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‘Lucrative’ buy-to-let continues to appeal to investors

Monday 01 July 2019

Residential property is currently the best long-term investment when compared to all other asset classes, according to buy-to-let investors.
 
Benham and Reeves surveyed more than 5,000 buy-to-let investors on everything from the current volatility of buy-to-let investments, confidence in the market, the impact of Brexit, other government changes to the industry and short and long-term investment intentions.
 
The research found that 73 per cent of those asked considered the sector to be the best, least volatile long-term investment.
 
But in the wake of a number of government changes to the sector, many investors are understandably more cautious about investing in property.
 
Changes to property and investment laws on the horizon are proving particularly problematic, with 80 per cent of those asked admitting to being unfamiliar with the latest changes to the buy-to-let market.
 
Opinion is divided over changes to buy-to-let tax relief and whether the sector still provided a good investment as a result, with 49 per cent believing it is and 51 per cent no longer sure.
 
However, with buy-to-let always requiring a long-term investment outlook, this increased to 37 per cent of investors feeling very confident that they will see an adequate return over the next ten years, with a further 6 per cent stating they were extremely confident and 51 per cent not as confident.
 
Some 83 per cent of investors stated it was either unlikely or very unlikely that they would sell their property over the next year, with the majority (58 per cent) staying put for five years.
 
But with market uncertainty still hanging over the sector, just 21 per cent of investors would consider investing in a property in the next 12 months, although half of those asked would consider expanding their portfolio within the next five years.
 
Director of Benham and Reeves, Marc von Grundherr, said: “The government has really gone to war with buy-to-let investors of late and a consistent string of detrimental changes to the sector through stamp duty increases, tax relief changes and a ban on tenant fees has had the desired impact of denting industry sentiment and dampening appetite for future investment due to a reduction in profitability.
 
“However, for the institutional buy-to-let investor, this is but a mere blip on a much longer timeline and the overwhelming overtones are that while Brexit poses a challenging obstacle for the immediate future, the market remains the investment option of choice with many confident on a return further down the line.
 
“This is a testament to the durability of buy-to-let bricks and mortar in the UK as, despite a government-backed clamp down, it remains a lucrative business and one that continues to gain the backing of those that are on the frontline.”
 

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