A Proposal to Reform Stamp Duty Land Tax

Walbrook Economicshas published a paper, in conjunction with The Tax Payers Alliance, looking at the impact of Stamp Duty on the housing market. We conclude that the tax is counterproductive and needs urgent reform and make three proposals to improve the efficiency of the tax. Each of the proposals has been costed with the first two being revenue neutral at worst for the Treasury while markedly reducing the cost of the tax to house purchasers. We believe all three proposals would significantly enhance GDP growth. The link below outlines our proposal

Housing Recovery Gathers Pace

Despite the recent warning, from a shift upwards in the long bond, we conclude that the risks to the housing market lie on the upside both in terms of valuations and transaction volumes. The kindling is the maintenance of cheap money, the spark is confidence fuelled by a greatly expanded monetary basis, strong demographics and a buoyant rental market. We see 6-8% growth in valuations in 2013 and 2014 and transaction volumes breaching 1 million for the first time since 2008. Please contact us for more details.

British and US interests diverge?

Ben Bernanke’s comments that the Fed is considering scaling back and ultimately ceasing all new QE, by summer 2014, have had a dramatic impact on both equity and bond markets. The end of ‘sugar rush,’ if end it is to be, has hit investors hard with 10 year gilts moving out by 60bp and the FTSE 100 giving up virtually all its gains since the start of the year. This note looks at the implications of Bernanke’s statement and argues what is ‘Good for America’ is unlikely to be copied here. Please contact us for a copy of the report.

Will a rise in gilt yields scupper equities (and much else also)?

The last couple of weeks have seen renewed turbulence in markets. Bond yields, particularly at the long end, have moved out sharply and this, in our view, has been the primary factor behind the FTSE retreat. The maintenance of low sovereign bond yields seems to us as critical to Central Bank thinking and we anticipate a resumption of the ‘monetary put’ if bond yields expand much further. We view the bond move as turbulence rather than a fundamental shift in the curve.

It’s Getting Better? Upgrades, markets and risk

Walbrook marginally upgraded 2014 UK GPD and beyond today to 0.8% in 2013 (unchanged) 1.2% in 2014 (up 0.5%) and 1.5% in 2015 to 2017 (up 1.5%) based on anticipated slightly higher consumer leverage and the impact of monetary policy of real assets, notably real estate. Walbrook maintains the view that the underlying imbalances remain and that that new bubbles are being created as a result of the extremity of policy. The full note is available at