Last weekend I made my semi-annual pilgrimage to London’s Property Investor Show.
It’s a good way of testing the mood among those who remain in thrall to the default British investment of the last 30 years, residential buy-to-let. And I have to report that, despite everything that has happened in the six months since the previous event, Ostrich Syndrome is alive and well in the aspirational classes.
No one could accuse me of subtlety in calling my talk Diversify or Die – to my surprise it drew a crowd of 50 people on Saturday lunchtime. I asked my usual question – ‘who’s heard of section 24?’ Five hands went up.
So, among an audience who’ve self-selected to come to an event mainly about residential buy-to-let, 90% of my sample were unaware of the biggest change in tax treatment for private landlords in a generation. With that kind of ignorance on display, politicians are going to have a field day in the 2020s.
My sampling was boosted by the scores of people who popped by the Elite Investor Club stand during the two days. One conversation was typical – I asked him what brought him to the show:
“I’ve got some buy-to-lets and I want to get some more”.
“Are you aware of the 23 pieces of anti-landlord legislation passed by the (supposedly) Conservative government in the last five years?”
“Not really, I don’t pay much attention to politics.”
“Have you seen Labour’s proposals for a Right to Buy for private tenants at prices decided by the government?”
“Well, they’re never gonna get in are they?”
“So are you going to put new money into buy-to-let despite all these threats”
“Yeah, I’ll wait for all the bad stuff to happen first then I might do something…”
I had maybe twenty variations of that conversation before going to lie down in a darkened room and take an overdose of anti-depressants.
Our stand was right opposite Seminar Theatre 1, so we got to listen to the great and the good trying to put a positive spin on events so that they could keep peddling their ‘Get Rich in Real Estate’ training course. Full marks for honesty go to the guy from the National Landlords Association for reporting the mood among his members. I hadn’t realised that, since 2006, they’ve conducted a quarterly survey and published a ‘Landlord Confidence Index’. It apparently peaked around 75 just ahead of the financial crisis, dropping into the mid 40s as the credit crunch took full effect.
Today, that index is at 29, the lowest since records began. So the message is getting through to the more serious property investors who have joined an industry body like the NLA. However, the lure of bricks and mortar has clearly entered the national psyche as hundreds of newbies turned up at the event certain that riches beyond the dreams of avarice await them if only they could become private landlords.
I detected a subtle shift in the messaging of the ‘gurus’. They are now saying that many landlords are wanting to leave the sector because of new rules like Section 24, and that this creates a wonderful buying opportunity to snap up some bargains from distressed landlords. These distressed landlords being, of course, the newbies who bought these guys’ courses five years ago as they followed their own dream of financial freedom…
As we steam headlong towards the 2020s, the need for financial education has never been greater.
Until next time.