we are smack on. SSTCs are up 3.8% year on year and 12.3% on 2017-19, and will stay ahead of 2022 (we’ve passed the “day of the lettuce” and now into aftermath territory). With SSTCs up 3.8%, whereas listings now are only up 1.1% on last year, this still signifies more “intention to transact” than 12 months ago, to this point in the year, for sure - or, put a different way, comparatively this looks like a more functional year than 2024 was (even though stock numbers have continued to rise throughout the year due to relentless listing). It’s the second best year for 9 years behind 2021 for Gross Sales. Week 45 of 2024 was a little more buoyant, but this was considerably better than week 45 of 2023 and also 2022. 2nd place for the decade in Gross sales is safe, in my view, for 2025. There was one real anomaly that I wanted to point out. The market is REALLY distorted at the moment on this specific matter. Listings vs sales prices. It really does seem now that “only” “cheap” stuff is being listed in the run-up to the budget. Average asking price of the listings in week 45? £387k. The average price of SSTCs? £363k. A 6.5% difference only. The 9-year average is a 16%-17% gap here! This is pretty seismic. I do expect, however, once there is clarity (whatever it is!) on the budget, this will right itself - whether it does straight away, or waits until Boxing Day/January (I’d suspect the latter). That number in September? £452k. October? £415k. It has dropped like a stone. It is always higher in September as the expensive houses go on the market after the Summer Holiday divorces (OK, I made the divorce bit up, but it wouldn’t surprise me!). We went into November with 742,072 homes on the market - October’s number was 751,797 - so there was a drop of nearly 10k. The numbers look like a slowish October for net listings but nothing extraordinary. We aren’t back to the peak of 763k in early August - it really is looking like that 763k will be the cycle peak now. For context, as the market got stickier before the pandemic that number was c. 660k, a sellers’ market is more likely to be under 600k. At the end of October 2024, 725k were on the market. Ongoing figures will be interesting as we don’t watch the number of properties withdrawn from the market week-on-week. There were only 2.4% more properties on the market on November 1 2025 compared to November 1 2024, but the 2024 number was already the 8-year high. Chris also looks at the per square foot on sold STC properties. October’s sales agreed average was £343.18/psqft - that was a huge leap on September’s number, so large I am just going to check with Chris that he hasn’t changed his methodology. Big increases in the Halifax index particularly - but not THAT big - September had seen a sqft pricing on sales agreed of £336.54 which was dropping, at the time - the previous numbers for context: August was at £338.78/sqft and that was 1.41% higher than August 2024 and 14.25% higher than August 2020 - but down 2.2% on June’s SSTC number of £346.45 and down 1.75% on July’s number of £344.78. So we aren’t yet back to June or July but it looks like a bigger-than-usual summer adjustment and we are nearly back there, in short. Fall throughs pulled back to 25.4% from 26.5% last week - the long-term average is 24.2%. The net sales were stronger this week - 17.1k, 3.3% up on last year-to-date and 9.2% higher than 2017-19 - now leapt above 2022 levels (more than 35,000 in front now). Week 45 9-year net sales average 16.8k, so we finished ahead of that. I always give Chris a weekly shout out here because he’s more prolific than “just” this epic tome he releases weekly on the UK property market - he comes up with some great stats on a regular basis. Drop him a like, subscribe, and all the rest of it and some kind words for his content creation. If you are in the industry and want support in growing your business or to be a more effective communicator/be more in touch with your local market - that’s his core business - give him a shout. The article gets published on the Property Industry Eye website, and the video on his YouTube channel - @christopherwatkin

What’s in this week’s macro? As we macro-clench as a nation, adopting the national posture that applies as much to our wallets as it does to our glutes - we are collectively braced, friends. We had inflation figures, as you might have seen, and we have to go there. Rightmove asking prices and the ONS Private Rents and House Prices report as well, two for one on that section. We MUST look at the Flash PMIs, of course. In the final slot? Gilts and swaps to round us up - you know it.

Inflation - gripping the nation, since 2021. You may well have heard it here first, and if you are still around nearly 5 years since I first raised it - reading or listening - well done. Those 5 years seem to have gone fairly quickly, but also incredibly slowly, if you follow. The carbon monoxide that is inflation continues on regardless, however. CPIH dipped under 4%, back to 3.8% from September’s 4.1% - the preferred ONS measure. The rest of the world looks at CPI, of course, and that was on consensus printing 3.6%. This all substantiated the Bank of England’s position that inflation has seen this cycle’s peak. What was driving it? The housing and household services sector made the largest downward contribution, primarily because of the Ofgem price cap change in October 2025 which was much smaller than the 2024 change, which dropped out of the figures of course. OOH also continued to wane, getting under 5% for the first time in over 2 years, printing 4.8%. The drop has been meteoric since the start of this year, and will be very welcomed for tenants (although everyone needs to remember - this is just prices going up less quickly, not prices going down!). Food made the headlines, because it went the wrong way - back up to 4.9% from 4.5%. Core inflation also printed “well” - in that core CPIH was 3.7% (lowest since November 2021), and core CPI printed 3.4% (lowest since December 2024). I still see no 2% world anytime quickly, but the 3% world at least looks as though it is returning and then we can go from there. Air fare prices were down as the larger rises of 2024, once again, dropped out of the figures. Fuel was up, however, compared to last October when it was down. Education pressed on with 7.6% inflation now, with a significant monthly price rise - once the VAT on private schools drops out of the figures, though, this will normalise somewhat. RPI printed 4.3%, for those who have leases linked to RPI still. Why am I still sceptical of this return to 2%? Well, we know that council tax will still be another 5% next year, mostly. Energy costs are looking grim, with January’s price cap being higher than expected. The transmission cost increases alone of getting to 2030 are eye-watering. Some elements of the budget will be inflationary - whereas an income tax rise, unpopular though it might have been, would at least have been disinflationary. The path to 3% is clear, and perhaps even to 2.7% or so - below that, I feel that the entrenchment in the system is as strong as it has been for many years. OK - Rightmove asking prices and also the ONS Private Rents and House Prices. What are the key takeaways from the RM report? “Significant hesitation” and a larger-than-average seasonal slowdown, they say. The budget - of course - takes the blame, but the timing and delay deserve critique. Average asking prices - as reported by Mr Watkin too - down 1.8% to £364,833. The largest November drop since 2012, for context. They also still cite the decade-high number of homes for sale, although they don’t point out just how close it is right now to the 2024 market at the same time of year - and we know from the weekly analysis that that is reversing, at this point. Specific uncertainty mentioned? Mansion tax, of course - and concerns over CGT (not as bad as last year, but those lucky enough to pay CGT certainly don’t trust Rachel Reeves NOT to touch it) - and even SDLT (again - no leaks there, but not impossible - Scotland has 8% additional LBTT remember!). Agreed sales for homes OVER £2m (the accepted threshold in most of the sensible commentary for “mansions”) - down 13% year-on-year. £500k - £2m (the “nice problem to have” bracket) - down 8% in volume. Sub-£500k - a 4% drop in sales, but compared to the point where the budget was done last year and people kept calm and carried on, I’d suggest? (Or, you need another strata below this at say sub-£300k or sub-£250k, to show just how healthy that part of the market is right now). RM do note the underlying stability and the 4% increase in sales agreed compared to 2024. Improved affordability provides the foundation for recovery - and I’d agree. They expect a busy period before Christmas - potentially - once the dreaded budget is out of the way. I think it is too little too late for 2025, mostly, but expect a very robust start to 2026. Asking prices were down 0.5% year-on-year in entirety. 34% of stock on Rightmove has been reduced. The average size of price reduction is 7%. Both of those are the highest since February 2024, when we were coming out of a tough market if you recall. Average stock per agent is at 64, from 56 in January - so there is more competition and more need to reduce to attract the “bargain hunting buyers”. The ten-year average slowdown for November is 1.1%, in case you think 1.8% is outrageous. Are the sellers reacting? We know they are with these asking price drops, of course. Supply in the £2m+ sector is down 9%. Strangely, though, first time buyer pricing is down 0.1% year-on-year in asking prices, whereas second-stepper is up 0.1% and top-of-the-ladder pricing is up 0.7%. Then again - you can ask what you like……you have to get it of course. RM always likes to highlight the drop in the 2-year mortgage rates - down from 5.06% to 4.41% (average) when compared to 12 months ago. Lenders are still climbing over each other to offer headline-grabbing rates. Monthly cost analysis is also showing that a mortgage payment for a first-time buyer with a 10% deposit has dipped below the average monthly rent for a similar property (you still need that 10%, of course, and all the insurances and maintenance remember - this comparison infuriates me as you can tell!). Scotland is still pressing ahead very well, with properties still taking far fewer days to find a buyer than in the rest of the UK. North-West asking prices have pressed on year-on-year, though, up 1.9%. Ahead of everywhere, with the West Midlands in second place. London asking prices are down 2.1% year-on-year. At a borough level, Westminster asking prices are down 10.5%, with Kensington & Chelsea “second” at -4.6% on asking prices. The commentary includes a suggestion of a market of two halves, very much an analogy I’ve used myself a number of times in recent months; prime central has “needs-based” buyers only in terms of activity. Colleen Babcock, the RM resident expert, focuses on the probable December base rate cut and suggests that could be the platform for a positive start to 2026 - and I’m inclined to agree. To the ONS report, then. Remember - rent data is one month laggardly, price data is two months laggardly, as if we needed any more confusion. Rent was “only” up 5%, but is very much coming back down to where wage increases are. That was a drop from 5.5% for September. The average annual house price according to the ONS for September? £272k, with a 2.6% annual growth rate (last month: 3.1%). The North East continues to dominate the ONS figures for fastest rent growth. 8.9%. The Yorkshire anomaly persists, “only” up 3.8% year-on-year. London had its 11th consecutive month of slowing rent growth, but was still up 4.3% year-on-year. On the sales side, Yorks and the Humber turned things on their heads - up 4.5% year-on-year, compared to London which is now officially DOWN - down 1.8% y-o-y. Average rent is now £1,360. That 5% over the past 12 months represents £65. The 5% is the lowest rent inflation rate recorded since August 2022, before inflation REALLY took off. Scotland, post-rent-cap-massive-hikes, remains “sensible” at +3.4% year-on-year. The +2.6% figure for UK housing masks a tougher market in England, only up 2%. Northern Ireland still leads the pack at 7.1%. Scotland looks more than healthy, up 5.3% y-o-y. We can only conclude that the North - or, in reality, the cheaper stock - continues to hold a competitive advantage to the South at this time. There is very little investment grade stock in the South - and so all the demand has migrated to the North and the Midlands, keeping prices buoyant and transaction volumes up. Right - yields are still increasing, then, as far as it goes. Good news for all involved, inevitable with the normalisation of interest rates as well. How long will that last? That’s the killer question, but I’d expect it to last another 12 months at least. Onwards with the PMIs and a summary of all of the relevant S&P global reports in the past week to 10 days. Where are the figures on the PMIs? Near-stagnant for November on the composite - 50.5 down from 52.2 in October. The deteriorating metrics have also tended to print even worse, so this might be below the 50-handle when it gets finalised in early December. Why? Well, services fell to the same number, a 7-month low, 50.5. Chris Williamson, the Chief Business Economist, notes that this is consistent with 0.1% growth for Q4 and 0% growth for November. Manufacturing was a bright spot, however, printing a 14-month high of 50.2 (yes, that’s the sad state it has been in) - but a print above the 50-handle will be most welcomed. Why? A boost in domestic sales and a pick-up in sales from A-Pac and the Middle East. There was a decline in new work in the Service sector for the first time since July - and why? The budget and “client caution”. No surprises, no worthwhile pushbacks to be honest. What did we learn from the other reports, including confidence, jobs and the global UK-focused business outlook? Cost pressures are persistent (I know!) - +70% on a balance figure of firms expect to see staff costs up in the next 12 months. Expectations for non-staff input costs hit their highest level in 3 years too, +56%. However - as of right now firms are cutting prices to win sales, and service sector charge inflation eased considerably, whilst manufacturers recorded an outright decline in factory gate prices for the first time since October 2023. However, margins are squeezed of course and this is directly impacting profitability and also future investment. Profit gains are expected by just +5% of firms on the balance figures. Capex expectations are negative for the third survey in a row at -6%, and firms projected that overall they would spend less on R&D (balance -7%). There’s more loosening in the labour market, according to the S&P reports. Falling demand for staff, a “rapidly increasing” supply of candidates (congruent with unemployment jumping 0.2% in one month of course) and the result? Weaker pay pressures. Permanent staff placements fell again, although at the softest rate of decline for 15 months. Temporary billings expanded slightly for the first time since June 2024. However, private sector employment fell more quickly according to the flash PMIs in November, so we will see how that plays out in the job report next month. Candidate supply is surging, at rates not seen since late 2020 thanks to redundancies, and fewer available job opportunities. Demand fell at a “historically market pace” in October. How about consumer confidence? The indices were at a 4+ month low across the board. Labour market sentiment managed to remain above the 50 handle at 52.6, everything else was sub-50 and the spending sentiment index printed 38.2, which is congruent with other headlines on this subject in the past week. Why so? Yep, the budget. We get it. Business leaders have emphasized the need for a confidence builder when the statement is finally out next week. Yep, agreed. Will we get that? The grim warnings from the big dogs towards the Chancellor are clear - there CANNOT be a repeat of last year, and measures in the budget MUST stoke business investment, not deter it. There’s positivity from the KPMG chief exec who suggests that a budget that DOES build business confidence will be a catalyst for renewed hiring.

That leads us into the gilts and swaps. The 5-year? A week of decline in the yields before the budget, in the end, even though there was a breakout attempt to the upside on Wednesday. We opened at 4.008% and closed at 3.967%, a simple 4 basis point decline. Thursday’s close was 4.002%. That left the Thursday night swap close at 3.65%, 35 basis points remaining the discount. One month ago? 3.617% - but one year ago it was 3.954%.

How about the longs? The 30-year opened at 5.378% and closed at 5.371% - again there was an attempted upside breakout, but it was short lived. Ergo, the yield curve is about 3.5 points steeper than it was last week between 5 and 30 years. A really, really boring week on the gilts that saw rates come down a little bit - my favourite kind. That gets us to the deep dive. What did I want? To talk about something else. However, here we are, on the hill, and I think I’ve got to have one final go. It’s all anyone is asking me about. I’m doing 3 meetings next week (2 via zoom) AND a budget live on my main YouTube channel, www.youtube.com/@propenomixwithadamlawrence - during the budget. Also - if you haven’t seen it, I’ve released a new show this week collaborating with an old friend and media master - we have called it Mortar & Margins, for obvious reasons. So - what’s cooking for us mere mortals, then? How much will it hurt, and where? (The pocket, of course, I mean). We’ve heard it all by now. It is a watershed moment. It is definitely Reeves’ second budget - plenty believe it will be her last. On Polymarket, there’s an 18% chance (so about 4-1) that she is gone by the end of the year - Starmer is 50/50 to make it beyond next June (I’d think he will be gone if the vote in Wales, and elsewhere, is another Reform-quake, although Wales will be much tougher than just rolling over - Plaid Cymru are very much there to mop up though if the nation has had enough of Labour). The projected £20bn - £40bn got a little better than expected, a couple of weeks ago. The pledge to eat the frog and raise income tax was dropped like a hot potato. The hole now looks like it is in the £20bns, but many respected outlets are still running the £30bn figure. We will soon know - what’s a few billion between friends? Well, actually it is the difference between ending the 2-child benefit cap, and not, for example. We’ve hit “policy-analysis-paralysis” if we focus on what I believe we can trust from the news outlets. Anticipation of tax changes is already distorting behaviour. There’s word of another “landlord exodus” - there’s certainly been plenty of lead volume in these previous weeks. Why does it have to be done? Downgraded productivity, global economic headwinds, increased borrowing. We’ve seen it all this year. No action would mean a spike in gilts and something approaching a Truss moment. Won’t be happening. The feeling is that the focus WILL be on wealth in general (but will that be in “name”, or ACTUAL wealth - the first rule is that the fewer people you tax, the more those people will change behaviour - in this case geography, most likely!) Will it be something like a tax on homes in Band F and above, in which case the vast majority of what’s raised will come from those in Band F dwellings, not from the very most wealthy - and “Claimed”, politically, as a wealth tax? Highly possible. SDLT? If it stays un-reformed, could the rates go up on additional properties, up from 5%? As I’ve already said today - yes they could. Very possible. An extra per cent or two on overseas buyers extra 2% surcharge as well? Again, very possible. Could CGT come up to income tax levels? That one I really don’t think so - because it would likely lower the CGT take as people took cover, waiting for a different administration to be elected before they sold assets. How about the extra council tax bands, Band H2, H3, H4 etc? Again, very possible but not likely to raise all that much money. Some bad press in terms of elderly people who live in great unencumbered residences but don’t have much income - I can see the Telegraph articles already, not that they will necessarily elicit much sympathy! The income tax threshold being frozen for 2 more years - started in 2022 by Mr Sunak - yes, that’s a penalty kick, I think. The fiscal drag approach. We aren’t charging you more, per se, but you are earning more and so you pay more. And you don’t really SEE it - hence my favoured analogy of inflation being like carbon monoxide - it hurts, but you don’t know why (unless you know, of course, because you have someone constantly telling you…..ahem). There’s people talking of secondary emergency budgets if the first one isn’t sufficient. This is more of a vote of no confidence in Rachel Reeves than anything, but I don’t think she’s incompetent. She knows what she needs to do. This is one hell of a look down the back of the sofa though, with the arms tied behind the back thanks to the ridiculous and counterproductive manifesto pledges on tax. There’s been some speculation of a return to help-to-buy, and I had a tip-off a couple of weeks back that it IS happening. However, a lot has changed in those past two weeks - but if nothing is done here to spur housebuilding on, it makes even more of a mockery of the unachievable 1.5m homes target that was set. Will stamp duty relief come back for first time buyers as well? That’s possible, targeted support for FTBs has a good chance. There’s speculation out there that rates for non-residential surcharges (currently at 2%) could go as high as 6%. This is odds-on according to the commentators on it. It would only raise about £100m even if it went to 6%, so it isn’t going to move the needle, but might score some political points. What should overseas buyers do, then? Buy existing property investment companies, and just pay SDLT on the shares (unless they see that one coming, in the Treasury, but they normally don’t). How about the removal of the “death uplift” - CGT dying on death, and IHT being paid? Is there a chance this might be passed on, so the beneficiaries inherit the CGT liability as well, and then still have IHT to contend with (depending on the value of the estate)? It’s possible. It would generate some activity too - because CGT dies on death, it does change behaviour meaning more people hold assets until death. There is one survey pointing to 85% of landlords looking to sell having CGT fears as their primary driver. I am surprised at this, and not sure how prominently the Renters’ Rights Act (for example) was in the questions. Supply of rentals, particularly in higher value areas, looks sure to continue to be squeezed, however. Mansion tax is scoring over 80% probability on my basic model for this budget. It feels long-odds-on. How does it manifest itself though? We will see. “Super Tax” is the monopoly feeling about it. How about sorting out the valuation problem across the UK, in that properties have not been revalued for council tax purposes since 1991? A very low probability event, under 10% likely - with commentary considering that sort of play “political suicide” (and I’d agree). How about broadening the IHT base? Very possible, I think. Increasing the IHT thresholds to 10 or 12 years for potentially exempt transfers? A coin toss. A lifetime cap on tax-free gifts (the majority of people get this wrong anyway, thinking that gifts attract tax now - they incur tax if the gift involves the sale of a property asset, for example - CGT - but not if the gift is cash). Pension pot tinkering? There have been a slew of headlines just in the past few days. The FT seems to think it is happening. Other publications seem equally convinced it isn’t. We can be assured that salary sacrifice is taking a haircut, perhaps with a cap put on it of £2k per year, or so - a nice stealthy raise there, because employers will pay their 15% NI and the employee will pay their slice too. Another coin toss I think. How about the exit tax? I have it at odds against, but maybe one chance in 3 or 4 of actually happening. If it happens, it comes in overnight. There’s no other way. If they aren’t doing it, they BETTER be VERY clear that it will NEVER be done by a Labour government, otherwise they are going to drive behaviour for people who are large taxpayers to get out of the UK before the next budget comes along in 2026. Does all this add up, and how about the giveaways? A promised reform to the business rates system - but Eurotunnel are lining up the lawyers. The point being that the larger businesses pay more and the smaller businesses pay less. We need to see the maths play out. The Two-child benefit cap looks very likely to go to give the noisy backbenchers something, at least. VAT at 5% on residential fuel bills could also do with going - that’s another £2.5bn though. There’s no other way this Government can get energy bills down - that much is painstakingly clear. The 3p a mile surcharge on full electric cars also looks highly likely - and that’s the start of the pain for EV owners, I’m sure, because it will be easy to tweak that one upwards year-on-year. It would be better to remove the green levies into general taxation - although it would cost more, about double that - and it would need to come from somewhere of course, but energy bills could go down £200 a year rather than about £90 a year if the 5% VAT was removed. Or - remove all that from electricity, but keep it on gas, if you want to try and nudge behaviour. What is the word on the street, then? Smorgasbord, as it goes - or “death by a thousand cuts” if you prefer (like you would!). And how about the National Insurance just for property income? Well, that would be yet one more straw to break the camel’s back. Don’t forget 94% of rental property, at last count, is still owned in personal names! By hitting the income, it hits even harder than section 24 of course - half (plus or minus about 5%) of landlords are unencumbered anyway, so it never particularly affected them. Would it raise much? £2bn - £3bn, depending on behaviour, if implemented at 8%. Hamptons estimated it would be more like £1bn because a swathe of incorporations would follow, and of course that’s possible - but this isn’t just expected by Hamptons - the Resolution Foundation and the IFS have suggested similar behavioural changes. I always come to the same conclusion here. This first level analysis never discusses what percentage might be passed on to the tenants in higher rent rises? Well - when section 24 was implemented, it was suggested in analysis that tenants absorbed 100% of the costs within 2-3 years. This - as always - comes down to supply and demand, and an inelastic price elasticity of demand in the rental sector. The pass-through effect is likely to be highest in London and the South East, whereas it wouldn’t be 100% in Wales, or the North East, for example. Rents could rise by £17-£35 a week, if this were to happen, on top of already planned rent rises. However - there’s never the alternative - if it hadn’t happened, what would rents then have done - you can’t prove it of course. The getout clause for the Government? Survey data (and I am always sceptical about surveys of intention, rather than measures of action - case in point this week, immigration figures from the ONS, a revision that trebled the number of Brits leaving the country, when they measured actions rather than survey data) points to the fact that 40% of landlords would plan to sell a property if National Insurance was introduced, and only 7% of respondents would continue buying. Now, the 7% continuing could all be 5-6 times bigger than the exiters - but that seems a difficult leap of faith to make. The national insurance application, now that the income tax rise has been ruled out, looks like a 50%-60% chance. One more consideration around Inheritance Tax, before I stop ruining your day. Could taper relief be abolished altogether, so the 7-year rule is a complete cliff-edge? Currently it edges down from year 3, of course, by 8% per year. Pensions could also see the employer still pay the national insurance on the contributions - as if the employer has not had enough pain to deal with in the past 12 months. However, pension contributions currently cost the Treasury £50bn per year in “lost” taxation, so you can see why they might like a slice of that. Private jets to pay a higher air passenger duty makes sense, and changes very little I think - but gets political points for “taxing the rich”; gambling duty changes should raise up to £3bn, targeted on the fixed odds betting terminals - very few will shed too many tears there. There’s also been recent talk of “shadow austerity” - paring even more away from the real terms growth in spending in non-protected Government departments to 0.5%, or 1% perhaps. My final comment will be on the Cash ISA limit. It strikes me as a good idea at the moment, in the now, to disincentivize saving. We need growth, and for growth we need consumption to rise, and confidence to be better. The latter is unlikely with “this lot” in charge, because there is no inspiration, no boosterism, no positivity about the UK. The former, however - the “stick” side of the equation - is to lower the returns for saving. Route 1. Brute force. Can you force people to buy stocks? Probably not, but cut the ISA allowance in half and you will see people still save the same amount but in a tax-paying account, most likely! In just a few days, we will all know the answers - but what I know for sure is - I’ll be here next week and for the foreseeable future, Keeping Calm and Carrying On! So - as I draw this week to a close, the next Property Business Workshop is filling up. As we turn our eyes to 2026, tickets are available! We start the year with a bang, discussing strategic planning and how to make the most of the next 12 months, with some of our own methods and takes on productivity and time management, alongside systems and processes. The other half of the workshop is about the most common pain point in SME property businesses - accounts, bookkeeping and group accounting. This is about measuring asset performance - not “how to use Xero”, but “how to make the most out of financial information” - what should you be seeing monthly, and how should you interpret it properly and use it strategically to grow your business, safely but quickly? SUPER EARLY BIRD tickets are currently available with a genuine 20%+ discount off the face value. As always we have real life case studies about our own experiences, and close with our “no-holds-barred” Q+A. Anything individual to consider? Get a VIP ticket and join us for dinner, in a smaller setting with an opportunity to discuss any specific roadblocks or issues in your property business at the moment. That’s the best way to get a substantial conversation with myself, Rod and other experienced Property Business people! Join us! Thursday 22nd January 2026, Central London; https://tinyurl.com/pbwnine Above all - please remember to Keep Calm, ALWAYS listen to or read the Supplement, and Carry On. There will be opportunities abound this year and towards 2030 and beyond - the landscape has been set for a surefire bull run. It will be slow(ish), and take a little while longer to get off the ground - and the amount of stock around is still keeping things suppressed at the moment - but as the market continues to improve slowly, it is a case of “here we go” in my opinion.

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