The death of the landlord

Spring is property auction season, when a motley collection of semi-derelict houses, flats with leases in the single figures and the homes of mortgage defaulters get sold off. This year, though, a scan of the catalogues of some of the UK’s leading property auction houses reveals a new class of property under the hammer: rental flats. Under pressure from rising interest rates and increasing regulation, many landlords are opting for an exit strategy. According to recent research from estate agent Hamptons, Britain’s rental sector is losing homes at a rate of 66 per day. Agents across the country report an influx of instructions from small-time landlords who’ve decided to invest elsewhere.

Why paying more dividends could save the planet

Climate emergency demands action, not rhetoric. So, on the eve of COP26, which UK news item promises to deliver the most positive impact for the future of the planet? Not, I suggest, Sadiq Khan’s extension of the Ultra Low Emissions Zone to the North and South Circulars, imposing stinging costs on owners of older diesels who can’t afford newer ones; nor Rishi Sunak’s £7 billion pledge for sustainable transport in cities outside London — only £1.5 billion of which turns out to be new money. No, the headline that matters more is the one that says dividend payments by UK companies are returning to normal. During the darkest days of

Will the new breed of retail investors cash in – or crash out?

‘Feed the ducks when they’re quacking’ sounds like advice from a foie gras farmer — but let’s leave gastronomy till last and focus first on stock market activity. The saying actually comes from Wall Street and means that if investor demand is strong, it’s best satisfied with ample supplies of new stock. What’s wrong with that? Nothing, if the investors understand risk and the offerings are sound. But is that what’s happening in the current retail investment craze on both sides of the Atlantic? Probably not. From its low in March last year, the FTSE 100 index has risen 40 per cent. A hectic London market in new issues since the

Comedy gold: the economics of internet irony

If you’re looking for proof we live in a computer simulation, consider the farcical story of dogecoin. Named after an internet meme about a talking dog, the joke currency was created as a parody of bitcoin. Dogecoin has no practical uses, yet online investors have ploughed billions into it. ‘We thought it would just make the viral rounds on social media,’ said founder Jackson Palmer. Last week the valuation passed $68 billion — more than Kraft Heinz and Ford. Palmer is now worth several hundred million dollars. Not bad for a Twitter gag. Although it’s seven years old, dogecoin wasn’t a big deal until a few months ago, when supportive

The emptiness of the UK-India trade deal

Britain and India have been trading for over 400 years. For 190 of those, between 1757 and 1947, the subcontinent was close to being a captive market of the United Kingdom. Today commercial turnover between the two nations is a mere £23 billion — a tenth of the goods and services traffic between Britain and the European Union. For many Leave voters, Boris Johnson included, expanding trade ties beyond the EU’s borders was a major motivation for Brexit. India was seen as both an exciting emerging market but also a nation that is culturally entwined with this one. However, five years after Britain voted to depart the lucrative single market,

Why I won’t invest in Deliveroo

‘The reason we have the vaccine success is because of capitalism — because of greed, my friends.’ So Boris Johnson told his backbenchers last week, though he immediately muttered ‘Forget I said that’ while aides tried to explain it as a joke on the chief whip, who was munching a cheese and pickle sandwich at the time. Whatever, the PM’s gaffe makes a neat text for a short Easter sermon. The fact is that ‘capitalism’ — the mustering of vast private-sector resources to bring lab-tested potions to mass production in record time — has indeed delivered a triumph, in combination with university science, a smart Whitehall taskforce, military logistics and

Is this a once-in-a-generation chance to invest in central London?

Buy when there is gunfire on the streets, goes the old adage. But could this be a case of the right time to buy being when there is, well, hardly anything happening on the streets? Few investments have been as hard hit by Covid-19 as commercial property in central London. As shops and restaurants have been closed, and office staff made to work from home, landlords have struggled to collect their rent. In the six months to September, for example, Shaftesbury, which owns 600 buildings in the West End including 1.9 million square foot of retail and office space, managed to collect only 41 per cent of what was due,

The car industry is accelerating towards an electric future

Back in November, when Downing Street’s pandemic responses looked daily more incompetent, the announcement of a ban on sales of new petrol and diesel cars by 2030, ten years earlier than originally planned, was largely greeted — along with the rest of the ‘Ten Point Plan for a Green Industrial Revolution’ — as another exercise in Johnsonian distraction and thin-air number-plucking. Auto makers responded defensively, citing the huge costs of re-engineering model ranges in short order and the shameful failure of ministers to encourage investment in plug-in networks for electric vehicles. Meanwhile, Tesla founder Elon Musk announced he would site a battery ‘gigafactory’ in Germany because Brexit made the UK

Matthew Lynn

Up Crash: why are markets soaring as the economy tanks?

Shops are boarded up. More than four million people are on furlough with little idea of whether they will have jobs to go back to. Global trade has hit levels last seen a decade ago, and government deficits are soaring, while most developed economies have seen output shrink by 10 per cent, a collapse not seen since the Great Depression of the 1930s. On just about every measure imaginable, the global economy has never been in worse shape, and we are all a lot poorer. And yet here is a puzzle. Why can’t we see any evidence for that in the financial markets? Instead we are witnessing a series of

The Reddit rampage is a sign of market turmoil ahead

The Reddit story — in which a ragtag army of small investors have executed a spectacular short squeeze against hedge-fund goliaths — can be interpreted two ways. Some say it’s another populist citadel–storming in the spirit of the moment, but this time an admirable one because its target is ‘Wall Street’, which everyone hates: the so-called ‘stick it to the man’ version. Others see a fever of price-chasing, part-driven by lockdown despair, akin to crypto-mania and the surge in online gambling; in this version, it has nothing to do with serious investment but is a sure signal of more market turmoil ahead. To recap: several million retail investors connected via

Why I joined the online army taking on the hedge funds

I spent most of last week drenched in sweat, launching a vicious assault on Wall Street hedge funds which cost them $20 billion. Along with thousands of other ‘degenerates’, I bought shares in GameStop, a struggling videogame shop whose value has recently soared by 2,000 per cent. Behind the surge is an online community called WallStreetBets, where bored young men gamble on barely researched stock tips and crack tasteless jokes. The community, which lives on the social media website Reddit, has a history of hilariously aggressive stock-market bets. In 2019, for example, a 19-year-old member made $700,000 and then lost it all again within two weeks. Last week WallStreetBets became

The capitalist nihilism of WallStreetBets

When Croatian movie director Dario Jurican ran in the country’s presidential election in 2019, his campaign slogan, ‘corruption for everybody’, promised that normal people would also be able to profit from cronyism. The people reacted with enthusiasm although they knew it was a joke. A similar dynamic is present on the WallStreetBets subreddit, which subverts the financial system by over-identifying with it or, rather, by universalizing it and thereby revealing its in-built absurdity. The story is well-known already, but let’s briefly recap. Wallstreetbets is an online group in which millions of participants discuss stock and options trading. It is notable for its profane nature and promotion of aggressive trading strategies.

My stamp duty solution for the Chancellor

On the Wednesday in early July when Rishi Sunak announced a temporary increase from £125,000 to £500,000 in the stamp duty threshold for house purchases, a record 8.5 million people visited the Rightmove property website and I’m pretty sure I was one of them. I continued visiting it weekly: it became a lockdown obsession, alongside French television thrillers, until last month I finally spotted a London flat I wanted to buy. Now, like thousands of others, I’m pushing to complete before 31 March, when the stamp duty holiday — a £15,000 saving for me but the equivalent of a £3.9 billion annual giveaway for the Treasury — is due to

Covid has left Britain printing money like never before

Lockdown is convulsing the British economy on multiple fronts. ‘Going to work’ has been upended, hitting transport and commercial property sectors. The demise of the high street accelerates as online retail surges. Yet the definitive Covid-related economic trend is happening within the national accounts, as the government spends vast sums on furloughing and other business support, while our locked-down economy struggles to generate tax. This has big implications for investors. The UK borrowed an astonishing £215 billion between April and October, almost twice the annual NHS budget. Our national debt now exceeds £2,000 billion — and just outstripped annual GDP, a first in our peacetime history. Amid renewed lockdown, with

The end of the line for the rail franchise fiasco

Good riddance to the passenger rail franchise system which has finally been killed off by Covid, though a majority of the travelling public might say it should long ago have been put out of its — and, more pertinently, their — misery. The complex scheme to privatise British Rail launched by the Major government in 1993 defied those who said it couldn’t be done and was designed by the Treasury to maximise proceeds to itself. In doing so, it fractured the industry into a myriad of separate owners, operators and service providers that rarely worked in harmony or created competition for the benefit of users. The consequences of this structural

The battle to tackle excess boardroom pay may already be won

At a low moment in late March, I suggested that all large companies should consider temporary cuts in executive salaries ‘both as a gesture of immediate solidarity and as a move to avert a longer-term backlash against wealth, privilege and the pillars of capitalism’. Latest research from the Chartered Institute of Personnel and Development and the High Pay Centre reveals that 36 of the FTSE 100 list of top companies followed my advice, most commonly with a 20 per cent salary cut for the chief executive but no reduction to the long-term incentive schemes that make up half of total boardroom pay. The High Pay Centre, which hates high pay,

The problem with investing in gold

The gold price, we keep being told, because investors are seeking a ‘safe haven’. The first part of that sentence is true – from £1100 per ounce at the beginning of this year, gold has surged to £1500 per ounce this week. But are those buying it really doing so because it is ‘safe’ investment? Come off it. It is easy to get on the wrong side of a stock market or property boom, but gold has proved are a far more insidious destroyer of wealth over the decades. Had you fallen for the lustre of gold in 1980, when it was selling for £280 an ounce it would have

Is it too late to jump on the gold bandwagon?

The price of gold has been rising since the earliest virus reports from China in December. Adherents regard it as a hedge against inflation, bad government, economic turmoil, weak currencies and negative real returns on financial alternatives, all of which are present threats. For pessimists, this week’s headlines — above-inflation pay rises for 900,000 UK public-sector workers, the EU’s €750 billion debt-fuelled recovery package, the WHO’s report of 260,000 new Covid cases in a single day — all represent arguments for this ultimate safe-haven holding. Too late to jump on the bandwagon? I’m no natural pessimist and (as I’m about to reveal) I’m a hit-and-miss forecaster, but I do see

Neil Woodford could do the washing-up at my fantasy Christmas lunch

It’s the season for kindness and conviviality. In that spirit — and recognising that business, like personal life, rarely follows an easy or predictable path — here’s a list of corporate heroes and anti-heroes who deserve your sympathy and a place at my fantasy Christmas table. First, those who are moving on. Bob Dudley put BP back on its feet after the Gulf of Mexico disaster; if many shareholders thought he was paid too much for doing so, he can make amends by bringing the wine. Ross McEwan didn’t solve all the problems of RBS, but dragged the crippled bank a long way back towards normality. Mario Draghi gave new

Are Boris’s hedge-fund pals conspiring to ‘short the UK’? I doubt it

Minding my own business at 67 Pall Mall — the private members’ club favoured by oenophile West End hedge-fund managers that will serve as this week’s restaurant tip — I’m watching two tieless but well-tailored gents at the next table sampling different vintages of Château Pichon Longueville. And I’m thinking: ‘Bastards! These must be the friends-of-Boris who are conspiring to reap billions from a no-deal Brexit!’ It was former chancellor Philip Hammond who wrote recently of Johnson being ‘backed by speculators’, citing the PM’s sister Rachel who had spoken of the influence on him of ‘people who have invested billions in shorting the pound and shorting the country’. The novelist