A few of you know that I have been investing in real estate for over three decades. I also had a long career in the technology sector and I became pretty good at understanding trends. I could look around the corner and see what was coming before most of the public. Right now I am looking around a corner and what I see could be very disruptive for the BTL investor. Disruptive in a good way…for some.
If you go to any number of monthly property meetings all around the UK, there is a common theme. Expansion: Investors are looking for more money to grow the business and to do more deals without needing to reach deeper into their own pockets. Investors who are any good will always run out of money before they run out of good deals. The lack of cash is however, as some might assume, not always a bad sign.
As a taxpayer, I am enjoying the fact that lenders have made it harder to leverage up. Why should the investor get all the upside and expect the lender, and the taxpayer, to take the downside? Why not require more equity in each deal to protect the lenders from needing a bailout? A shift towards more equity and less debt.
If BTL investors lose the right to deduct the interest, more equity and less debt could be a natural outcome. What other investments can you make where you can deduct the interest paid? A shift towards more equity and less debt.