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Buy-to-Let Outperforms All Other Asset Classes

July 6, 2015 | Landlord News  

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Research commissioned by a property investment firm shows that buy-to-let property investments are more profitable than any other UK asset class. The study compared the returns of several of the main asset classes between 2010 and 2014.

Standard buy-to-let properties were found to have a cumulative total return of equity of 77%, while UK equities returned 46%. Commercial property managed to return an average 41% for investors, while returns on UK government bonds (gilts) were significantly lower at 23%. The worst performer was cash, as measured by one month Libor, returning only 2% over four years.

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However, the biggest winner was found to be houses in multiple occupation (HMOs) that were rented to young professionals and key workers, generating a cumulative total return on equity of 108%. Every �1,000 invested in 2010 would have grown to �2,080 in 2014.

The downside is that properties intended as HMOs are considerably more expensive to purchase and refurbish. Also, there is greater regional variation for HMOs than for standard buy-to-lets, with net income returns of 134.9% in the North East, but only 77.5% in the South East.

The research clearly shows that buy-to-let is the top performing investment over the last four years, with stocks and shares lagging far behind good old bricks and mortar.

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