The buy-to-let market has shown its strength in the last 18 years, according to a new report, which shows that the purchasing of homes for the express purpose of letting them out to a tenant has produced average returns that outpace all other asset classes.
Specialist buy-to-let lender Landbay said that in the last 18 years, every £1,000 invested in the buy-to-let market with a 75 per cent loan to value mortgage has grown impressively. It said that if this money was invested in 1996, it would have been worth £14,897 by the last quarter of 2014.
This would have presented long-term investors with a compound annual interest of 16.2 per cent across the 18 years examined. The same investment elsewhere in other assets would have provided far less impressive results.
For example, £1,000 put into UK commercial property in 1996 would now be worth £4,494, in gilts or UK government bonds to £3,329, in UK shares to £3,119 and in cash to £1,959. A buy-to-let borrower who spent £1,000 purely in cash in 1996 without a mortgage would have seen their investment worth £5,071 by the end of 2014, a compound annual return of 9.4 per cent.
John Goodall, chief executive of Landbay, said: “The phenomenon of buy to let as an asset class only goes to underline the stable personal finances of landlords. The stability of returns shown in this paper underlines why this group of borrowers can be so attractive for lenders. In fact the history of buy to let can be viewed as a history of opportunity for those offering the financial backing to landlords.”
Looking forward, the company also stated that it sees the buy-to-let sector becoming even more popular and strong. It said that in 1996, the general public had the ability to become a landlord unlocked.
However, in 2015, this has gone further, and the emergence of peer-to-peer lending has meant that the public can now even be the bank, which makes buy-to-let ever more fluid and accessible.
And it doesn’t just stop at lending. Higher yields are now more accessible through well-established property companies like Experience Invest. The Company offers a selection of buy-to-let property investments which provides investors with, on average, 10% NET per annum over an assured period ranging between 1 to 10 years.
The London-based property company tailors opportunities to enable investors to secure higher than average returns from the UK’s most sustainable markets, such as student accommodation and healthcare property
Buy-to-let remains one of the most important asset classes as its returns outpace all other markets.