Buy-to-let returns transcend all other asset classes over 18 year period

on Apr 14, 2015

Recent analysis of the buy-to-let market by financial institution Landbay, has revealed that the sector has outperformed all other major asset classes over the past 18 years.

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The data shows that since 1996, buy-to-let investments have returned almost 1,400 percent, meaning that if £1,000 was invested in the buy-to-let market in 1996, it would have been worth £14,897 by the end of last year. The figure is six times the amount that an investment in shares would have earned landlords over the same time period, with the sector seeing a 212 percent return.
Commercial property investments saw a return of 349 percent, while anyone making an investment in Government bonds back in 1996 would have seen an increase of 233 percent. Cash savings have failed to live up to the performance of other asset classes, though, seeing a £1,000 investment in 1996 turn into just £1,959 by the end of 2014.
Commenting on the success of the buy-to-let market, the chief executive of Landbay, John Goodall commented:
“The phenomenon of buy-to-let as an asset class only goes to underline the stable personal finances of landlords.”
Predictions suggest that the buy-to-let sector will continue to be profitable, with the report projecting that £1 invested in buy-to-let, with a 25 percent deposit, will return £2.87 over the next decade. Cash buyers would see the same investment grow to £1.81 by 2024.
Former economist Rob Thomas stated that this is a “conservative estimate”, given that it is forecast that mortgage rates will rise to 5.5 percent by the year 2022 and that house prices will increase by 4 percent. He also claimed that there would be no real impact of a Labour government on the buy-to-let market, stating: “Controls on the rented sector simply means less supply, fewer new landlords, and will result in higher rents for new tenants,” when referring to Ed Miliband’s proposed rental caps for existing tenants and three-year contracts on selected tenancies.
Further analysis into the future of Britain’s housing market suggests that a third of all homes in the country will be owned by buy-to-let landlords by 2032.


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