Buy to let offers the best returns of all investment types in spite of the new tax regime and strict mortgage lending rules.
Property investors can anticipate a higher return than any other mainstream investment, including stocks, bonds and ISAs, according to agency chain Lenders. Research from the firm has proven the popular opinion that buy to let investment in bricks and mortar offers a safe haven in spite of market shake ups.
The results outlined that investors with a £30,000 deposit were able to purchase a property for £100,000. By 2023, they could expect to record a yield of over 5 per cent, with returns continuing to grow each year, even once tax relief levels out in 2020.
Managing director at Leaders, Allison Thompson, said: ‘Tax and stamp duty changes do not alter the fundamental factors that continue to make buy-to-let an incredibly attractive and rewarding market to investors. In addition, substantial capital growth is worth tens of thousands of pounds over a relatively short period of just seven years. Tenant demand is extremely high in almost all areas of the UK and this is set to push rents higher in the years to come, enhancing the return available to investors.’
Using the example of a two-bedroom flat in Stoke-on-Trent, lenders claim that at an initial cost of £95,000, the property could then be let at £450 per calendar month, offering a yield of 5.7 per cent. The research suggested that a two-bedroom house in the area could produce yields of 4.8 per cent, whilst a three-bedroom house would see figures closer to 5.4 per cent.
Thompson continued: ‘There is no doubt the buy-to-let sector has received some bad press in recent months, but there is no getting away from the fact it delivers a great return to shrewd investors. And at a time when savings accounts and pensions are falling short, property investment can be a crucial way for people to fund themselves through retirement.’