Buy-to-let is the Top UK Asset Class of 21st Century!
UK buy-to-let has seen the best returns
Research from Landlord Mortgages, the UK’s largest specialist buy-to-let broker, reveals that, as an asset class, UK buy-to-let1 has seen the best returns (157%) in the 21st century (Q1 2000 – Q2 2006).
Investors who purchased a buy-to-let1 property with a deposit of £25,000 could expect to see a £39,309 profit (157%) over six years. This is significantly higher than the £415 (2%) achieved by people who invested in the FTSE 1004 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 set backs.
The second most profitable asset class to invest in was gold2, which provided consumers with a profit of £47,484, an increase of 90% on their initial stake – see table below for further details. Gold is 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.
Asset Class Comparison Table:
Ranking |
Asset Class |
Initial
Investment |
Profit |
Increase(%) |
1 |
UK Buy-to-let1 |
£25,000 |
£39,309 |
157 |
2 |
Gold2 |
£25,000 |
£22,484 |
90 |
3 |
Savings Account3 |
£25,000 |
£7,061 |
28 |
4 |
FTSE 10004 |
£25,000 |
£415 |
2 |
|
|
|
Risk adverse consumers 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 considerable better than people who chose to invest in the stock market.
Footnotes:
1 = Returns calculated on the capital appreciation of a property (Q1 2000 – Q2 2006) with the assumption that the property is purchased using a repayment mortgage and the rental income covers this.
2 = Data sourced from www.gold.org (Q1 2000 – Q2 2006)
3 = Returns calculated on a savings account paying 1% (Q1 2000 – Q2 2006)
4 = Returns calculated on the average quarterly growth in the FTSE 100 (Q1 2000 – Q2 2006)
Lee Grandin, Managing Director, Landlord Mortgages comments:
“While buy-to-let property requires a relatively large minimum investment, this research shows that you can make considerable gains on capital invested in this asset class. The UK market returned healthy profits to those consumers who chose to invest in this asset class. However it is important to make sure that any potential property investment is fully researched prior to purchase to minimise risks of rental voids and low returns.
“Gold – while a relatively under-utilised asset for most consumers – also provided healthy returns and it will be interesting to see if this continues in the long term. Investors who chose to stay close to home by investing in the FTSE 100 have been burnt by the poor performance of the stock market and – in hindsight – would have done better by putting their capital in a savings account.
“Whilst buy-to-let has outperformed the other classes included in the survey, the old adage applies. By avoiding putting all your eggs in one basket you stand a much better chance of long term gain as you are not pinning your hopes on the development of one particular sector. We would recommend that investors consider all these asset classes and invest in those most suitable to their lifestyle.”
Investors interested in speaking to Landlord Mortgages can contact them on 0800 917 3324.
