Are we on the brink of budget disaster?

A growing number of analysts are suggesting we are on the brink of a budget disaster with some even predicting the end of London’s Alternative Investment Market (AIM), which dropped 33% in the last year alone.

IPOs have dried up on the AIM, with secondary funding also declining – just ￡1.2bn came in through secondary raises in the 12 months to 31 August compared to ￡1.8bn over the year prior.

While this is worrying, what looks set to push the AIM towards collapse is potential plans to hike taxes on its shares in next month's budget – the first for the new Labour government.

Rumours have been swirling that Chancellor Rachel Reeves will remove the inheritance tax break on AIM shares which let shares be passed on tax-free if held for at least two years before an individual dies.

It’s of such concern that London Stock Exchange CEO Dame Julia Hoggett has written a letter to City Minister Tulip Siddiq in which she says that the “ongoing viability” of AIM would be threatened if the Chancellor were to push ahead with such plans.

The situation will be worrying UHNWIs and HNWIs as stocks and shares often make up a solid percentage of the assets they hold. But it also stands as a reminder the property, especially super prime property, is a great option for long-term investors seeking stability.

Property, especially when seen as long-term investment, is not subject to the same volatility as stocks and shares and can still deliver a similar level of return. Of course, this can only be achieved by acquiring the right properties at the right time.

In most super prime purchases, time is of the essence and for different reasons. It might be that the right property comes to market at a time when the investor does not have enough liquid cash available, or the purchase might encounter a chain break scenario.

In both cases, a bridging loan can be used as 1 – quick access to significant capital and 2 – to ensure the purchase progresses in the event the chain breaks.

Time really is of the essence right now with Reeves set to publish her budget at the end of October. Will it be a disaster for the AIM? If it was me, I wouldn’t wait to find out.

- Mike Jones – Chief Sales Officer

We’ve dropped a new feature in this week’s newsletter – the week in numbers. Below, we share some figures that have caught our eye over the past seven days and why they are important.

￡6.1bn – REA’s revised takeover bid for Rightmove. The bid has been rejected with analysts saying it’s still not at the level the board would entertain. Why is this important? The takeover bid for what is considered to be an undervalued Rightmove shows there is confidence in the UK property market long-term and this should encourage investors.

21 – The number of people in the UK that compete for every available rental property. Again, this shows there is significant demand for rentals, something that should make investors, especially property investors, sit up and take note.

$5.3tn – China has taken the decision to lower bowering costs on as much as $5.3tn in mortgages as well as easing down payment requirements for second home purchases to historical lows as it looks to stimulate its struggling property market.

Find out more here.

This week’s recommendations, all books for a change, come from Tenn Capital CEO, Matt Watson.

Reading: Breaking Twitter by Ben Mezrich. Dubbed “the book Elon Musk doesn’t want you to read”, it goes deep inside Musk’s takeover of the social media giant.

Reading: The Trading Game – A Confession by Gary Stevenson. Gary, a former City trader, looks back (mostly in anger) in a deeply funny account of life on the trading floor.

Reading: On the Edge – The Art of Risking Everything by Nate Silver. This book is all about mastering the art of risk-taking.

Before you go...

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