What Else Poku Banks Admits

Alongside admitting that his claim about Samuel Leeds being a ‘fake guru’ was for “views” and “clickbait”, Poku Banks makes a number of refreshingly honest revelations, perhaps due to his youth and inexperience.

In the debate Poku Banks admits to lying, says he isn’t arguing against the claim that Samuel runs a legitimate business that teaches and helps people, says Samuel’s Crash Course is “good value” and “great”, says he thinks the BBC had an agenda against Samuel, admits that the person he collaborated with for his property course is a mentee of Samuel’s student and that this person is more successful in property than him.

It is almost unbelievable that he openly admits all this after implying Mr Leeds is a ‘fake guru’. However, you can view all evidence for this in the summary I posted as a YouTube comment here.

Did Poku Banks Prove Samaul Leeds Is A ‘Fake Guru’?

Poku gave his definition of a ‘fake guru’ at the beginning of the debate saying it could be someone that presents themselves as something they are not. Samuel added to this that it is a fake teacher or expert. Poku agreed. At no point in the debate did Poku provide evidence which would fit this definition.

Later in the debate, Poku tried to change this definition claiming Samuel is a fake guru because Poku thinks Samuel markets the rent-to-rent strategy to “vulnerable people”. As the basis for this claim falls outside of the agreed definition of ‘fake guru’, in my opinion, Poku loses the debate at this point.

A Wider Problem?

Poku Banks is a young guy who ultimately, when pushed, came clean about what he was doing and why. He will no doubt learn from his mistakes and go on to do better things. But Poku’s unintentional transparency shines a light into what may be driving some of the experienced critics and professional ‘exposers’ that litter the internet.

In a previous article, I suggested that another critic of Mr Leeds may have been doing something very similar to what Poku Banks openly admitted to. Of course, unlike Poku an experienced businessman is highly unlikely to come out and say it directly.

This is not to say anyone that posts criticism of Samuel Leeds or anyone else is unjustified or simply seeking views. However, there is clearly a portion of people that appear to fit this description.

An Appeal To Honest Critics

If you are an honest critic of Samuel Leeds, it is as important for you to root these people out as it is for those that support him. If you have genuine criticisms to make they will be lost and discredited in the minds of the public if they become mixed in with the claims of fame-seeking influencers who are happy to take whichever side gets them views and clicks.

Poku Banks eventually owned up and admitted what he was doing. It is time some of the more experienced, older people playing the same game do so too. If you are an honest critic it is time to root out the charlatans in your ranks.

What is going on and what is likely to be the Bank of England’s next move?

Recession Re-Confirmed!

The Office for National Statistics today published revised estimates showing we are indeed in a recession, although Quarter 2’s retraction is likely to be smaller than first thought at 19.8% compared to the initial estimate of a 20.4% drop. This confirmation is not particularly surprising given the lockdown’s impact on trade.

As some lockdown measures have been reintroduced this trend is likely to continue into Quarter 3’s figures.

Property Boom!

A report by NAEA Propertymark, a trade body for estate agents states that 13% of properties sold for more than the original asking price in August. This is the highest number since November 2015.

According to Mark Hayward, Chief Executive of NAEA Propertymark:

…Last month, we witnessed a boom in the number of prospective buyers following the government’s announcement of a Stamp Duty holiday, and it seems this is increasing the level of competition in the property market. With the increase in the number of prospective buyers since this announcement, many buyers are clearly willing to pay over the asking price in order to secure their dream home.

Housing Report, August 2020

Currency Printing And The Bank Of England’s Next Move!

Why are house prices going up? In part it is due to factors such as the lockdown and Government support for business e.g. backing for loans, but it is also down to Bank of England currency printing. As the currency supply is increased, the value of the currency goes down and therefore it makes sense to move capital into assets with a limited supply such as property.

The Bank of England is likely to continue to print more currency in future waves of QE. However, it also looks set to use another economic tool if things continue to get worse, negative interest rates!

Negative interest rates are where the central bank charge banks to store currency rather than pay them interest. The aim of doing this is to encourage banks to lend.

The Bank of England has played down the idea of using negative interest rates but announced in September that “it would take a detailed look at how negative interest rates might work in practice during the last three months of the year” according to the BBC.

As the central banks continue to back themselves into a corner with accelerated currency printing, negative rates seem to be inevitable. The Bank of England seems to be preparing for them while attempting not to spook the markets.

If this happens, it is likely that property will receive a further pump in price.

“UK house prices rose by 2.0% in August, after taking account of seasonal effects, following a 1.8% rise in July. This is the highest monthly rise since February 2004 (2.7%). As a result, annual house price growth accelerated to 3.7%, from 1.5% last month. House prices have now reversed the losses recorded in May and June and are at a new all-time high.“

House prices recover from recent dip to reach new all-time high in August

This rise in the price of houses is likely to have been boosted by Quantitative Easing from the Bank of England and cash injections from the Government including furlough schemes and self-employment grants. It is also the result of pent-up demand from the lockdown (when it was hard or impossible for people to move). This leads to the question of what will happen once this additional help dries up? Will we see a crash?

A Coming Crash

The most likely outcome (and that which is backed by the historical data) is that we a going to head towards an overall property crash. This doesn’t mean that all areas of the country will be effected, but when the market seems irrationally buoyant, people are about to lose the additional government support they have been given due to the lockdown and we have been in a property bull market for as long as we have, we should be heading for a crash.

Property trainer and investor Samuel Leeds explains this and predicts a crash in 2021 in this video:

The Inflation Hypothesis

A less likely but possible scenario is that the Bank of England leads us into higher inflation, thereby increasing property prices even as property values drop.

Since the last recession the Bank of England has been engaging in Quantitative Easing (QE) which is the process of creating additional new currency to purchase bonds when there is any economic dip. This is new. QE was not used in previous recessions in the UK. Theoretically, pushing new currency into the economy every time there is a dip should push prices up indefinitely. The problem with doing this is eventually this will lead to extremely high or even hyperinflation.

In the US the Federal Reserve has announced that it’s inflation target is now “flexible” (meaning that inflation can be expected to go above it’s target for some time). If the Bank of England follows their lead, this would mean that the likelihood they will continue to pump the market even if it pushes up inflation faster significantly increases.

The Bank of England could also use negative interest rates, which is when banks are charged for holding funds at the Central Bank. This is intended to make banks lend out their capital. While the Bank of England rejected the idea in August, they are keeping this under review. In their Monetary Policy Report they state:

The MPC [Monetary Policy Committee] will continue to review the appropriateness of a negative policy rate as a policy tool alongside its broader toolkit. The MPC has other instruments available — for example, asset purchases and forward guidance. The MPC will continue to assess the appropriate monetary policy stance and will keep the appropriate tools for achieving its remit — including negative policy rates — under review

Monetary Policy Report, August 2020

There is also a possibility that the Bank of England will move from purchasing government bonds with QE to purchasing other assets such as shares or mortgage-backed securities. If this happens this will create an even stronger artificial boost to prices.

If these means of creating artificial increases in the currency supply and the flow (velocity) of money are used, it may well mean that property prices rise in currency terms, while falling in real terms. If, for example, house prices rise by 3% but the price of groceries rises 5% and the price of money with a limited supply e.g. gold, silver, Bitcoin, etc rises by 20% then house prices will be falling in real terms while seeming to increase due to inflation.

Conclusion

The likelihood of a crash is inarguable, historical data and the evidence seem to be on the side of this outcome. But there is also the possibility of high inflation or even hyperinflation instead. With the seeming irrationality of central banks since the last financial crisis I am somewhat drawn to this hypothesis. But the experts and investors are most likely to be right and we will see a significant crash first. Only time will tell.

In a statement posted on the UK Governments portal, Housing Secretary Robert Jenrick issued the bad news for landlords.

The statement highlighted the following key points:

– Ban on evictions continues for 4 weeks taking the total ban to 6 months

– New 6 month notice periods to be in place until at least 31 March 2021

– Once eviction hearings restart, the judiciary will carefully prioritise the most serious cases including those involving anti-social behaviour and domestic abuse

Jenrick extends ban on evictions and notice periods

Impact On Landlords

While the Government claim that 87% of tenants have continued to pay their full rent since the start of the COVID pandemic, this move will undoubtedly have negative consequences for those landlords who have tenants who are unable or unwilling to pay.

Even when courts re-open to eviction cases in September the Government has made it clear that cases involving anti-social behaviour and domestic abuse will be the priority. This will mean that landlords that are simply seeking what they are owed will go to the back of the line.

Alex Cook, director of litigation firm Helix Law, speaking to iNews said: “The fear is these claims won’t be heard for many months or possibly even years because the courts will be at maximum capacity.” He said that many of his clients haven’t been paid any rent in over a year!

Opinion: Unbalanced Response

The supposedly pro-business Conservative government seems to be taking a rather unbalanced approach to this issue. It is right and proper that renters are being protected from homelessness caused by no fault of their own. But there must also be protections put in place for landlords, many of whom are not wealthy themselves.

If the Government is going to force private individuals to house people perhaps they could also cover any unpaid rent (and recover this from the tenant at a later stage)? Perhaps evictions could be allowed to go ahead in cases where the tenant hasn’t shown willingness to negotiate or shown that their income has been affected by the lockdown? Whatever the solution is, simply putting the burden on landlords isn’t the answer.

A recession is when there is two consecutive quarters where the GDP of the nation drops i.e. there is a drop in the total expenditure of the economy. Quarter 1, January to March, saw a drop of 2.2% and Quarter 2, April to June, saw a massive 20.4% drop according to the Office for National Statistics.

No Surprise!

Lockdown started on 23 March 2020, and worries about coronavirus started even before this, so of course there was a drop in the total spending in the economy! With cafes, bars and other business closed this should come as a surprise to no one. So the announcement that we are in a recession is a formality rather than actual news.

The extent of the drop may be argued to have been a surprise. However, the Governor of the Bank of England said in July that the UK could have a “23 to 25 per cent” contraction in the second quarter. The UK has a large hospitality sector so a lockdown was inevitably going to have this type of effect.

Short Term Recovery

We are already seeing signs of a recovery with the Office for National Statistics stating there has been a rise in GDP of 8.7% during June. With the lockdown over, this is likely to continue and we should see this trend continuing in the next quarter.

The Bank of England printed £100 billion in new currency in June in its latest round of quantitative easing.

What is quantitative easing?, BoE

Continual currency printing means that the value of existing currency will go down overtime. However, the circulation of this currency means that the total spend in the economy will go up, leading to an increase in GDP.

This currency printing, combined with the various measures used by the Government such as Bounce Back loans, self-employment grants and Eat Out To Help Out discounts, are likely to see the economy appear to recover significantly.

In the short term, it is possible that we will soon come out of this recession and see economic growth again.

Long Term Problems

Longer-term is a different story. As government programmes stop and the build up of currency in the economy either forces the Bank of England to contract the currency supply by rising interest rates or do nothing and see higher levels of inflation, the real problems will start.

If the Bank of England decides to continue with further rounds of quantitative easing, things could get even worse. The continued printing of currency will cause prices to rise. Holding your savings in currency will not be a good idea at this point as its purchasing power will be decreasing fast. Assets with a limited supply will do well in my opinion such as gold/silver, Bitcoin and property.

In my view, this recession is more of a warning than a reality. It is giving us time to prepare. The ONS announcement told us what we already knew and the media headlines were typically alarmist.

In a previous post called Explaining Fiat Currency With A £150,000 Pokemon Card! we looked at how the creation of fiat currency (pounds, dollars, euros, etc) causes the purchasing power of that currency to go down. If you are unfamiliar with this topic, I would recommend reading that post before this one.

What Is Quantitative Easing?

Quantitative easing (QE) is the creation of additional money by the central bank of a nation to buy bonds or other financial assets as a means of stimulating the economy. When new currency is created, it reduces the value of existing currency. This new currency therefore pushes prices up.

In this short video, the Bank of England explains that they don’t even print up this money, instead simply adding a few extra zeros to their online accounts:

Following the recession of 2008 there has been a number of rounds of quantitative easing.

In June 2020, the Bank of England undertook a £100bn round of QE. This is a chart that shows their cumulative government bond purchase via QE:

When this new currency is created the market does not immediately react and adjust prices to compensate for the new currency in the system. This means the large funds, banks and companies that receive this money first in the form of bond purchases are at an advantage. They can, at first, purchase assets at prices that, by and large, reflect the value of currency before the round of QE.

As the additional demand created by the new currency is noticed by the market the prices of the assets they buy begin to rise. Eventually this will cause price rises across the economy in the form of inflation.

How QE Pumps UK Property Prices

The new currency created by quantitative easing increases the UK property prices in two major ways. Firstly, the new currency, over time, reduces the spending power of each individual pound. This means even if a property remains static in value, it’s price in currency will go up. Furthermore, because this new currency goes to funds and banks first that invest that money, this additional currency will impact the price of assets (including property), before it impacts the cost of consumer goods.

The second impact of QE on property prices is the realisation among high net worth individuals and investment funds that the value of their currency position will continue to go down. This forces them to move their money into assets with a limited supply. At the time of writing, Bitcoin, gold, silver and property are all up and I think this is no coincidence.

As Governments continue to print currency driving down its value, more and more value will be driven into the property market. If and when these continual rounds of QE result in massive inflation, even if property values go down, prices will go up!

As a side note: This blog has been listed on Feedspot’s Top UK Property Blogs & Top 10 UK Cryptocurrency Blogs lists. Thank you to them for listing us!

The rules will apply from 23 August 2020 until 28 March 2021.

We will go over some of the main changes that will impact you as a private landlord if you are seeking to evict tenants.

If You Have An Ongoing Eviction Case

If you have an ongoing case that has been stayed due to the temporary ban on evictions, you are likely to need to issue a “reactivation notice” to the court and the defendant. If you do not do this, the case will remain dormant.

This may not apply if the case was “brought on or after 3 August 2020 or in which a final order for possession has been made”.

Coronavirus Impact Statement

Where you are evicting someone for not paying their rent, you will now need to include a statement setting out any knowledge you have about “the impact of the coronavirus pandemic on the Defendant and their dependants”.

Updated Rent Account

The “reactivation notice” must contain an “updated rent account for the previous two years”. This means you will need to provide the rent history beforehand, rather than at court.

The Courts Don’t Have To Hear Your Case Within 8 Weeks

Normally the date from the issue of the claim form until a hearing should not be more than 8 weeks. However, this requirement has been lifted due to the expected backlog of cases.

High Court Eviction Notice Period

High Court bailiffs will now have to give notice to the tenant of an eviction in the same manner as County Court bailiffs already have to do. This comes in separately from the other provisions and is not a temporary measure.

Priority Cases

The purpose of the new rules is to limit the number of eviction cases coming before the courts. According to Compliance Officer for The Guild of Property Professionals, Paul Offley:

…the Government is eager to only have cases that are a priority go through the courts if possible. Priority cases have been defined as those that include anti-social behaviour, extreme rent arrears, domestic abuse, cases involving squatters, fraud or unlawful subletting….If a case does not fall into the category of being a priority, the Government is encouraging parties to use an independent third-party mediator to assist them in reaching a mutually acceptable agreement to resolve their dispute, rather than going to court.

New rules for possession proceedings

Further Reading

You can find full details about the changes on the Judiciary website: Civil Procedure (Amendment No. 4) (Coronavirus) Rules 2020 & the 123rd Practice Direction Update and Civil Procedure (Amendment No. 3) Rules 2020 & the 122^nd Practice Direction Update.

Conclusion

It is likely to be more difficult to evict tenants even after the ban is lifted in August. The new rules coupled with extremely busy courts means bad news for landlords with tenant troubles. The courts are going to prioritise the worst cases and expect landlords to try to resolve issues with renters wherever possible.

If you are impacted by the new rules in anyway, you should speak to a legal professional immediately.

The BBC is meant to be an unbiased commentator which acts solely in the public interest. However, there are a number of financial incentives which I believe may bias it against new independent entrepreneurs and small individual property investors. I will lay out my case and leave you to be the judge.

What Control Does The Government Have Over The BBC?

The Chairman of the BBC Board is appointed by the Queen under the advice of Ministers. As Britain is a constitutional Monarchy this means that the advice of Ministers is always taken by the Queen. Essentially Ministers of the Government select this person. The BBC Board then select the Director-General of the BBC who is “responsible for the creative, editorial and operational leadership” of the broadcaster.

Furthermore, the BBC is paid for via the TV licence fee and the Government have the power to propose legislation to remove this source of funding should they choose to do so.

Of course, this arrangement does not lead to a potential for bias in favour of the political party in power, as they could be replaced by the opposition, therefore it would not be in the interest of the BBC to lean entirely in one direction or the other. What does make sense however is for the BBC to have a bias – conscious or otherwise – in favour of the interests that back both main political parties.

Following The Money In Politics

As generally speaking, the Government is either controlled by Labour or The Conservatives, we will focus on these two parties.

The Labour Party receives many of its largest donations from trade unions. In Q1 of 2020, for example, it received £401,875 from Unite the Union, £291,575 from UNISON and £290,125 from GMB. Unions represent the interests of workers, not business owners and may have a negative view of landlords. Unite the Union, for example, is in favour of rent controls which would set limits on the amount that can be charged by landlords.

The Conservative Party’s big donors tend to be rich individuals and large companies. Donations in Q1 of 2020 include £250,000 from a former banker and head of an online trading company, £200,000 from a Russian government-linked businesswoman and £125,000 from a construction machinery company, Unatrac Limited.

Although it may seem at first glance that the Labour Party might be seen to be biased in favour of workers, and the Conservatives might be considered to have a bias in favour of big business, we need to consider the incomes of outgoing prime ministers.

Following Ex-Prime Ministers’ Money

When a Prime Minister leaves office, they will look for work in the private sector. It, therefore, makes sense for a PM to pay heed to the recommendations of big business when they are in power to build up such relationships.

Former Labour Prime Minister Tony Blair has taken a number of roles after leaving office including appointments with JPMorgan Chase, earning £2 million “in his part-time role as adviser….without ever having to go into the office” according to the Telegraph, and a role with Zurich Financial Services. He has also spoken at corporate events including being paid £182,000 for a 30 minutes speech. Former Labour Prime Minister Gordon Brown took an advisory role at PIMCO, the world’s biggest asset manager (although his fee went to the Office of Gordon and Sarah Brown to support his charitable and public service work rather than to him directly).

Former Conservative Prime Minister David Cameron has received a number of appointments in the private sector including with life sciences company Illumina Inc and consultancy for First Data Corporation. Former Conservative Prime Minister Theresa May has received a number of speaking fees including £100,000 from bank UBS Switzerland.

This means that the leadership of both major parties have a financial reason to support big business, regardless of their public political positions.

What BBC Bias Could This Lead To?

As we have seen the BBC is indirectly influenced by the government. The government is invariably run by parties that are either backed by big business or the unions.

Big business has a financial interest in preventing competition from smaller firms so parties backed by them are likely to support legislation which favours larger enterprise over smaller businesses.

The Unions represent the interests of workers rather than business owners and investors and therefore parties backed by them are more likely to be biased against business more generally. However, the politicians that lead these parties also have a personal interest in listening to big business and therefore may turn their attention to smaller players.

This means the pressure from both sides is for the BBC to be biased against small business owners and property investors, particularly ones that are not seeking the backing of major corporations.

If my hypothesis is correct, this would mean the BBC would be more likely to run programming that is biased against wealth creation education, small entrepreneurs that are not seeking funding from large enterprise and individual landlords. Where property and starting a business is mentioned, little instructional information would be provided and conventional paths would be advocated for. The BBC would also be more likely to back more traditional career paths and university education.

I will leave you to judge if you think my hypothesis is correct and if this is reflective of BBC programming or not. Either way, every business and organisation has the potential for bias in favour of its backers and its own products/services. This is not a problem. The problem only arises when you are not aware of the potential bias. Even if you disagree with my conclusions, I hope this gets you thinking about this topic more deeply.

The Case

A single disabled mother of two children aged 21 and 16 contacted a letting agent to view a property. She told the letting agent that “I work part time and receive some Housing Benefit”. The letting agent replied: “Many thanks for your enquiry regarding the above property for let. Unfortunately we do not accept housing benefit so could not proceed with a let on this basis.” The mother then brought a claim for indirect discrimination under the Equality Act 2010.

Why Did The Court Rule No DSS Policies Are “Indirect Discrimination”?

The court found that women and people with disabilities are more likely to be on housing benefit. It is unlawful to indirectly discriminate against protected characteristics, in this case sex and disability.

Indirect discrimination is defined in law as:

1) A person (A) discriminates against another (B) if A applies to B a provision, criterion or practice which is discriminatory in relation to a relevant protected characteristic of B’s.

(2) For the purposes of subsection (1), a provision, criterion or practice is discriminatory in relation to a relevant protected characteristic of B’s if—

(a) A applies, or would apply, it to persons with whom B does not share the characteristic,

(b) it puts, or would put, persons with whom B shares the characteristic at a particular disadvantage when compared with persons with whom B does not share it,

(c) it puts, or would put, B at that disadvantage, and

(d) A cannot show it to be a proportionate means of achieving a legitimate aim.

– Section 19 of Equality Act 2010

The court looked at statistics from the housing charity Shelter showing that women and disabled people are more likely to be on housing benefit. The court said:

The policy applied to persons with whom the Claimant does not share the protected characteristics, namely men and non-disabled people, as well as women and disabled people….

The policy put persons with whom the Claimant shares the protected characteristics of sex and disability (namely women and disabled people) at a particular disadvantage when compared with persons with whom the Claimant does not share the characteristics (namely men and non-disabled people).

County Court at York

The parties in the case agreed that the policy wasn’t justified so arguments as to why this type of policy could be considered proportionate were not heard by the court. The judge ruled:

The burden is (or would be) on the Respondent to prove that the policy was a proportionate means of achieving a legitimate aim. The parties are agreed that the policy was not justified.

County Court at York

Does This Case Set Precedent?

This case was heard in the County Court so it does not set precedent, meaning the ruling is not binding on other judges. However, if letting agents or landlords continue to have “no DSS policies” in place they will need to show the courts why they are “a proportionate means of achieving a legitimate aim”.

Does This Mean Landlords Cannot Refuse DSS Tenants?

No. It means that landlords cannot refuse tenants on the basis that they are DSS tenants, but if a DSS applicant is refused on other “proportionate grounds” this is lawful.

That means if a DSS applicant fails referencing, for example, it is unlikely that it would be unlawful to reject the tenant on this basis. However, not accepting an application on the grounds that the prospective tenant is on housing benefit is likely to be unlawful.

If you are a landlord or letting agent that has a “no DSS” policy it may be advisable to remove those words from any advertising you have and to contact a solicitor for full legal advice regarding your policies.