London agent: ‘Truss Toy Town economics are huge gamble’
Property expert Allan Fuller warns economic policies of Prime Minister Liz Truss and Chancellor Kwasi Kwarteng could bring chaos.
The fallout from last Friday’s mini-budget continues apace with one leading South West London agent warning of more chaos to come with the implementation of ‘Toy Town’ economic policies a ‘huge gamble’.
Allan Fuller of Putney-based Allan Fuller Estate Agents says that the one thing that you cannot say is that Truss has not stuck to the policies that she espoused when on the hustings circuit with rival Rishi Sunak.
Fuller told The Neg: “The fact that her ‘Toy Town’ economics would be a disaster was completely lost on the majority of the members of the Tory Party, who have managed to bring abject chaos to an already fragile economy.
“For property – she giveth with one hand and taketh with the other.”
GAMBLE
Fuller says it was a massive gamble to reduce stamp duty while at the same time oversee an introduction of policies that would inevitably lead to a large rise in interest rates and higher mortgage payments.
Already this week Halifax, Virgin Money, Skipton Building Society, Clydesdale Bank, Scottish Building Society, Leek United, the Nottingham, the Bank of Ireland and Paragon have all pulled mortgage fixed rates as uncertainty over Bank of England Base Rate continues to grow. The base rate is currently at 2.25% but some City pundits predict it could soar to 6% by spring next year.
I fear a lot of people may well put off moving plans until next year.”
Fuller says: “It is likely that, in London and the South East at least, the strong demand for property will sustain values and we will not see a slump, but it will be no thanks to her dangerous gamble.”
He adds: “I fear a lot of people may well put off moving plans until next year. So far with the deals that we have in progress nobody is reconsidering their options at the moment.
“However, all the headlines in the media are negative and carry a worrying inference. Until the dust settles it’s going to be a worrying time for many wannabe homemovers.”
Kami-Kwasi freakanomics more like, is Truss really going to be Margaret Thatcher on steroids and believes that monetarism is the way to balance the books. Clearly the city and the markets do not see it her way.
As to balancing the books, lets see on SDLT a £2,500 saving if purchase if £250,000 or more, but with increase in typical mortgage £100 a month due to recent BoE interest rate, so in two years of a typical 25/30 mortgage that £2,500 benefit is eaten up.
Within the next six weeks there is likely to be an extra 1% added to the recent 0.5% BoE rate, and we are nowhere near 2023. Will the next government intervention be propping up all homewoners unable to pay their mortgage.
I am not for a second saying Truss or University challenge Kami-Kwasi created the present situation, they inherited it – but the global recession, war in the Ukraine, supply chain difficulties, COLC etc, means that those that govern have a huge responsibility to stablise the boat, not take a hatchet to it and make things worse.
The property market is based on sentiment, and right now borrowing Rishi’s policy as a fiscal pulmigator at a time when there are no pennies in the bank is just madness.