In real estate terms, I’d classify as a baby. I may have nearly two decades of experience, but in terms of market cycles, that’s not so much. Yes, I have lived through and survived the financial disaster that was 2008, and I managed to hang onto my hat, but still I don’t take anything for granted.
I was fortunate to reap the benefits of cheap credit and some stunning mortgage deals scored before the 2008-mess, but as I’ve learned: Good things never last.
Enter George Osborne.
As a portfolio landlord with properties nationwide I can assure you his plans were pretty disastrous for somebody like me, especially when that somebody like me didn’t own the properties in a company due to previous tax planning that then got scrapped.
But there we are, life has a habit of happening while you make plans.
Osborne’s tax changes worked – especially section 24. He forced me to sell some good stock to keep my business going and made me wonder what to do about some of the lower priced/ higher yielding stock that had yet to recover any values – despite being held for over 15 years.
Perhaps many people will be surprised to learn that, they’ll think – but the property market has been amazeballs these past few years? You must be a crap investor. I would reply, yes, but not everywhere. The UK market is big and unequal and is one of the reasons why I have no interest in ‘averages’.
It’s a questionable and galling process to sell off good stock (I term that the stuff that really exploded in value) to keep the bad stock (those where capital values are firmly pancakes but earn decent yields).
And it’s something I debate often with myself when I look again at places I sold and what they’d be worth now (don’t recommend this).
But the thinking then, as it is now: I cannot pay a gas bill with capital gains unless I sell.
Equity is meaningless unless you sell (or remortgage – but this doesn’t work for me with S24)
First and foremost, for any business to succeed you need cash flow.
Cash is what pays your bills, ensures you keep your stock in good condition, gives you the ability to pay the tax and run your business. It’s a bugger I have to pay so much, but I remind myself often: Paying tax is a sign of success (dress it up anyway you want to make yourself feel better!)
Anyway, I’ve been selling off for a number of years now and I know that goes against a lot of what other investors do, but I’m OK with my decisions – I’ve also been buying more, but that’s a different story.
Anyways… in March this year, I decided to start selling more. I’ll get in on the ‘Boris Bounce’ was my thinking.
You know as you sit there reading this, that didn’t happen.
What did happen is Coronovirus and a complete freezing of the property market. Viewings weren’t allowed, house moves weren’t allowed, evictions still aren’t allowed. Pretty much anything to do with the normal functioning of the property market wasn’t allowed.
Which is a mighty big sucker of a suck.
Of course, the media claims the market has now turned, properties are all shiny and sought after again, but when I called up a few agents (and some were even in desirable commuter belts down South) the response I got was not what I thought.
And so I’ve been mulling on this for the last few weeks (and when I don’t know what to do, I do nothing) and then I said to myself: What have I learned this time?
I know we’re going to hit a massive recession, lots of people are going to lose their jobs and the outlook for the next five years is bleak.
So why am I not selling, when I intended to sell?
Despite everything – the world falling apart, loads of gloom and doom on the horizon, everything going to pot yada-yada – people will always need somewhere to shelter.
People will always need somewhere to lockdown and to hide from the world.
Regardless of anything else happening on the planet, property is a key need, and that’s my business.
I fully expect the government to mess about more with policies and taxes and for me to question again why I’m in the market, but for now, I still believe what I have are assets. The market will fluctuate, nose-dive, top-out and everything else in-between, but the most important thing is to remain on-board for the ride and come out the other side.
Your property planning may not be perfect and things may not turn out quite how you wanted, intended, hoped for or anything else. But if you’ve got cashflow, you can go the journey. It may be bumpy and lumpy and you may have regrets for signing up for the ride, but remember this: everybody needs somewhere to live, love and lockdown in.
