Outstanding BTL returns attract investors despite bad press

Thu 12 Jan 2017

More landlords are looking to expand their property portfolios as the buy-to-let market continues to outperform the majority of other investment types.

Some 45 per cent of landlords are currently seeking to invest in additional properties, up from just 41 per cent in May 2016, according to a survey by Mortgages for Business.

Positivity in the buy-to-let market is evident despite two key changes to legislation by the government in the last 12 months that have created a tougher operating environment.

Allison Thompson, managing director at property specialist Leaders, says: “The last year has seen an additional stamp duty levy placed on buy-to-let investors and changes to mortgage interest tax relief that will be phased in over the next four years from April.

“Despite this, and all the negativity in the press about buy-to-let, it is clear that investing in property is still a rewarding prospect. Most investors are willing to accept slightly higher costs and adapt their strategies in order to remain in the buy-to-let market, rather than take a risk or accept lower returns on other investment types.”

Falling buy-to-let mortgage rates provide another potential bonus for investors, with John Charcol predicting that rates will drop in 2017, meaning landlords can offset some costs against reduced mortgage payments.

Recent research by Leaders showed a £50,000 investment in property in 2006 generated a 175 per cent return over the last ten years, equating to a profit of £138,936. In comparison, the same investment in gold would have delivered a profit of £50,673, interest from a savings account would have amounted to £14,447 and a £50,000 investment in the FTSE 100 would have yielded just £2,969 over the same time period.

Allison adds: “The figures show just how profitable the buy-to-let market can be for investors. As such, it is no surprise to learn that landlords are still as determined as ever to make a success of their property investment – whether they own just one buy-to-let or a large portfolio.

“But with challenges in the shape of the mortgage interest relief cut on the horizon, it is now more important than ever to secure expert and professional advice before adding to your portfolio or buying to let for the first time.”

Leaders can support investors at every stage of their buy-to-let journey and a comprehensive database of available buy-to-let properties –hand-picked for their outstanding investment potential - can be accessed via its Property Investment Hub.