Your current PM at time or writing, Rishi wants to jump on the Inflation Celebration Bus, and say how brilliant he is. (Despite the fact he can not control or affect the wholesale energy market.) Within this Blog we will explain the only real reason inflation is down and flag the risk the media and MPs who ignore that affect on over 21 million in the UK from an area no one mentions. We also talk about why in less than five months those MP’s on the champers claiming they affected this lower inflation, will be hiding behind desks in Westminster, as your cost of living looks set to rise and the Housing market slows further! (Spoiler alert, the PM be it Blue or red can not do anything really to lower Inflation and as mentioned below, many Tory policies have made renting more expensive, and limited mortgage choice and inflation could rise soon.)
Inflation at 4.6% is good and has gone down mainly due to falls within the Housing, Water, Electric, Gas and other Fuels. (Or the HWEGF/Utilities sector). The main reason for these utilities being down is due to Ofgem reducing the price cap in October and many consumers have not actually paid Oct bills yet! And this is a key point many ignore. You see some categories that make up the total number are classed differently. Food prices are compared at the price you pay at the till in Sainsburys, but with Energy/Utilities for your home, it’s based-on the rate for electricity or gas changing! The price cap is having a big impact in this area. But what’s not mentioned is that the UK government paid £400 towards people gas/electric bills from Oct 2022 to March 2023! The £400 subsidy was paid over six months, so people are today paying more for the gas/electricity than 12mths ago in terms of real cash leaving your wallet.
But the area I want to really flag is the Owner Occupiers Hosing costs, or as I call it the OOH sector. Most of our media are ignoring this and that’s a concern for over a third of the UK. OOH is now higher than inflation and is pushing inflation up so this should have made many ask why, especially the media and MP’s. I flag this as it will be an area of concern for anyone renting or who has a fixed term Mortgage. You see many fixed terms will end soon and this will influence OOH numbers as the cost of your mortgage will rise. (This is roughly about 1/3 of the UK that has a fixed term! O and I must mention that if a landlord’s fixed term deal ends and the costs rise for them, expect the rents to rise.) So, looking at the OOH data many are saying that this could see inflation rise soon. Within OOH Rents (currently at 6.3%) are high and in my view will rise as the increased costs for Landlords are passed to tenants. (See our other Blog as to why since back to Cameron’s first time in Government (Osbourne period), being a landlord has been made harder by the Government! Also, worth noting a lack of big house building over last 12years buy Tory MPs!)
Note lettuce Liz also removed many mortgages for you to choose from, and she also drove up Rental costs and slowed market confidence, all in less than a month! Liz spoke about helping families, but her actions made renting lots more expensive! Bizarrely some want to listen to her or worse, bring her back to do more of that? OOH Housing costs are trending upwards in the Government graphs (see pic below with OOH Black Line) and this was 100% ignored by the popular media! This black line is trending up, and will probably rise again!
Now, I had very bad food poisoning over the last week, and looked for this issue in the main press, and no sign of it? Why are the Media not flagging the risk to the public, is it because they need or must protect the MP’s? When OOH rises, and higher wage growth hit do you think Tory press or Tory MPs will still be sat on the top deck of the Inflation celebration bus, retweeting Jeremey Hunt videos? NOPE! So based on this short summary we could see inflation rise next time and I feel the public will lessen discretionary spend, as Mortgage costs rise, and rents rise in my view and for the property sector that’s slowed dramatically I expect a normally quiet Winter Property period to be about as cold as the arctic. (This is your recession warning PM!) The government could take steps to address this risk, but I doubt that will happen. The Liz legacy on millions is real, with rents up, and the reduced mortgage choices from her actions, again ignored in the media.
From over 10 years of being a Landlord I can say in any Property cycles up or down you can always find bargains for buyers and the number of Joint Ventures within our business will increase in 2024. We have past Property Joint Ventures (JV) that offered clients better returns than high street banks, and demand is up for our JV Membership. My time helping investors get great prices on properties is busier than ever, and many landlords exiting is driving rents up, so those still being landlords have some benefit to staying in the sector. (See our other pages for more on our JV options if you wish?)
We need more landlords; we need more homes to lower the rents Mr. Rishi! Your PM whom less than 1% voted for is holding emergency Press conferences this week for a boat plan that is inept, yet no Housing strategy or sudden PR Press conference to address Brexit shambles? So trying to stop boats that you can't is more vital than the recession or inflation that affects 100% of the UK's 63m? Seem Rishi is focused on the wrong topics, wasting time he does not have, and the polls shows that! The fact the media are praising the PM who did nothing to lower inflation is just odd. (The Brexit Mess and inflation, especially around the high cost of your Food are linked and this is the subject of another blog!) The strategies the government could use are obvious, but they are doing nothing. I talk to many Landlords across the UK who are adapting to survive, laughing at the lack of real steps to lower rents from the Government! If the OOH numbers trend upwards and a lack of solutions from the Brexit shambles, then I predict inflation to rise next time. I might be wrong, and I really hope it falls as this drives consumer spending and we could maybe get tax cuts! If inflation does rise next time, then 100% for sure expect the MPs to say inflation is not under Gov control in a few months, as Rishi talks to you from his Jet, flying off to his next job. I also bet you that MPs won’t want to be linked to inflation and will plead with the press to blame anyone or anything but the MPs! (Hint: We wish the MPs would gather experts to advise and shape strategies but can only see MPs wasting millions and time they don’t have, ignoring the long term for a headline or PR event.)
Note: Any mention of Prices or returns, % rates or figures are not financial advice, or guidance. The Blog is opinion based on experience, and we hope inflation lowers, and consumer spending rises.