The coming years will provide investors with a great opportunity to succeed in the buy-to-let market, although the industry will also face some challenges over the same period.
That is the verdict of the Centre for Economics and Business Research (CEBR), which says rents will rise and house price growth will remain robust. And while recent tax changes have had an impact on the market, the body believes buy-to-let remains a viable and profitable option for both lenders and investors.
However, with house prices due to increase faster than rents, landlords could face a reduction in overall yields, which are predicted to be 3.5 per cent on average in 2027.
Allison Thompson, managing director at property specialist Leaders, says: “Balancing risk and reward has always been the key to a successful investment – and we believe the rewards of investing in property will continue to significantly outweigh the risks.
“In recent years, property has outperformed a host of other major investment types – including stocks and shares, gold and savings – and there are plenty of reasons to be optimistic that this will continue over the next decade.
“Should yields decrease as the study suggests, we remain confident this gap will be bridged by rising house prices, which allow landlords to benefit from significant capital growth when the time comes to sell.”
The CEBR research, carried out on behalf of Shawbrook Bank, went on to suggest that demand for rental properties is expected to remain strong and that the proportion of UK homes in the private rented sector will surge from 21 per cent in 2016 to 28 per cent in 2027.
It also explains that while higher costs are encouraging some landlords to adapt their strategies, they are still buying.
Allison adds: “Buy-to-let has provided a high return on investment for thousands of landlords in recent years and, providing new challenges are suitably negotiated, fundamentally remains an extremely strong and attractive proposition.
“The combination of high tenant demand and rising rental prices ensures it will continue to deliver the results ambitious investors expect.”
For more information or advice on investing in property or making more of an existing home contact your local Leaders branch or visit leaders.co.uk. Alternatively, take a look at our range of dedicated investment properties for sale at Property Investment Hub.