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Rave

Uk House Price Tracker Fund / Etf?

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Long story short, a close friend of mine took redundancy this year and then started a business which has been pretty wildly successful- so much so that next year he's going to be looking for a way to take a very substantial chunk of cash from it (though in the 10s rather than 100s of thousands), as tax efficiently as possible, and find a home for it. He phoned me after leaving the pub last night, full of enthusiasm for buying a BTL. A bit of back and forth ensued, during which I laid out the obvious pitfalls of being a landlord, and I managed to extract an admission from him that he was prepared to see it purely as a speculative punt on house prices continuing to rise.

I've been beating the HPC drum for going on for 7 years now and been proven fairly consistently wrong in practice, so my credibility on that front is shot... and I'm now actually not that confident that government can't continue to engineer nominal increases in house prices for some time to come. I seem to recall reading that one can buy some sort of ETF/ tracker fund that simply follows the RICS or government house price indexes? Because if so, then I could put it to him than rather than buy a highly illiquid asset and then suffer the risks of rent arrears, voids, expensive maintenance etc. etc., he could just put his money into that and literally take a straight up punt, without any of the attendant risks?

So anyone know of such a thing? Since he wouldn't have enough to buy outright, he'd need a BTL mortgage, so if he's betting on rising prices I guess it's be a leveraged bet, so perhaps a spread bet would be required to generate equivalent profits in he's right tha prices will rise- can you take one out over a timeframe of many years and leave it open, as long as you can make the margin calls?

I am hoping that once I get him to agree that it is a straight bet on rising prices, and then show him that he can make that straight bet without any of the bother of actually buying a house and letting it out, that he'll see sense; but even if he decides to take the punt I reckon he's still risking less than actually taking on a BTL mortgage...

Any help much appreciated. He's a very close friend who I've known since we were 13, but over the course of our adult lives he's proven consistently hopeless with his own finances. Unfortunately he's now full of himself over the (unarguable) success of his business, and thinks he can do no wrong :( .

Edit: I know very little about tax matters, so if there's some legitimate way that he could use currently untaxed cash within his business to acquire an asset like a BTL property, such that it would give him a significant advantage over a BTLer using already taxed income to buy in, then please let me know.

Also, I haven't mentioned CFDs- but presumably they're no good for an open-ended punt on rising prices as I guess they have a definite end point?

Edited by Rave

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Long story short, a close friend of mine took redundancy this year and then started a business which has been pretty wildly successful- so much so that next year he's going to be looking for a way to take a very substantial chunk of cash from it (though in the 10s rather than 100s of thousands), as tax efficiently as possible, and find a home for it. He phoned me after leaving the pub last night, full of enthusiasm for buying a BTL. A bit of back and forth ensued, during which I laid out the obvious pitfalls of being a landlord, and I managed to extract an admission from him that he was prepared to see it purely as a speculative punt on house prices continuing to rise.

I've been beating the HPC drum for going on for 7 years now and been proven fairly consistently wrong in practice, so my credibility on that front is shot... and I'm now actually not that confident that government can't continue to engineer nominal increases in house prices for some time to come. I seem to recall reading that one can buy some sort of ETF/ tracker fund that simply follows the RICS or government house price indexes? Because if so, then I could put it to him than rather than buy a highly illiquid asset and then suffer the risks of rent arrears, voids, expensive maintenance etc. etc., he could just put his money into that and literally take a straight up punt, without any of the attendant risks?

So anyone know of such a thing? Since he wouldn't have enough to buy outright, he'd need a BTL mortgage, so if he's betting on rising prices I guess it's be a leveraged bet, so perhaps a spread bet would be required to generate equivalent profits in he's right tha prices will rise- can you take one out over a timeframe of many years and leave it open, as long as you can make the margin calls?

I am hoping that once I get him to agree that it is a straight bet on rising prices, and then show him that he can make that straight bet without any of the bother of actually buying a house and letting it out, that he'll see sense; but even if he decides to take the punt I reckon he's still risking less than actually taking on a BTL mortgage...

Any help much appreciated. He's a very close friend who I've known since we were 13, but over the course of our adult lives he's proven consistently hopeless with his own finances. Unfortunately he's now full of himself over the (unarguable) success of his business, and thinks he can do no wrong :( .

Edit: I know very little about tax matters, so if there's some legitimate way that he could use currently untaxed cash within his business to acquire an asset like a BTL property, such that it would give him a significant advantage over a BTLer using already taxed income to buy in, then please let me know.

Also, I haven't mentioned CFDs- but presumably they're no good for an open-ended punt on rising prices as I guess they have a definite end point?

Not sure if an ETF like this even exists? Speadbetting/CFDs are the only way I know of punting on house prices without buying a house!

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You can invest in a listed company that owns residential property, thus getting in to BTL for as large or small a stake as you want, and with your risk/reward spread over a portfolio. That offers a hedge if you don't own property.

For a more pure play, you can take a spread bet on an index such as the one the Halifax publishes monthly.

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