Peter Hargreaves, the co-founder of investment platform Hargreaves Lansdown, believes UK property is a poor investment right now because of lower inflation and punitive tax rates.
The billionaire said property was an attractive investment in the past because people could borrow money to buy it at a rate of interest much lower than the rate of inflation.
But he claimed that with the UK economy not currently booming, and inflation not at the same level as has historically been the case, real assets were less attractive.
“Where property is concerned, there is a further factor weighing on its appeal – a punitive rate of stamp duty which has curbed property transactions,” he told FT Adviser. “I am not convinced interest rates are going to rise with any significance in the short term, despite the Governor of the Bank of England indicating otherwise.”
Hargreaves believes equities represent a better opportunity, despite the fact they seem expensive by historic standards.
Ben Yearsley, investment director at Shore Capital, told FT Adviser he “can’t get massively excited” about the outlook for UK property investments right now.
“Whilst other assets are poorly positioned, or have values so far inflated above that of the stock market, I believe an investment in the stock market at this very moment still seems like the sensible option,” he stated.
Hargreaves was estimated by the Sunday Times Rich list to have a personal wealth of £3.1 billion.
Around 90% of his personal wealth is invested in equities, most of which consists of a £2 billion stake in the company he co-founded.