Why buy to let is still the best form of investment

Why buy to let is still the best form of investment

As discussed in my last post, 2016 was quite a year for the property market. Despite some uncertainty, the market has proven to be resilient with sales figures and house prices still on the rise.

Buy to let in particular has been a popular subject as a result of market changes recently, but has always consistently proven to provide investors with the best returns when compared to stocks, bonds, ISAs and so on. In fact, only in 2015 was it reported that returns made from property were over 1,000% higher than any other form of investment.

So what does this mean for those looking to take the plunge into property investment in 2017?

Well, looking at the numbers, compared to other investments out there, buy to let still tops the chart, even with recent tax changes and everything else taken into consideration. We at Sequre have piled together a forecast for the next few years. Based on those who bought a property in 2016 at £100,000, it shows the average estimated returns buy to let can still achieve following on from the phased introduction on mortgage tax relief that will begin in April this year. 

*Property value, rent achieved, and service charge increases all based on 4% PA Increase.


Although these are average figures based on estimates, we can see that property can still provide a significant profit. Even after the tax relief levels out at 20% in 2020, returns still continue to increase well into 2023, thanks to the rise in property value and rental income.
But there are other factors that play a part into why buy to let still remains successful. Tenant demand still has a lot to answer for as the private rented sector continues to see a hive of activity.  New schemes and initiatives from the government and other private investment projects also has a part to play. If we look at developer’s launching PRS schemes across the UK and the government’s Northern Powerhouse vision, there’s no telling how far the buy to let market could leap in 2017.

Some may be sceptical, but it’s important to think about how beneficial property investment can be. Many now use it as a means to fund their retirement due to the poor returns from pension annuities. Some use it as inheritance to pass onto their children as the increase in value from the cash invested will rise much higher than it would do in any cash ISA. It’s understandable why some may be cautious about buy to let in the future, but the figures really do speak for themselves. Property has the same amount of risk as any other investment but, when carried out smartly and correctly, the benefits can be monumental.

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Comments

  1. CommercialTrustCommercialTrust30 January 2017 09:18:27

    Hi Graham, Would be interesting to see the above figure calculated against an investment via a Lt Company /SPV structure and if the investor found themselves pushed in to the higher tax bracket. Mortgage affordability is anothe rvery important piece of the jigsaw investor need to look at carefully so that they can evaluate the impact of mortgage choice on their tax bill.

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Latest Comments

Oliver Conway
Oliver Conway 18 May 2017

Making a neat inventory is a good idea, but if the seller is not willing to provide it, can the buyer demand it?

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Bertrand
Bertrand 17 May 2017

First step to nationalisation of the private rented sector IMHO. Nanny state poking their noses into things yet again. I object, as a decent landlord, sometimes having to deal with some pretty awful tenants,...

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Izzy
Izzy 16 May 2017

This is such a great a post. I love the detail you've gone into. It's a very useful article for helping those who are looking at deciding which sector they would like to go into! When I first started investing...

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paul burnham
paul burnham 30 Apr 2017

Jeremy Corbyn's pledge that a Labour government would build 500,000 new council houses must electrify the general election campaign. Reliance on markets and the profit motive has brought huge housing-related...

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CommercialTrust
CommercialTrust 28 Apr 2017

Sadiq Khan?s announcement of an online database of landlords and letting agents who have been convicted of housing offences, appears on face value to be a variation of the already implemented Database

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warren
warren 26 Apr 2017

You're very welcome Mary! Glad you enjoyed them :)

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Mary Ward
Mary Ward 26 Apr 2017

Thank you for the wonderful ideas. First impressions can make or break a deal. It's sadly that many homeowners drop the kerb to create an off-street parking space.

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Tony Gimple
Tony Gimple 14 Apr 2017

I'm not at all surprised that so many landlords are still confused about what the tax changes really mean and how it will affect them. In particular, the blind rush to incorporation is leaving landlords...

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MH
MH 13 Apr 2017

You are right that the bank holidays are going to be spoiled in looking for the properties. But people who want to sell their property and looking for the better relocation, they can get benefits of this...

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bnellyb
bnellyb 08 Apr 2017

There will be an exodus of private landlords over the next 5 years as tax changes take effect, private landlords provide an important service to the rental market, why do housing associations and councils...

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Fred Cassman
Fred Cassman 07 Apr 2017

"Make it look like you are at home": often people forget this and share on facebook their location!

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jared townsend
jared townsend 05 Apr 2017

It'll be interesting to see how & if the Government's asset sale regarding mortgages helps

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