High-Net-Worth Investors Pessimistic About Property Investments

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High-net-worth investors are feeling somewhat pessimistic about the property sector, with 38 per cent claiming to no longer view property as a good investment.

Rathbone Investment Management polled over 1,000 investors and 500 high-net-worth (HNW) individuals in the UK. They found that 38 per cent of investors with a high net worth of £100,000 or more in the UK were put off property slightly, though this could also be read as 62 per cent not put off at all.

While 25 per cent of high-net-worth investors own buy to let properties, only 7 per cent plan to increase their portfolios.

The findings come following research from the National Landlords Association (NLA) which predicted that homes suitable for first-time buyers could flood the market due to the 19 per cent of landlords who plan to sell some of their portfolio.

The figures from the NLA indicate that 45 per cent of landlords who intend to sell property in the coming year are aiming to sell individual flats and apartments. 33 per cent are looking to sell terraced homes.

Regulatory changes in the buy to let sector as well as changes to the tax treatment of buy to let investments along with new regulations by the Prudential Regulation Authority have led to some investors now re-evaluating property as an investment.

Investment director at Rathbones, Robert Szechenyi, spoke out about the findings: ‘Not only are the returns now being impacted by an increased rate of tax, but they can also prove high-risk investments due to a lack of diversification. Property investments require a large amount of capital to be held in one single asset, and landlords will often hold a number of properties within one region.’

He continued: ‘Investors who are looking to invest in property, should make sure to assess their risk appetite, look at all alternative options and make sure this property is held within a well-diversified portfolio of investments.’

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