Buy to Let Investment Returns

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By Cheryl Taylor
Property Editor

Buy to let: top UK asset class of the century

Buy to let has seen the best returns of any asset class this century (first quarter 2000 to second quarter 2006), research from specialist broker Landlord Mortgages reveals. Investors who purchased a UK buy-to-let property costing £165,500 on a repayment mortgage with a deposit of £25,000 could expect to see a £39,309 profit (157%) over six years.

The report compares this figure with the £415 achieved by those who invested in the FTSE 100 over the same period. The huge disparity between the returns available is due to the consistently strong performance of the housing market, while the stock exchange has suffered some severe setbacks.

The second most profitable asset class to invest in was gold, which turned a profit of £22,484, an increase of 90% on an initial stake of £25,000. Gold appears to be a relatively under-utilised asset class – which, in the recent climate of rising oil prices and a weak performance by the dollar, has provided excellent returns.

Risk-adverse investors who placed their capital in a savings account did not enjoy the huge gains offered by the other asset classes. Although with a £7,061 profit, they fared considerably better than those who chose to invest in the stock market.

Lee Grandin, managing director of Landlord Mortgages, says: “While buy-to-let property requires a relatively large minimum investment, this research shows that you can make considerable gains on capital invested.

“However, this asset class often requires more commitment from investors than others and should be seen as a business rather than simply an investment. In addition, this sector is not regulated by the FSA, so potential landlords need to make sure they do their research thoroughly and understand the nature of the market.”

©The Business 2006