BTL is no longer profitable because of the tax changes – Property Rant 035

Rubbish, absolute rubbish.. I have heard it all before, change happens and everyone wants to jump ship, sounds like a recipe for failures if you ask me. When there is change it’s important to find the opportunity and do this one extra thing… without it nothing happens anyway.

Sure the UK Property Tax changes put a dampener on the party but successful investors have already regrouped and are pressing ahead. Don’t be left behind wondering why the doomsayers were wrong again... 

Video Transcription 

Hey, guys. Property Search... Think Gladfish. I'm Brett Alegre-Wood, and this is Property Rant.

I'm hearing lots of questions from clients and things like saying, "Buy to let is not profitable anymore." And it's like, "What a load of rubbish. That's the media hype you're listening to. That's all the rubbish that's going on. And you're hearing all sorts of alternative investment saying, "Oh, don't do that anymore. It's not profitable. Do this." Plantation trees in Chile and all this sort of thing. And it's amazing the variety of alternative investments that have popped up and companies that are selling alternative investments. I mean, it's interesting. Right through recession, we saw buy to let.

Even though everybody is saying, "Don't buy property," and yet our clients made money through that. Because why? They adjusted their strategy to meet the market. And the reality is this, the tax changes have made...and make no mistake. I'm not saying they're good. I'm not saying I like them. In fact, I'm the total opposite. I hate them. I think the guys behind them are totally self-servicing and they're focused on large corporations taking control and delivering lots and lots of homes, which I can see the positive in that. I can see the negative in that.

But I think the issue is that people like you and I who are going to need a pension and are going to be building a pension and aren't a big multinational corporation, are going to be left realistically being in control or not in control of our future, unless we continue to invest and do things like buy to let. I mean, there are other investments out there.

But my point is this around this whole game. Buy to let is still profitable. Yes, the rules of the game have changed, so you adjust to change with the rules. And as soon as you do that, you realize, actually, yes, for instance, in my own case, it's going to cost a substantial amount to change my portfolio around. And that may mean that I need to sell some of these. It's not really worth changing them. It may be setting up companies, trusts, whatever, a whole range of things. But what it does mean is that all of a sudden, whether I was or not, I have to become a professional landlord. And that is the key thing here, is you have to approach this as a professional landlord. And when you do, you realize the rules have changed, you adjust those rules, and you make money. You spot the opportunity. You make money. And it's as simple as that.

There is still money in property. And here's one key thing that no government can take away. Supply and demand, and land. Land is something interesting because there is only a finite amount of it. And realistically, there's very little they can do to make more of it. I mean, one way to make more of it is to build up and look in the cities. That's what's happening, and that is actually what's going to be happening a lot. High rises. More and more high rises. Look at Singapore, the most densely populated island on the planet. How do they build it? How do they do it? They build up. And that is what's happening. I mean, there's even talk about building underneath, hitting the ground. But we'll see what happens there. But right now, that's really the only way to maximize the land use that we have, and that, no government can change.

Supply and demand. That's based on human nature, and no government can legislate that, or I haven't found one yet that can. So the reality is this is them changing the rules of the game. Yes, it's a bit of turmoil. It's a bit of change. But you know what? Crisis, opportunity, same thing virtually. So you have to look for the opportunity and not be whitewashed by the media talking rubbish about how something is not profitable anymore. A lot of it is people who are selling different things and have different motives, different commission streams, are just trying to jump on that opportunity. And if you're believing it, well, that's your own fault.

But actually, those who stay the course, and in fact, adjust the course to meet the new way of things, they'll be fine and they are fine. And that's what we're finding with most of our investors, that when they make that decision, when they look at all the facts on the ground, and now we've had the spring budget, we've got some real, "This is what's happening," as opposed to, "Maybe they'll go back on it. Maybe they won't." Now, we've got some certainty.

The market is still very good. We still haven't built. We've got a massive supply shortage, and the only way we're going to overcome that is by building more. And that means new developments, and that means releasing new land. That means lots of opportunity for you as an investor. So, for all of those people who say, "Buy to let is not profitable. Buy to let is dead," rubbish. Absolute rubbish, you frigging idiot.

Anyway, guys, have a great day. Live with passion.

Brett Alegre-Wood
March 15, 2017

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