“You now need a quarter of a million to enter the buy-to-let market in London. So borrowers simply aren’t there in the volume they were years ago.”
Asked what prospective buy-to-let investors are turning to instead, Stewart said simply: “Bitcoin.”
While Stewart doesn’t advise on cryptocurrency investments - much like the majority of broker - he understood why people could no longer feasibly invest in property, at least in London.
“Professionalisation of the buy-to-let space isn’t a bad thing - it needs more regulation and professionals - these are people’s houses we’re talking about,” said Stewart.
“You could house a family with practically no regulation. To me, it’s an investment, so it needs to be regulated like one.”
'We all know' tax will come
The big appeal of cryptocurrency, at least for the moment, is the lack of regulation which means gains are not taxed as heavily as those made from property investments.
But some brokers were not so sure this would be the case for much longer, highlighting that even now, capital gains tax must be paid on any gains over £12,300.
Bulent Kandemir, managing director of broker Intra Private Finance, said: “We all know it will be regulated and taxed more in the future.”
Managing 17 of his buy-to-let portfolio clients, some three or four realised some of their property assets in 2018 and 2019, investing them into cryptocurrencies. They sold some properties as property taxation changes in recent years had meant their profits declined.
“They’re now looking to pull out of crypto, as dips and troughs become more intense,” Kendemir explained. “Some of my buy-to-let portfolio clients hold their property under their sole names, hence if they sold or switched to limited company buy-to-lets, then certain taxes would potentially be payable.
“The tax position is potentially the same as buy-to-let, when it first started,” Kandemir explained. “There were inadequate taxation follow ups by the authorities when buy-to-lets were very popular in the late 1990s and early 2000s. Surely some people took advantage at the time - so we could ask, is crypto the same thing?"
Kandemir reckons the government will reform the taxation of cryptocurrencies soon. "Then we’ll hear the same thing [from investors]: ‘You didn’t tell me at the time’."
Earlier this year, HM Revenue & Customs issued nudge letters to taxpayers it identified as holding crypto assets, or cryptocurrency, to ensure they paid CGT on their gains - pointing to greater scrutiny already being exerted on investors.
With significant gains in cryptocurrency hampered by short-term market volatility, many investors keep their money in cryptocurrency to achieve generational wealth.
