The problem with owning property is that it’s hard to move.
And, if the rumours are true, UK Chancellor of the Exchequer Rachel Reeves, desperate to raise funds but refusing to confront Britain’s structural problems, may be about to reach for the one thing that can’t run away: housing.
The truth is, after the Covid-19 pandemic, millions more people were parked on benefits. Welfare became the country’s single biggest growth industry. Now, instead of fixing this, the governing Labour party is going back to type: tax and spend, the playbook used by former chancellor and prime minister Gordon Brown. And if Ms Reeves reaches for a “mansion tax” or capital gains levy on family homes above £1.5 million (about $2 million), she will be detonating the last working engine of the British economy: property in London and the country’s south-east.
Britain is already one of the most taxed countries in the developed world when it comes to property. The Organisation for Economic Co-operation and Development ranks it number one in property taxes as a share of the gross domestic product. Remember France tried it, too, and watched its wealth and talent flee. The US, for now, treats primary homes far more leniently. And the places people are running to – Dubai, Singapore, Milan – are doing the exact opposite of what Ms Reeves is floating. They’re rolling out the red carpet for capital while Britain is rolling out His Majesty’s Revenue and Customs authority.
This isn’t just about billionaires. The families targeted by Labour are middle-class professionals in the south-east, the doctors and small business owners. Basically, anyone whose homes have risen in value but whose incomes are finite. These are people who’ve already shelled out tens or even hundreds of thousands in stamp duty, and now they’re told their primary residence will be treated like a speculative asset. They are the people paying the lion’s share of income tax, value-added tax and council tax. Labour’s message to them is clear: thanks for holding the country up, now here’s another kick in the teeth.
Markets know what’s coming. Government bond yields surged last week, signalling that investors are losing confidence in Britain’s fiscal credibility. That isn’t some footnote in the finance columns; it translates directly into higher mortgage rates, more expensive borrowing for businesses and a weaker pound. If Ms Reeves drives down house prices on top of that, the ripple effects will hit everything: banking, consumer spending and construction.
Property is not just an asset class. It is the collateral behind lending, the foundation of small business creation and household wealth. It’s the biggest psychological driver of consumer confidence. Destroy it, and you destroy everything.
The places people are running to – Dubai, Singapore, Milan – are doing the exact opposite of what Rachel Reeves is floating
The exodus has already begun. Non-doms have left. Wealth is flowing to the UAE, Singapore, Milan and elsewhere. Demand for London’s top-end property is down, and agents are already reporting price corrections. Ms Reeves may pretend this hasn’t dented revenue because VAT receipts look fine. But you can’t measure what never arrives: the businesses that never set up, the jobs that never came, the tax base that never grew.
“Easy to tax, hard to sell,” billionaire investor Ray Dalio once said of real estate. He’s right. But the minute you make property toxic, people draw the obvious conclusion: if they tax it once, they’ll do it again. That’s how capital flight becomes permanent. That’s how countries end up at the International Monetary Fund, begging for loans.
Labour thinks punishing property owners will rally its base of renters and public-sector workers. But it is a losing bet. Mr Brown’s raids on pensions and property helped leave Labour unelectable for nearly 15 years. His predecessor, Tony Blair, in the early years at least understood that Old Labour economics was a death wish. That’s why he invented New Labour, and why he won. Ms Reeves is throwing that lesson away.
Britain doesn’t need another redistributive stunt. It needs growth. It needs spending discipline. It needs a welfare system that doesn’t consume half the budget and keep millions idle while the rest foot the bill. But instead of fixing the problem, Ms Reeves wants to strangle the last working engine left.
Do this, and Labour won’t just sink the housing market. They’ll sink Britain. And, just like Mr Brown, they’ll sink themselves out of power for another generation.
UK’s AI plan
- AI ambassadors such as MIT economist Simon Johnson, Monzo cofounder Tom Blomfield and Google DeepMind’s Raia Hadsell
- £10bn AI growth zone in South Wales to create 5,000 jobs
- £100m of government support for startups building AI hardware products
- £250m to train new AI models
Tamkeen's offering
- Option 1: 70% in year 1, 50% in year 2, 30% in year 3
- Option 2: 50% across three years
- Option 3: 30% across five years
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COMPANY PROFILE
Company name: Letstango.com
Started: June 2013
Founder: Alex Tchablakian
Based: Dubai
Industry: e-commerce
Initial investment: Dh10 million
Investors: Self-funded
Total customers: 300,000 unique customers every month
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What are NFTs?
Are non-fungible tokens a currency, asset, or a licensing instrument? Arnab Das, global market strategist EMEA at Invesco, says they are mix of all of three.
You can buy, hold and use NFTs just like US dollars and Bitcoins. “They can appreciate in value and even produce cash flows.”
However, while money is fungible, NFTs are not. “One Bitcoin, dollar, euro or dirham is largely indistinguishable from the next. Nothing ties a dollar bill to a particular owner, for example. Nor does it tie you to to any goods, services or assets you bought with that currency. In contrast, NFTs confer specific ownership,” Mr Das says.
This makes NFTs closer to a piece of intellectual property such as a work of art or licence, as you can claim royalties or profit by exchanging it at a higher value later, Mr Das says. “They could provide a sustainable income stream.”
This income will depend on future demand and use, which makes NFTs difficult to value. “However, there is a credible use case for many forms of intellectual property, notably art, songs, videos,” Mr Das says.
Moon Music
Artist: Coldplay
Label: Parlophone/Atlantic
Number of tracks: 10
Rating: 3/5
Our family matters legal consultant
Name: Hassan Mohsen Elhais
Position: legal consultant with Al Rowaad Advocates and Legal Consultants.
AL%20BOOM
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Profile
Company: Justmop.com
Date started: December 2015
Founders: Kerem Kuyucu and Cagatay Ozcan
Sector: Technology and home services
Based: Jumeirah Lake Towers, Dubai
Size: 55 employees and 100,000 cleaning requests a month
Funding: The company’s investors include Collective Spark, Faith Capital Holding, Oak Capital, VentureFriends, and 500 Startups.
CONFIRMED%20LINE-UP
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
Day 1, Abu Dhabi Test: At a glance
Moment of the day Dimuth Karunaratne had batted with plenty of pluck, and no little skill, in getting to within seven runs of a first-day century. Then, while he ran what he thought was a comfortable single to mid-on, his batting partner Dinesh Chandimal opted to stay at home. The opener was run out by the length of the pitch.
Stat of the day - 1 One six was hit on Day 1. The boundary was only breached 18 times in total over the course of the 90 overs. When it did arrive, the lone six was a thing of beauty, as Niroshan Dickwella effortlessly clipped Mohammed Amir over the square-leg boundary.
The verdict Three wickets down at lunch, on a featherbed wicket having won the toss, and Sri Lanka’s fragile confidence must have been waning. Then Karunaratne and Chandimal's alliance of precisely 100 gave them a foothold in the match. Dickwella’s free-spirited strokeplay meant the Sri Lankans were handily placed at 227 for four at the close.
The specs
Engine: Long-range single or dual motor with 200kW or 400kW battery
Transmission: Single-speed automatic
Max touring range: 620km / 590km
Price: From Dh250,000 (estimated)
UAE currency: the story behind the money in your pockets
Brief scores:
Toss: Sindhis, elected to field first
Kerala Knights 103-7 (10 ov)
Parnell 59 not out; Tambe 5-15
Sindhis 104-1 (7.4 ov)
Watson 50 not out, Devcich 49
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Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
The five pillars of Islam
1. Fasting
2. Prayer
3. Hajj
4. Shahada
5. Zakat
Checks continue
A High Court judge issued an interim order on Friday suspending a decision by Agriculture Minister Edwin Poots to direct a stop to Brexit agri-food checks at Northern Ireland ports.
Mr Justice Colton said he was making the temporary direction until a judicial review of the minister's unilateral action this week to order a halt to port checks that are required under the Northern Ireland Protocol.
Civil servants have yet to implement the instruction, pending legal clarity on their obligations, and checks are continuing.
Who was Alfred Nobel?
The Nobel Prize was created by wealthy Swedish chemist and entrepreneur Alfred Nobel.
- In his will he dictated that the bulk of his estate should be used to fund "prizes to those who, during the preceding year, have conferred the greatest benefit to humankind".
- Nobel is best known as the inventor of dynamite, but also wrote poetry and drama and could speak Russian, French, English and German by the age of 17. The five original prize categories reflect the interests closest to his heart.
- Nobel died in 1896 but it took until 1901, following a legal battle over his will, before the first prizes were awarded.
Who's who in Yemen conflict
Houthis: Iran-backed rebels who occupy Sanaa and run unrecognised government
Yemeni government: Exiled government in Aden led by eight-member Presidential Leadership Council
Southern Transitional Council: Faction in Yemeni government that seeks autonomy for the south
Habrish 'rebels': Tribal-backed forces feuding with STC over control of oil in government territory
more from Janine di Giovanni
Company%20Profile
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Graduated from the American University of Sharjah
She is the eldest of three brothers and two sisters
Has helped solve 15 cases of electric shocks
Enjoys travelling, reading and horse riding
Company profile: buybackbazaar.com
Name: buybackbazaar.com
Started: January 2018
Founder(s): Pishu Ganglani and Ricky Husaini
Based: Dubai
Sector: FinTech, micro finance
Initial investment: $1 million
Killing of Qassem Suleimani
Profile
Company name: Jaib
Started: January 2018
Co-founders: Fouad Jeryes and Sinan Taifour
Based: Jordan
Sector: FinTech
Total transactions: over $800,000 since January, 2018
Investors in Jaib's mother company Alpha Apps: Aramex and 500 Startups
Where to Find Me by Alba Arikha
Alma Books
